UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 20-F





(Mark One)

 ̈

Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934

or



S

Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



For the fiscal year ended July 31, 2003



or



 ̈

Transition report pursuant to Section 13 to 15(d) of the Securities Exchange Act of 1934



For the transition period from ___________ to ___________



Commission File Number: 0-29328





THRILLTIME ENTERTAINMENT INTERNATIONAL, INC.

(Exact Name of Company as Specified in its Charter)



Province of British Columbia, Canada

(Jurisdiction of Incorporation or Organization)



322 - 4585 Canada Way

Burnaby, British Columbia, V5G 4L6

(Address of Principal Executive Offices)



Securities registered or to be registered pursuant to Section 12(b) of the Act:

|Title of each Class |  | Name of each exchange on which registered
|------------------- |  | -----------------------------------------
|None                |  |                                          



Securities registered or to be registered pursuant to Section 12(g) of the Act:



Common shares without par value

(Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:



None

(Title of Class)



Indicate the number of outstanding shares of each of the issuers classes of capital stock as of the close of the period covered by the annual report:

20,007,297 Common Shares outstanding as of July 31, 2003







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Indicate by checkmark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



YES

__X__          NO   _____





Indicate by checkmark which financial statement item the registrant has elected to follow.



ITEM 17   __X__

ITEM 18  _____







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NOTE REGARDING FORWARD LOOKING STATEMENTS



Except for statements of historical fact, certain information contained herein constitute forward-looking statements, including without limitation statements containing the words believes, anticipates, intends, expects and words of similar import, as well as all projections of future results.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or achievements of the Company to be materially different from any future results or achievements of the Company expressed or implied by such forward-looking statements.  Such factors include, among others, the following:



-  the Companys default on certain of its debt obligations;

-  the Companys history of losses and limited revenues;

-  reliance upon two products, the Top E® and Skycoaster® attractions;

-  the Companys reliance on anticipated revenues from royalties and ride sales;

-  the limited number of potential customers and amusement parks for the Companys products;

-  seasonal nature of business; reliance upon intellectual property rights; need for additional capital;

-  uncertainties as to the Companys ability to achieve the goals and satisfy the assumptions of management;

-  the risk that ride installations will not be completed in a timely manner;

-  uncertainties as to the demand for the Companys products and the Companys ability to meet such demands;

-  general economic factors that may result in a reduction in capital expenditures and/or delayed buying decisions affecting demand for the customers products and

-  other factors described in the section under Key Information  Risk Factors.



Forward-looking statements are based on the beliefs, opinions and expectations of the Companys management at the time they are made, and the Company does not assume any obligation to update its forward-looking statements if those beliefs, opinions or expectations, or other circumstances, should change.  You should not place undue reliance on forward looking statements.



FINANCIAL INFORMATION



Except where otherwise indicated, all financial information disclosed in this Annual Report is presented in United States dollars and prepared in accordance with Canadian generally accepted accounting principles.



















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PART I

ITEM 1

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3

KEY INFORMATION

A.

Selected Financial Data

The following table sets forth selected financial data regarding the Companys consolidated operating results and financial position.  The data has been derived from the Companys consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in Canada (Canadian GAAP).  For a reconciliation to accounting principles generally accepted in the United States (U.S. GAAP), see note 15 to the Consolidated Financial Statements as at July 31, 2003 and 2002 and for the years ended July 31, 2003, 2002, and 2001.  The financial data as at July 31, 2001, 2000, and 1999 and for the years ended July 31, 2000 and 1999 have been derived from the Companys audited consolidated financial statements not included in this Annual Report.  (See Managements Discussion and Analysis of Financial Condition and Results of Operation.)  The following selected financial data is qualified in its entirety by, and should be read in conjunction with, the consolidated financial statements and notes thereto included elsewhere in this Annual Report.  The selected financial data is expressed in United States dollars.







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|                                  | Fiscal year Ended
July 31
|--------------------------------- | -------------------------
|                                  | 2003                     
|                                  |                          
|Revenue(1)                        |                          
|Product Sales                     | $963,749                 
|Cost of Sales                     | 592,897                  
|Gross Margin                      | 370,852                  
|Other Revenue                     |                          
|Royalty Revenue                   | 1,024,889                
|Other Revenue                     | 261,166                  
|                                  | 1,656,907                
|                                  |                          
|Expenses(2)                       |                          
|Canadian GAAP                     | 2,897,035                
|US GAAP                           | 2,639,490                
|Asset write-downs and other costs |                          
|Canadian GAAP                     | 1                        
|US GAAP                           | 1                        
|Income (Loss)                     |                          
|Canadian GAAP                     | 4,818,993(3)             
|US GAAP                           | 5,076,538(3)             
|Income (Loss) per Share           |                          
|Canadian GAAP                     | $0.26                    
|US GAAP                           | $0.27                    
|                                  |                          

(1)

Certain of the comparative figures were reclassified to conform with the presentation for the current year.

(2)

Includes operating expenses, interest expense net of interest income and amortization of capital assets, and amortization of patent rights.

(3)

Includes a gain on a settlement of convertible securities in the amount of $6,116,246 resulting from our settlement of a $5,950,000 convertible debenture ($7,564,127 including accrued interest and an equity component of $495,381 prior to discharge) for $60,000 in cash, a promissory note in the principal amount of $60,000 and the issuance of 750,000 shares of common stock.  See Liquidity and Capital Resources, below.







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|                                  | As at
July 31
|--------------------------------- | -------------
|                                  | 2003         
|                                  |              
|Working Capital
(Deficiency)(1)   | $(2,551,245) 
|Total Assets                      |              
|Canadian GAAP                     | 839,226      
|US GAAP                           | 829,226      
|Long-term Obligations             |              
|Canadian GAAP                     | -            
|US GAAP                           | -            
|Total Liabilities                 |              
|Canadian GAAP                     | 3,340,098(2) 
|US GAAP                           | 3,340,098(2) 
|Shareholders Equity (Deficiency) |              
|Canadian GAAP                     | (2,503,872)  
|US GAAP                           | (2,503,872)  
|Outstanding Number of Shares      | 20,007,297   
|Dividends Declared                | Nil          
|                                  |              



(1)

Current Assets less Current Liabilities.  Includes the full amount of the Convertible Debenture as a current liability in 2003.

(2)

On December 20, 2002, the Company entered into a Settlement and Release Agreement related to the settlement of a convertible debenture with a value prior to discharge on January 23, 2003 of $7,564,127 (including accrued interest and an equity component of $495,381) for $60,000 in cash, a promissory note in the principal amount of $60,000 and the issuance of 750,000 shares of common stock.  See Liquidity and Capital Resources, below.  We recognized a gain on the settlement of $6,116,246.









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Currency and Exchange Rates

The Companys consolidated financial statements are denominated in United States dollars.

|                       |        | Canadian Dollars Per United States Dollar
|---------------------- | ------ | -----------------------------------------
|                       |        | Fiscal Year Ended July 31                
|                       | 2003   | 2002                                     
|End of period          | 1.4074 | 1.5845                                   
|Average for the period | 1.4384 | 1.5036                                   
|High for the period    | 1.5963 | 1.6128                                   
|Low for the period     | 1.3348 | 1.5036                                   



The following table sets forth the high and low exchange rates for one Canadian dollar expressed in terms of one United States dollar for each of the last six (6) months.



|                   | December
2003 | November
2003 | October
2003 | September
2003 | August
2003 | July
2003
|------------------ | ------------- | ------------- | ------------ | -------------- | ----------- | ---------
|High for the month | 1.3405        | 1.3362        | 1.3481       | 1.3876         | 1.4100      | 1.4114   
|Low for the month  | 1.2923        | 1.2973        | 1.3043       | 1.3469         | 1.3836      | 1.3368   



Exchange rates are based upon the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.  The noon rate of exchange on January 23, 2004 as reported by the United States Federal Reserve Bank of New York for the conversion of Canadian dollars into United States dollars was US $0.762 (US$1.00 = Cdn $1.3115).  Unless otherwise indicated, in this annual report on Form 20-F (the Annual Report or Form 20-F) all references herein are to United States Dollars.



B.

Capitalization and Indebtedness

Not applicable.

C.

Reasons for the Offer and Use of Proceeds

Not applicable.

D.

Risk Factors

In this section entitled Risk Factors, the terms we, our and us refer to the Company and its subsidiaries.  Our securities are highly speculative.  To date, we have had only limited revenues.  A prospective investor or other person reviewing our business should not consider an investment unless the investor is capable of sustaining an economic loss of the entire investment.  All our development, acquisition and operating costs have been funded through equity, debt, and, through product sales.  Certain risks are associated with our business, including the following:

We defaulted on debt instruments with an aggregate value in excess of $2.7 million

We defaulted on the May, August and November 15th, 2003 payments totaling $783,957 due under a 10.5% non-convertible secured loan, which constituted an event of default.  Under the terms of the loan, the lender can accelerate the amount due under the loan, which was  approximately $2,465,697 at December 31, 2003.  We have been attempting to re-negotiate the loan and has had discussions with potential lenders in an effort to refinance our obligations.  To date, we have been unsuccessful.  The loan is secured by the shares of Skycoaster, Inc., its patents and trademarks and related recurring royalty stream generated from license agreements, and if we cannot successfully renegotiate the terms of the loan or make alternative arrangements to satisfy the obligations, the lender may foreclose on our assets.  Due to the default status of this loan, this debt instrument has been classified as a current liability, increasing the working capital deficiency.  To date, the lender has not acted to recover on its security on this loan.

We defaulted under our obligation to make a lump sum payment in the amount of $100,000 on August 1, 2003 in connection with a settlement agreement.  We are currently attempting to re-negotiate a settlement.  Under the terms of the settlement agreement, we granted the third party a security interest in ten Top Eliminator dragsters.  The loan currently bears interest at 8.5% per annum. Due to the default status of this loan, this debt instrument has been classified as a current liability, increase the working capital deficiency.

We defaulted under the terms of a $60,000 promissory note associated with the settlement of the convertible debenture to make four monthly payments in the amount of $15,000 plus interest in July, August, September, and October 2003.  The promissory note is due on demand and bears interest at 18% per annum until the entire amount is paid in full.  We are currently attempting to re-negotiate a settlement.

As of December 31, 2003, our debt excluding accounts payable and accrued liabilities and interest consisted of:

|                                                                 |           
|---------------------------------------------------------------- | ----------
|Non-convertible secured loan bearing interest at 10.5% per annum | $2,465,697
|Note payable bearing interest at 18% per annum (5% in 2003)      | 60,000    
|Amount due for settlement agreement                              | 180,476   
|                                                                 | $2,706,173



We cannot assure you that we will generate sufficient cash to pay down our debt or re-negotiate more favorable terms with our existing lenders or with a new lender.Furthermore, certain of our debt is secured by our assets and the lenders may elect to foreclose on our assets or we may elect to sell some or all of our assets to meet our obligations.  We cannot assure you that the proceeds from the sale of our assets will be greater than our outstanding debt obligations.  We may be unable to continue as a going concern.



We have a history of operational losses

As of July 31, 2003, we had an accumulated deficit of $10,810,231.  We have a history of losses including losses of $3,065,943 during our fiscal year ended July 31, 2001 and $2,443,166 during our fiscal year ended July 31, 2002.  We would have recognized a loss during our fiscal year ended July 31, 2003, absent a $6,116,246 gain on a settlement of a convertible debenture, which resulted in net income of $4,818,993.

At the present time, our revenue from sales of rides is unpredictable.  We are currently using cash of approximately $100,000 per month for general operating and interest expenses.  We anticipate that we will incur losses in our fiscal year ending July 31, 2004, and we cannot assure you that we will be able to generate sufficient sales in the future to attain any appreciable level of profits.

We may be unable to continue as a going concern

The auditors report on our consolidated financial statements includes comments for U.S. readers on Canada-U.S. reporting difference and Note 1 to our consolidated financial statements outlines factors that cast substantial doubt on our ability to continue as a going concern.  The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.

We had a working capital deficit of $2,551,245 at July 31, 2003 and $2,564,131 at October 31, 2003.  We had $202,943 in cash and cash equivalents as of July 31, 2003 and $131,335 as at October 31, 2003.  We have historically funded our working capital requirements from revenue from product sales and royalties, cash on hand and proceeds from debt and equity offerings.  Our ability to meet our cash requirements during fiscal 2004 is contingent in part on our ability to increase our cash flow from operations, our ability to raise additional capital through equity or debt financing and our ability to restructure our existing debt.  If we are unable to meet our cash requirements, our secured lenders may foreclose on our assets or we may be required to liquidate our business.

Our overall revenues have experienced an overall decline

Revenue from product sales declined from $2,950,306 in the fiscal year ended July 31, 2001, to $1,678,899 in fiscal 2002, to $963,749 in fiscal 2003.  Revenue from royalties were $1,141,134 in the fiscal year ended July 31, 2001, $982,547 in the fiscal 2002, and $1,024,889 in fiscal 2003.  We have experienced an overall decline in revenues during the last five fiscal years.  We believe that the decline in revenues during the last two years was due in part to weak general economic conditions and a decline in tourism due to the September 11, 2001 terrorist attacks.  We have no control over many of the factors that affect the sales of our products or demand for our rides.  We do not expect revenues to reach pre-fiscal 2001 levels in fiscal 2004.



Our rides are value added rides and must compete with other amusement park rides that are included in the price of admission



Our Top E® and Skycoaster® attractions must compete with other amusement rides for market acceptance and for the capital investment funds available at each amusement park.  Our Top E® and Skycoaster® attractions are sold and licensed as an added value ride so that a park customer must pay for each ride on the Top E® and Skycoaster® attractions in addition to any park entrance fee.  While the park provides a showcase for the Top E® and Skycoaster® attractions, our rides must attract customers on their own merits since the Top E® and Skycoaster® attractions have a smaller rider capacity than competing rides.  Consequently, a park owner may choose to order competing rides rather than to purchase the Top E® or Skycoaster®.  In addition, other entities may develop new concept rides that may compete directly with the Top E® and Skycoaster®.



Reliance upon the Top E® and Skycoaster® Products

Our commercial viability depends upon the success of our two rides: our Top E®and Skycoaster® products.  We must successfully attract and retain riders once these products are installed in amusement parks.  Unlike other amusement ride manufacturers, we have only two established rides and these rides must be attractive enough to a sufficient number of riders to generate new orders or to generate significant revenues from existing agreements.

We rely on third parties to assemble our rides

For both our Skycoaster® and Top E® rides, we rely on a small number of suppliers for major manufactured parts used in the assembly of the end product, as well as for after-market part sales.  An interruption in the supply of any of these parts could negatively affect the timely delivery of rides and parts to the buyers of our rides.  This could result in a default in our obligations under these contracts, resulting in the loss of the sales and other revenue opportunities.

We depend on our key management employees

Our ability to continue product development and marketing activities and to be competitive in the amusement ride industry will depend, in large part, on our ability to attract and retain qualified key management personnel. Competition for qualified personnel is intense, and there can be no assurance that we will be able to attract and retain such personnel.  Loss of the services of one or more members of the management group or the inability to hire additional qualified personnel as needed could have a material adverse effect on our ability to develop, market and sell our products.

We are subject to risk of accidents

Sales and other revenue from the Top E® and Skycoaster® attractions may be adversely affected by any serious accident or similar occurrence with respect to the attraction.  We carry liability insurance, which provides coverage of up to $1,000,000 per loss occurrence with a deductible of $25,000.  In addition, as substantially all of the parks in which the Top E® and Skycoaster® attractions are located, or will be located, feature thrill rides, attendance at the parks and consequently, revenues from the Top E®and Skycoaster® attractions may be adversely affected by a change in market acceptance, particularly in the event of any serious accident or similar occurrence on thrill ride attractions.

Inclement weather adversely affects our business

Most of the attractions at amusement parks are located outdoors; consequently, attendance at parks and our revenues may be significantly affected by the weather. Unfavorable weekend weather and unusual weather of any kind can adversely affect park attendance.  In addition, the Top E® attraction cannot operate in wet weather.

Our business is subject to seasonal effects

The operations of most parks are highly seasonal with park attendance occurring primarily in the second and third calendar quarters.  As a result, the vast majority of our royalty and ancillary cash flow revenue from the Top E® and Skycoaster® attractions will be generated during this period.

Economic conditions affect the demand for our products

The amusement and entertainment industries are highly dependent on tourism and consumers with disposable income, which may be affected by general economic conditions.  Approximately 90% of our total revenue was derived from the United States.  The recent downturn in the United States economy and recessionary trend has had and may continue to have an adverse affect on our revenues from royalties and product sales.

Our revenue and results of operations will likely be adversely affected by increased unemployment, inflation and decreases in travel and vacation expenditures.  The condition of the capital markets will affect our ability to raise capital on acceptable terms.

We are subject to governmental regulation

Park operations are subject to increasingly stringent federal, state and local environmental laws and regulations governing noise levels, air emissions, soil contamination and the disposal of waste and hazardous materials.  We believe that we are in substantial compliance with applicable current regulatory standards.  If these standards change, we may require significant modifications and expenditures on our Top E® or the Skycoaster® attractions to meet such requirements.

We may not be able to adequately protect our intellectual property

Our success will depend significantly on our ability to obtain and enforce intellectual property protection for the proprietary hardware and software and the other proprietary portions of our rides and attractions in the United States and in other jurisdictions. Our U.S. patent protection covers major aspects of our technology and our trademark protection covers proprietary marks in the United States.  There can be no assurance that the claims allowed will be sufficient to protect our technology, or that patent laws will provide remedies sufficient to preclude any infringement of our rights, either in the United States or elsewhere.  In addition, there is no assurance that a patent issued to us will not be challenged, invalidated or circumvented or that our competitors will not independently develop or patent technologies that are equivalent or superior to ours. While we have attempted to protect our technology and general intellectual property rights under the applicable patent and trademark laws of the United States and will undertake, as economics allow and circumstances require, to obtain similar protection in other jurisdictions, there is no assurance that our efforts will effectively protect us or our products against piracy.  Monitoring and identifying unauthorized use of technology, trademarks, service marks and other proprietary rights and property may prove difficult, particularly outside of North America, and the cost of litigation may impair our ability to adequately guard against such piracy or infringement.

Delays in delivery of our products may adversely affect our business

The timing of the receipt of the amount still due to us under existing contracts and the timing or the amount of any revenues which we will receive from the sale of our rides or from the continuing royalties, merchandise sales or new product applications or developments cannot be precisely predicted.  Any substantial delay in product development, technology introduction or market acceptance could result in significant delays in revenues and could allow competitors to reach the market with products that could successfully compete with us for market acceptance and access.  In addition, we are dependent on third party manufacturers, and production scheduling problems, beyond our control, that could affect our ability to deliver rides to buyers on a timely basis.  In view of the evolving nature of the amusement park and destination resort industry and the uncertainties concerning the strategies which will be adopted by large park and venue operators, there can be no assurance of when or if we will achieve or sustain profitability.

We cannot assure you that a public market for our stock will continue to be available

Our shares are listed and traded on the TSX Venture Exchange under the symbol THL and OTCBB under the symbol THLL-F.  While we intend to maintain our listings on the TSX Venture and OTCBB, we cannot assure you that we will meet listing and reporting obligations to remain eligible for listing or that these trading markets will be retained so as to correspond with an investors desire for a ready market for shares.

Your investment is subject to potential dilution

On July 31, 2003, we had 20,007,297 common shares issued and outstanding compared to 17,504,497 on July 31, 2002.  During the year ended July 31, 2003 the following transactions took place:

•

2,000,000 common shares were issued in connection with a 2,000,000 unit private placement at Cdn. $0.05 per unit. Each unit consisted of one common share and one share purchase warrant exercisable to acquire one additional common share at Cdn. $0.10 for one year; and



•

750,000 common shares were issued in connection with a Satisfaction and Release Agreement dated December 20, 2002 between the Company and the holder of the 6% debenture.



As of January 23, 2004, we have commitments which may require us to issue up to 3,172,850 additional shares of our common shares, including stock options exercisable to acquire up to 1,172,850 shares and share purchase warrants exercisable to acquire 2,000,000 shares.  The exercise of or the conversion of such options, and share purchase warrants will like occur only when the market price of our common shares exceeds the exercise price of the options or warrants, and such exercises, if any, may have an adverse effect on the market price of our common shares.  Furthermore, agreements to enter into future equity or debt financings, property transactions, and issuance of additional stock options among other things may require the subsequent issuance of our securities.



Speculative Nature of TSX Venture Exchange Market and Over-the-Counter Bulletin Board Market

Our shares are traded on the TSX Venture Exchange and quoted on the OTCBB.  The TSX Venture is known as a risk capital exchange where shares of speculative companies are often brought to market and traded. Many of the companies on the TSX Venture have not engaged in profitable operations and are undertaking start up or mineral exploration activities.  The liquidity and depth of the market of the TSX and OTCBB may be dependent upon a substantial number of factors including the economies in British Columbia, Canada and the United States and the desire of investors to enter into a speculative market.  This may affect the pricing of our securities.

Rules 15g-1 through 15g-9 promulgated under the Exchange Act impose sales practice and disclosure requirements on NASD broker-dealers who make a market in a penny stock.  A penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share.  The closing price of our shares on the OTCBB on January 23, 2004 was $0.025 per share.  As such, our shares will be deemed penny stock for the purposes of the Exchange Act.  The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in the shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.

Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or accredited investor, generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse, must make a special suitability determination for the purchaser and must receive the purchasers written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt.  In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt.  A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities.  Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customers account and information with respect to the limited market in penny stocks.

Our business may be affected by currency fluctuations and other international factors

Our management anticipates that we will pursue product markets on a world-wide basis.  We have sold the Top E® and Skycoaster® to customers throughout the world.  As a result, our business and results of operations may be affected by currency fluctuations, income tax matters and government regulations of the various jurisdictions, all of which will increase the complexities of our operations at this stage of our development.

It may be difficult to enforce judgments against our officers and directors in the United States

All of our directors and officers are residents of Canada.  Consequently, it may be difficult for United States investors to effect service of process within the United States upon directors or officers who are not residents of the United States, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under the Exchange Act, as amended.  A judgment of a U.S. court predicated solely upon such civil liabilities may be enforceable in Canada by a Canadian court if the U.S. court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter.  There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or us predicated solely upon such civil liabilities.

Our contracts may be governed by the laws of foreign jurisdictions

The various material agreements to which we are a party are governed by the law of several different countries and jurisdictions and there is no assurance that such agreements can be enforced in the courts of Canada.  The inability to enforce such agreements in Canada may have a material adverse effect on our business.

ITEM 4

INFORMATION ON THE COMPANY

A.

History and Development of the Company

ThrillTime Entertainment International, Inc., a British Columbia corporation (the Company), through its wholly owned subsidiaries, Superstar Dragsters, Inc., a Nevada corporation (Superstar), Skycoaster, Inc., a Nevada corporation (Skycoaster), and ThrillTime Entertainment (US), Inc., a Nevada corporation (collectively, as applicable, the Company), are in the business of designing, prototyping, manufacturing and selling actual experience, amusement rides for destination and regional amusement thrill parks and family fun centers.

The Company was incorporated on August 29, 1988, as a British Columbia corporation under the name Aramis Ventures Ltd.  In 1992, the Company, under new management, changed the nature of its business from mineral exploration to designing, manufacturing and marketing amusement park rides.  The Company discontinued all of its mineral exploration activities in connection with its change of business.  On April 5, 1994, the Company changed its name to Newera Capital Corporation.  On August 12, 1997, the Company changed its name to its current name, ThrillTime Entertainment International, Inc.  The memorandum of the Company was amended on January 22, 1999 to increase the authorized capital from 50,000,000 to 100,000,000 shares without par value (Common Shares).

The registered office of the Company is located at #322  4585 Canada Way, Burnaby, British Columbia, V5G 4L6.  Its principal executive office is located at #1900 - 355 Burrard Street, Vancouver, British Columbia, V6C 2G8, and its phone number at that address is (604) 682-7737.

Neither the Company nor any of its subsidiaries have been subject to any bankruptcy, receivership or similar proceedings.  Where the context requires, the term Company includes the subsidiaries of the Company.

The Companys common shares commenced trading on the Vancouver Stock Exchange on September 14, 1989, now the TSX Venture Exchange (the TSX Venture), and is currently traded under the symbol THL.  The Companys common shares have been quoted on the National Securities Dealers Association Over the Counter Bulletin Board (OTCBB) since January 15, 1996, and is quoted under the symbol THLL-F.  (See Nature of Trading Market.)

There have been no indications of any public takeover offers by third parties in respect to the Companys shares or by the Company in respect of other companies shares which have occurred during the last and current financial year.

B.

Business Overview

The Company is in the business of developing, manufacturing and marketing amusement park thrill rides.  The Company currently markets two such thrill rides:

The Skycoaster®

In 1998, the Company acquired rights to the Skycoaster®, which is currently installed in 80 amusement parks throughout the world.  The Skycoaster® consists of a swing, suspended by steel flight cables from either an arch or an A-Frame structure.  One, two or three people (flyers) are harnessed and attached to the flight cables.  A steel launch cable suspended from a launch tower behind the flyers is attached to the flyers.  The flyers are then towed to the top of the launch tower.  Once the flyers have reached the top of the launch tower, one flyer pulls a rip cord device, and all of the flyers free fall until the flight cables take hold of the flyers and swing them back and forth in a pendulum motion.

The Top E®

In 1992, the Company began developing a thrill ride called the Top E®, which is currently installed in 4 amusement parks in the U.S.  The Top E® package consists of parallel lanes of metal tracking, and a series of 18 foot dragster cars, each with a fully powered General Motors 300 horse power engine, a control tower and a complex computer hardware and software system that controls the starting line, the timing, the braking and safety systems of the ride.  Riders are able to control the speed with their own gas pedal and have an actual race experience with the drivers in the other lanes.

The SkySpiderTM

The Company is in the process of introducing a new ride concept called the SkySpider.  The SkySpiderTM is currently in the developmental and engineering stages and is being developed internally by the Company.

The Amusement Park Ride Industry

The amusement park and ride industry in North America can be characterized based on two types of competitors, which also represents the Company’s target market:

Large Corporations and Amusement Park Developers:  There are a small number of very large corporate firms that develop and operate destination amusement theme parks and resort areas.  The large corporations include, among others, Disney, MCA, Anheuser Busch, Cedar Fair, and Six Flags, Inc.  These parks are generally built in conjunction with existing attractions, studios or other facilities, such as Universal City in Burbank, California, or on a stand-alone basis, such as Disney World and EPCOT Center in Orlando, Florida and Disneyland in Anaheim, California.  In some cases, developers of theme parks have also designed and installed amusement park rides.

Private Companies:  The remaining segments of the United States amusement ride and park markets include a large number of privately or family-owned businesses, which have developed in particular cities or regions and have operated as independent, privately held enterprises or structural and engineering companies that build a single product line, such as roller coasters or ferris wheels and sell them to the parks.

Traditionally, rides have been manufactured by private enterprises or structural engineering companies which have built and sold rides sometimes referred to as hard rides.  Hard rides are traditional mechanical rides that entertain riders through physical movement or ride experiences.  Hard rides include (i) thrill rides, such as roller coasters, bungy jumping and high speed spinning rides and (ii) specialty rides, such as carousels and ferris wheels.  The Companys Top E® and Skycoaster® are thrill rides.  Hard rides are generally sold either on a pre designed-to-build or a specialty manufacturing basis.

In recent years, with the advent of computer and multi-media systems, there has been a trend to develop virtual reality rides, which provide computerized simulations of hard or thrill rides.  The Company does not currently intend to develop or market any virtual reality rides.

The Companys Business

Business Strategy

In the early 1990s, the Companys management identified a potential business opportunity to manufacture, install and service hard rides in various mid-sized and regional amusement parks.  The Company believed that it could develop a market for thrill rides that it designed, developed and manufactured and achieve certain economies by replicating installations of these rides in other amusement parks.

In addition, through analyzing the existing industry, management recognized that hard ride manufacturers generally sold their rides to the user.  This practice resulted in only a single revenue event, rather than an opportunity to participate in ongoing revenues generated from the ride or amusement attraction.  As an integral part of its business strategy, the Company generally  arranges for the manufacture and sale of its attractions to amusement parks and retains a license, which entitles the Company to royalties based on revenues from ridership, merchandise, rider videos, photography and advertising generated by the thrill ride attraction.  The Company believes that the revenues generated from sales of rides, replacement parts sales and on-going licensing royalties will provide working capital for its internal operations and growth strategies.  The Company currently outsources manufacturing and marketing functions and uses internal purchasing agents to minimize its overhead expenses.  (See Description of Business - The Companys Manufacturing and Procurement Strategy.)

There can be no assurance that the Company will continue to successfully market the Skycoaster®, Top E® attractions, introduce a new product concept known as the SkySpiderTM or successfully develop other projects or that such projects, if developed, will generate any revenues or profits from operations.

The Company’s Market Approach

In the amusement ride industry, most amusement ride manufacturers sell their rides without retaining a residual royalty or other revenue interests.  As a result, after an initial sale, amusement ride manufacturers have not had an on-going source of cash flow from their rides.

To address this limitation, the Company sells its rides or attractions and concurrently enters into a license for the operation of the Top E® and Skycoaster® attractions and the use of the accompanying trademarks.  The Company receives the initial sales price, and also receives on-going cash flow from participation in royalties, joint venture revenue, merchandising, and video/photography opportunities.  The on-going cash flow will enable the Company to share in the success of its attractions while allowing the Company an internal source of funds to develop new attractions, such as the SkySpiderTM, and to make acquisitions.

Based on the Company’s experience, the Company believes that the amusement ride industry in North America is largely composed of smaller tightly-held or family-owned ride manufacturers, which may present the Company with an opportunity to make acquisitions of additional amusement ride attractions to market to end users.

The Companys Marketing Strategy

The Companys marketing plan is based on a strategy of generating revenues from:

•

the sale of the Top E® and Skycoaster® attractions;

•

the introduction and sale of the SkySpiderTM attraction;

•

royalties based on on-going ride usage or revenue; and

•

royalties on ancillary products, videos and photography, related merchandise, advertising and revenues from joint ventures.

The Company’s Manufacturing and Procurement Strategy

The Company does not own or operate a manufacturing facility and relies primarily on third-party vendors to manufacture components for its Skycoaster® and Top E®.

The Company contracts with several third-party vendors to manufacture Skycoaster® components, which are delivered to and consolidated at the buyers site for installation and construction.  This approach will be used for the SkySpiderTM.

The Top E® consists of components that are purchased from third-party vendors under contractual or supply arrangements.  These components include the electrical and computer control systems and software, steel/metal fabrication, braking systems, and the dragster cars.  To date, the dragster cars have been manufactured and assembled in the Salt Lake City, Utah, area with the final assembly being done by Morgan Valley Manufacturing, Inc. (Morgan Valley), on a fixed price contract basis with the Company.  Future contracts may provide incentives to Morgan Valley for quality, cost savings and timely delivery.  The Companys manufacturing outsourcing has relieved it of the start-up and overhead costs of a manufacturing plant and of maintaining or financing significant related inventory. The Company believes it will have sufficient lead time to allow it to plan, coordinate and adapt its manufacturing requirements in advance.

The Company generally enters into new contractual arrangements once a new sale to a customer is finalized.  There can be no assurance that the Company will be able to continue to procure components for its Skycoaster® and Top E® in a timely manner, if at all, or on commercially reasonable terms.  In the event the Company is unable to procure such components at reasonable prices and in a timely manner, the Companys delivery of customer orders may be delayed and the Companys business and results of operations may be adversely affected.

The Companys Delivery and Support Programs

The Company provides each attraction purchaser with detailed engineering requirements to install the Skycoaster® , Top E® and when developed, the SkySpiderTM ride.  The purchaser can elect to do its own construction and installation, retain an independent contractor or have the Company arrange for the construction and installation.

The Company supervises the final installation of the ride components and provides on-site training on safety, operations, maintenance and inspections upon installation of either ride.  The Company tests and certifies ride operators prior to allowing a purchaser to operate a Skycoaster® or Top E® ride.  The Company provides operators with periodic refresher courses in operations and safety.

Generally, the buyer takes delivery of its Skycoaster® or Top E® at a manufacturing facility designated by the Company pursuant to a standard form of purchase and license agreement.  Delivery to countries in Asia, Europe and South America are made by container shipment, which is economical and enables secure packaging of the rides.  The Company anticipates that it will generate additional revenues from the supply of parts and service to operating parks.

The Companys Research and Development

In 1998, the Company acquired a company which owned the patents and trademarks related to the Skycoaster® ride system.  The Skycoaster® was fully developed at that time.

The Company developed the Top E® attraction using a combination of its own personnel and outside resources.

The Company is in the development phase of the SkySpiderTM using a combination of its own personnel and outside resources.

The Company spent $11,210, $9,053, and $1,661 on research and development for the fiscal years ended July 31, 2003, 2002, and 2001, respectively.



The Companys Proprietary Systems



Skycoaster®:  The Skycoaster® proprietary system is a combination of the flight and launch towers, flight cables, launch cable and winch, harnesses, loading platform, copyrighted manuals and logos and the registered trademarks and patents.

Top E®:  The Top E® dragster ride is a patented amusement ride, and the computer operating safety hardware and software developed for the Top E® are also proprietary.  The Company believes these systems can be adapted to other attractions the Company may develop.  The Company anticipates that continued use and adaptation of the proprietary system may allow the Company to develop similar systems and applications for other rides.  Top E®, Top Eliminator® and Top Eliminator Dragsters® are all registered trademarks of the Company.

Since the Company is only at the concept stage for the SkySpiderTM, the proprietary nature and extent of trademarking has not yet been determined.

The Company’s Proprietary Protection

The Company has obtained United States patents for the Top E® and Skycoaster® attractions.  The Company has made international PCT patent filings for the Top E® and Skycoaster® attractions and national filings in most of the major countries of the world to obtain international patent protection. The Company has also developed proprietary information with respect to the Top E® attractions computer software safety and operating systems.  Since the Company is only at the concept stage for the SkySpiderTM, the proprietary nature and extent of trademarking has not yet been determined. There can be no assurance that the Company will successfully obtain any new patents, protect its existing US and foreign patents or that such patents, if granted, will protect the Company from potential competitors.

Material Agreements Related to the Companys Business

Acquisition of Skycoaster® Attraction

On December 1, 1997, the Company entered into an agreement with Skycoaster, its wholly owned subsidiary, Sky Fun 1, Inc. (Sky Fun) and William J. Kitchen (Kitchen), as amended March 18, 1998 and June 16, 1998, whereby Skycoaster acquired 100% of the issued and outstanding shares of Sky Fun. The acquisition closed on July 3, 1998.

The Company agreed to purchase the shares of Sky Fun for a total of $12,075,000, consisting of a cash payment of $6,000,000 and 607,500 of the Companys common shares at a deemed value of $10 per share.  The Company also agreed to make additional payments or issue additional shares to Kitchen in the event (i) the market price of the Companys shares was less than $10 per share and/or (ii) the average daily trading volume of the Companys shares for the 30 consecutive trading days prior to July 3, 1999 was less than 15,000 shares.  The Company assigned certain intellectual property it acquired from Sky Fun to Kitchen to secure payment, and Kitchen granted an exclusive license to the intellectual property to the Company.

Based on the closing share price of the Companys shares on July 3, 1999, the Companys liability to Kitchen relating to the share price provisions was $5,950,470.  The Company and Kitchen subsequently agreed to settle this liability for $4,000,000, pursuant to a memorandum of understanding dated August 17, 1999, as amended November 2, 1999.  The Company paid the settlement amount on November 8, 1999.  The $543,522 difference between the contingent amount due, calculated at the time of the acquisition, and the ultimate settlement price of $4,000,000, has been recorded as a reduction in the value of the patent rights acquired.

Under the terms of the memorandum of understanding, all obligations under the prior agreements were cancelled.  The agreement provided that Skycoaster would sell a new Skycoaster® ride to Kitchen, the size of which is yet to be determined, at a 10% discount.  In addition, Kitchen agreed to assign his patent in a new ride called SkyMax to Skycoaster for $1 provided that Skycoaster develop SkyMax within one year of the date of the agreement. The Company determined that it was not economically feasible to develop SkyMax, and the patent reverted back to Kitchen on November 8, 2000.

In November 1999, the Company completed a $4,000,000 financing througha non-convertible secured loan with a rate of interest of 10.5% per annum, which will be amortized as to principal and interest over five years.  The Company used the funds to complete the acquisition of Sky Fun, pursuant to the terms of its memorandum of understanding with Kitchen.  Under the terms of the loan agreement, the Company has pledged to the lender its common shares of Skycoaster, as well as the Skycoaster® worldwide patents, trademarks and royalty stream.  The loan may be repaid at any time with a penalty equal to the interest the lender would have otherwise earned over the remaining life of the loan.

In connection with its acquisition of Sky Fun, the Company also entered into a consulting agreement with Kitchen, which terminated on July 3, 1999.

At the time of the acquisition, Sky Fun was involved in a contract dispute with a licensee of one of its Skycoaster® products.  In November 1998, an arbitration tribunal awarded $1.4 million to the Company in resolution of the dispute, which was subsequently settled for cash of $1.2 million.  This receipt, net of taxes payable of $449,000, was recorded as an adjustment to the value of the patent rights acquired in 1999.

Malibu Entertainment Worldwide, Inc. (Malibu)

During fiscal 1997, the Company entered into a master sales and license agreement with Malibu to provide 32 lanes of the Top E® ride in fiscal 1997, 40 lanes in fiscal 1998 and 48 lanes in fiscal 1999.  Malibu defaulted on the agreement in 1999.

During fiscal 2000, the Company and Malibu entered into a settlement agreement whereby Malibu paid the Company $1.1 million in cash and issued to the Company Malibu common shares having a trading value at the date of issuance of $1.5 million.  Under the terms of the settlement agreement, Malibu was relieved of its obligation to acquire any additional Top E® lanes, and the Company delivered to Malibu 20 completed lanes that had been partially paid for.  The Company received 4,633,922 shares of Malibu that had an average trading value of $0.3237 per share at the time of issuance.  The shares received were subject to a one year hold period that expired February 18, 2001. The settlement agreement provided Malibu the option to purchase the shares from the Company for cash of $1.5 million to August 16, 2000, which expired unexercised.

As a result of the above restrictions and other factors, the Company initially recorded the Malibu shares received at their estimated fair value of $500,000.  On July 31, 2000, the quoted market value of the Malibu shares was $0.22 per share and on November 10, 2000, the quoted market value of Malibu shares had declined to $0.045 per share.  As a result of this and other factors, the Company recorded a provision for the decline in value of the Malibu shares of $300,000 as at July 31, 2000.  On July 31, 2001, the quoted market value of the Malibu shares was $0.02 per share.  As a result of this and other factors, the Company recorded a provision for the decline in value of the Malibu shares of $199,999 to $1. On January 21, 2002, Malibu announced that it would terminate the registration of its common shares under the Securities and Exchange Act of 1934 and to cause its common shares to cease to be traded on the OTC Bulletin Board on January 24, 2002.

The master sales and license agreement was replaced by individual license agreements for each location Malibu installed the Top E® attraction.

On July 5, 2002 the Company consented to the assignment by Malibu of two of its license agreements along with all of its Top E® inventory to Festival Fun Parks LLC (FFC) (d/b/a Palace Entertainment).  FFC have agreed to observe and perform all covenants and obligations under the license agreements.  Malibu has also surrendered all rights to territorial protection under the December 1999 Settlement Agreement with the Company and FFC has agreed to observe and be bound by the inventory obligations contained in the Agreement.  FFC have agreed to refrain from installing any of the inventory at any location without entering into a License Agreement with the Company.

Purchase and License Agreements

The Company sells its attractions under a purchase and license agreement which specifies the price, and terms of payment and, provides the purchaser with a license to operate the attraction and to use the trademarks associated therewith.  In the past the term of each agreement began on the date of execution and continued for the life of the patent.  The Skycoaster® patent expires on August 19, 2012 and the Top E® patent expires on December 31, 2015. Throughout the term of each purchase and license agreement, the Company generally grants each park exclusive territory rights within a specified mile radius of the location of the ride.

Each purchase and license agreement also includes a royalty payable to the Company equal to a negotiated percentage of the ticket price for a ride on the attraction, as well as a royalty based on the selling price of the sale of products or services bearing the trademarks.  In most cases, the Company has minimum royalty payments per year depending on the agreement with the park.In some cases, depending on individual negotiations, the Company will be paid a one time royalty payment on the date the purchase and license agreement is executed.  Currently, Skycoaster has joint venture agreements with two amusement parks, under which the parks share in the revenues generated from ride and merchandise sales.  For Top E®, royalties vary according to individual negotiations.

C.

Organization Structure

The following table sets forth the name of each material subsidiary of the Company, the jurisdiction of its incorporation and the director or indirect percentage ownership by the Company in such subsidiary.

|Name of Subsidiary                  | Jurisdiction of Incorporation | Percentage Ownership
|----------------------------------- | ----------------------------- | --------------------
|Superstar Dragsters, Inc.           | Nevada                        | 100%                
|Skycoaster, Inc.                    | Nevada                        | 100%                
|ThrillTime Entertainment (US), Inc. | Nevada                        | 100%                

D.

Property, Plant and Equipment

The Companys corporate headquarters are located in Burnaby, British Columbia.  In an effort to streamline both its Skycoaster and Superstar Dragsters operations, in addition to cutting costs, the Skycoaster operations office was moved from Longmont, Colorado to Layton, Utah in August 2002.  The Company and Skycoaster now lease approximately 4,989 square feet of office space at an annual aggregate rental of approximately $45,000.  The leases expire on March 31, 2004 and July 31, 2005, respectively.  Management intends to renew its Burnaby lease at comparable market rates. Management believes these offices are adequate for its needs.

ITEM 5

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis explains trends in the Companys financial condition and results of operations for the three fiscal years ended July 31, 2003, 2002 and 2001.  This discussion and analysis of the results of operations and financial condition of the Company should be read in conjunction with the audited financial statements and the related notes, as well as statements made elsewhere in this Form 20-F.  The financial statements have been prepared in accordance with Canadian GAAP which conforms to U.S. GAAP, except as described in Note 15 to the Consolidated Financial Statements included herein.  Unless expressly stated otherwise, all references to dollar amounts in this section are in United States dollars.  The discussion is based on the consolidated financial statements as prepared in accordance with Canadian GAAP.

The Company is in the business of developing, manufacturing and acquiring proprietary actual experience amusement rides for sale to destination and regional amusement parks and family fun centers throughout the world.

The Companys operations from 1995 through 1998 consisted primarily of developing and refining the Top E® attraction, and in 1996, the Company commenced marketing the attraction as well as continuing the on-going development of the Top E® attraction.  In 1998, the Company acquired the Skycoaster®, a fully developed amusement ride and is currently marketing that ride to buyers.

Critical Accounting Policies

Our financial statements are prepared in conformity with Canadian generally accepted accounting principles, which require management to make estimates and assumptions which can affect the reported balances.  In determining estimates of net recoverable amounts and net realizable values, or whether there has been a permanent impairment in value, for accounts receivable, inventories, capital assets, investments, patent rights and other assets, the Company relies on assumptions regarding applicable industry performance and prospects, as well as general business and economic conditions that prevail and are expected to prevail.  Assumptions underlying asset valuations are limited by the availability of reliable comparable data and the uncertainty of predictions concerning future events.

By nature, asset valuations are subjective and do not necessarily result in precise determinations. Should the underlying assumptions change, the estimated net recoverable amounts and net realizable values may change by a material amount.  Our significant accounting policies are set forth in Note 2 to our consolidated financial statements, which should be read in conjunction with managements discussion of the Companys critical accounting policies and estimates set forth below.

Going Concern and continuing operations

Our financial statements have been prepared on the going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities and commitments in the ordinary course of business notwithstanding that, at July 31, 2003, the Company had a working capital deficiency of $2,551,245, shareholders deficiency of $2,503,872, non-compliance with terms in certain debt instruments, negative cash flows from operating activities for fiscal 2003, and with income being generated in the current fiscal year primarily due to a gain on the settlement of convertible securities, and losses in each of the previous two fiscal years.  The Company has a history of losses, and operations to date have been primarily financed by long-term debt and equity transactions.  As a result, the Companys future operations are dependent upon the identification and successful completion of additional long-term or permanent equity financing, the continued support of creditors and shareholders, and, ultimately, the achievement of profitable operations.  If the Company is unsuccessful, secured creditors may foreclose on the assets of the Company or the Company will be required to reduce operations or liquidate assets. The Companys consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern

Revenue recognition

Revenues from the sale of entertainment rides are recognized by the percentage of completion method whereby revenue recognized in the statement of operations is the percentage of estimated total revenue relating to the contract that incurred costs to date bear to estimated total costs, after giving effect to estimates of costs to complete based upon most recent information. To the extent that payments received from the purchaser pursuant to the agreement are in excess of the revenue recognized, such excess is presented as deferred revenue on the balance sheet. Royalty revenues are recorded as earned in accordance with the specific terms and conditions of royalty agreements. Other revenues, consisting primarily of sales of parts, are recorded at the time of delivery.

Inventories

Inventories are stated at the lower of cost, on a first-in, first-out basis, and net realizable value.  We are required to make a periodic assessment of the net realizable value in valuing out inventory. Due to the lack of sales of the Top EliminatorÒ attraction, from 2000-2002, we wrote-down 100% of its finished goods and work in process, initially valued at approximately $1.2 million.



Capital assets

Capital assets are recorded at cost and are amortized over their remaining estimated useful economic life.  We amortize equipment on a declining-balance basis at between 20% and 30% per annum, and our Skycoasters on a straight-line basis over the term of their operating agreements (3-5 years).  We make an assessment of the estimated useful economic life of our capital assets for the purposes of amortization.

Deferred financing costs

Deferred financing costs relate to the issuance of convertible securities during 1998 and the secured loan during fiscal 2000. These costs are amortized to interest expense over the terms of the respective debt instruments.

Patent rights

Patent rights acquired as a result of business acquisitions are amortized on a straight-line basis over their remaining useful life, which on acquisition, was estimated to be 5 years. The SkycoasterÒ patents and trademarks expire 2010 in the US and 2012 internationally.  The Top EliminatorÒ patents and trademarks expire between 2012-2016. As at July 31, 2003, the Companys patents have been fully amortized, even though royalty revenue from the patents and existing license agreements will continue until at least 2010.

Stock based compensation

We account for direct share awards and grants of options to non-employees using the fair value method of accounting for stock-based compensation.  Options granted to employees and directors will be accounted for using the intrinsic value method of accounting for stock-based compensations.  Accordingly, no compensation cost has been recognized for such grants of options to employees and directors, as the exercise price is equal to the market price of the stock on the grant date.

Under the fair value based method, stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable.  The fair value of stock-based payments to non-employees is periodically re-measured until counterparty performance is complete, and any change therein is recognized over the period and in the same manner as if the Company had paid cash instead of paying with or using equity instruments.  The cost of stock-based payments to non-employees that are fully vested and nonforfeitable at the grant date is measured and recognized at that date.

Translation of foreign currencies

The Companys functional currency is the U.S. dollar.   Amounts denominated in foreign currencies but for which the functional currency of the operation is the United States dollar are translated at the exchange rate in effect at the transaction date.  Monetary assets and liabilities denominated in currencies other than the functional currency are translated at the exchange rate prevailing at the balance sheet date.  Exchange gains and losses on translation are included in earnings.

A.

Operating Results

The Company generates revenues by installing its attractions pursuant to purchase and license agreements, which typically include a license to operate the Skycoaster® or Top E® attraction and to use the trademarks associated therewith.   Each purchase and license agreement also includes a royalty payable to the Company equal to a negotiated percentage of the ticket price for a ride on the attraction, as well as a royalty based on the selling price of the sale of products or services bearing the trademarks.  In most cases, the Company has minimum royalty payments per year depending on the agreement with the park.

Year ended July 31, 2003 Compared to July 31, 2002

Revenues:  Aggregate gross revenues from product sales, royalties and other revenue excluding interest income were approximately $2.2 million for the fiscal year ended July 31, 2003 compared to $3.0 million for the fiscal year ended July 31, 2002.  Revenue from sales in the United States constituted approximately 90% of the Companys total revenue in fiscal 2003 compared to 92% in fiscal 2002.  Revenues for 2003 were down compared to 2002 due to lower ride sales (one sale in 2003 versus two sales in 2002); and a general decline in ticket sales and royalties due to lower attendance at parks as a result of September 11, 2001 and the current U.S. economy.

Gross revenues from the Top E® ride were $217,415 for the fiscal year ended July 31, 2003, compared to $394,761 for the fiscal year ending July 31, 2002.  Included in gross revenues from the Top E® ride was royalty income of $78,555 for the fiscal year ended July 31, 2003, compared to $86,866 in fiscal 2002.

Gross revenues from the Skycoaster® ride were $2.0 million for the fiscal year ended July 31, 2003, compared to $2.6 million for the fiscal year ending July 31, 2002, which included royalty income and joint venture revenue of $1,017,560 in fiscal 2003, compared to $1,012,516 in fiscal 2002.  The $0.6 million net difference resulted from lower Skycoaster® sales (one versus two in 2002).

Royalty revenue was $1,024,889 for the fiscal year ended July 31, 2003, compared to $982,547 for the same period in fiscal 2002, an increase of $42,342 or 4.3% due to the conversion of a Skycoaster® attraction from a joint venture arrangement to a sale and royalty arrangement plus the incremental royalty revenue associated with a ride sale made in 2002.

Other revenue was $261,166 for the fiscal year ended July 31, 2003, compared to $299,650 for the same period in fiscal 2002, a decrease of $38,484. Included in other revenue of $261,166 was $175,000 for the sale of a Skycoaster® that was owned by the Company and operated under a joint venture agreement.

The Company believes that revenues from product/part sales should increase during the fiscal year ending July 31, 2004, compared to fiscal 2003, as the Company is in negotiations to complete the sale and installation of two to three rides, joint ventures and the introduction of the SkySpiderTM.  Royalty revenues are expected to increase slightly during the fiscal year ending July 31, 2004, compared to fiscal 2003, as a result of new ride installations, offset by park closures.  There can be no assurance that historical results will be any indication of future results or that sales and installation will occur, or that revenues will increase as anticipated by management.

The net income for fiscal 2003 was $4.8 million or $0.26 per share, compared to a net loss of $2.4 million or $0.14 per share for the prior year, an increase of $7.2 million.  The $7.2 million change is attributed primarily to the $6.1 million gain on the one-time settlement of convertible securities, and to a lesser extent to $.162 million in lower interest associated with the convertible securities and other debt, the final $.66 million in amortization costs associated with the patent rights and lower operating expenses.

The $6.1 million gain on the one-time settlement of convertible securities resulted from the Company entering into a Satisfaction and Release Agreement dated December 20, 2002 with the holder of a $5,950,000 convertible debenture (the Debenture), under all of the Companys obligations thereunder were satisfied and discharged through a combination of cash and common shares of the Company.  Under the terms of the agreement, the Company agreed to pay $120,000 in cash and issued 750,000 common shares to the holder in full and final satisfaction of the Debenture obligation. $60,000 of the $120,000 was paid on January 23, 2003 and the Company signed a promissory note for the remaining $60,000, payable in four monthly installments commencing on July 31, 2003.  The net effect of the settlement was a gain of $6,116,246 on the settlement of the Debenture.  The net income result for fiscal 2003 is not indicative of future performance as the Company does not anticipate any future adjustments on the magnitude of gain on the one-time settlement of the Debenture.



Amortization of capital assets in the amount of $44,318 ($103,326 in 2002), amortization of patent rights in the amount of $1,005,160 ($1,664,946 in 2002) and write-down of assets, legal and other costs in the amount of $1 ($331,000 in the 2002) were recorded in the year.  The Company had income tax expense of $57,124 for the fiscal year ended July 31, 2003, compared to $80,031 in fiscal 2002.

Operating Expenses: Operating expenses, excluding interest expense, amortization, write-downs and income taxes, for the fiscal year ended July 31, 2003 were $1,333,765 for the fiscal year ended July 31, 2003, compared to $1,438,461 for fiscal 2002, a decrease of $104,696 or 7.3%. Operating expenses include $399,708 for general liability and property insurance coverage, up $212,839 or 114% for the same period in 2002.  Insurance premiums charged to the amusement ride industry as a whole have risen dramatically over the past two years, primarily as the continuing result of the events of September 11, 2001 as well as risks associated with the amusement industry. Marketing and selling expenses decreased to $37,178 in the fiscal year ended July 31, 2003, compared to $56,984 in fiscal 2002, and research and development expenses relating to trademarking and design fees for new product concepts increased to $11,210 in fiscal 2003, compared to $9,053 in fiscal 2002. The Company believes that generally expenses should continue to decrease during the fiscal year ending July 31, 2004, compared to fiscal 2003, as the Company has implemented initiatives to contain overall general and administrative expenses by consolidating certain functions.  There also can be no assurance that historical results will be any indication of future results or that other expenses will continue to decline as anticipated by management.

Due to the state of the insurance industry, current insurance premiums will reflect historical levels and, in fact, such rates may increase.  The Company cannot determine if the trend in increased insurance premiums will continue in fiscal 2004 or the overall effect that an increase, if any, will have on the Companys overall general and administrative expenses.  Also, in the event that accidents or incidents occur, the Company may incur increased legal expense in connection with its $25,000 deductible per occurrence required under its current policy to defend itself.

Year ended July 31, 2002 Compared to July 31, 2001

Revenues:  Aggregate gross revenues from product sales, royalties and other revenue excluding interest income were approximately $3.0 million for the fiscal year ended July 31, 2002 compared to $4.2 million for the fiscal year ended July 31, 2001.  Revenue from sales in the United States constituted approximately 92% of the Companys total revenue in both fiscal 2002 and fiscal 2001.  Revenues for 2002 were down compared to 2001 due to lower ride sales (two sales in 2002 versus four sales in 2001); a discount that was provided to a customer to assist with funding a re-engineered Skycoaster® model, and a general decline in ticket sales and royalties due to lower attendance at parks as a result of September 11, 2001 and the condition of the U.S. economy.

Gross revenues from the Top E® ride were $0.4 million for the fiscal year ended July 31, 2002, compared to $0.3 million for the fiscal year ending July 31, 2001.  Included in gross revenues from the Top E® ride was royalty income of $86,866 for the fiscal year ended July 31, 2002, compared to $104,317 in fiscal 2001.

Gross revenues from the Skycoaster® ride were $2.6 million for the fiscal year ended July 31, 2002, compared to $3.9 million for the fiscal year ending July 31, 2001, which included royalty income and joint venture revenue of $1,012,516 in fiscal 2002, compared to $1,125,790 in fiscal 2001.  The $1.3 million net difference resulted from lower Skycoaster® sales (two versus four in 2001) amounting to $1.2 million, and a reduction in joint venture and royalty income of approximately $100,000 due to lower attendance and ridership experience at parks.

In the spring of 2002, the Company initiated a project to re-engineer one its Skycoaster® rides.  To offset the design, engineering, development and manufacturing costs, an agreement was reached with a customer to fund the prototype.  The total reengineering and manufacturing costs for the ride amounted to $221,241, of which $199,237 or 90% was funded by the customer.   The $199,237 was included in product sales and the $221,241 was included in cost of sales.  The impact of this treatment reduced overall gross margin for fiscal 2002 from 39.9% to 33.9%.

Royalty revenue was $982,547 for the fiscal year ended July 31, 2002, compared to $1,141,134 for the same period in fiscal 2001, a decline of $158,587 or 13.9% due to lower attendance and ride ticket sales within the amusement ride industry.

Other revenue was $299,650 for the fiscal year ended July 31, 2002, compared to $88,974 for the same period in fiscal 2001, an increase of $210,676. Included in other revenue of $299,650 was $157,814 in previously deferred revenue which has now been recognized due to expiration of a Top E® contract.

Loss:  The net loss for fiscal 2002 was $2.4 million or $0.14 per share, compared to a net loss of $3.1 million or $0.18 per share for the prior year, a decrease of $0.7 million.

Operating income before interest, amortization, write-downs and income taxes was $412,191 or $0.02 per share for the fiscal year ended July 31, 2002, compared to $443,762 or $0.03 for fiscal 2001, a decrease of $31,571.

Amortization of capital assets in the amount of $103,326 ($117,003 in 2001), amortization of patent rights in the amount of $1,664,946 ($1,664,947 in 2001) and write-down of assets, legal and other costs in the amount of $331,000 ($876,495 in 2001) were recorded in the year.  The write-down of assets, legal and other costs of $876,496 or $0.05 in fiscal 2001 were related to write-downs of Top EliminatorÒ inventory ($676,496) after an assessment of the carrying value relative to estimated net realizable value and the Companys investment in Malibu ($199,999) to reflect the decline in current market value of the Malibu shares.  The Company had income tax expense of $80,031 for the fiscal year ended July 31, 2002, compared to $193,465 in fiscal 2001.

Operating Expenses: Operating expenses, excluding interest expense, amortization, write-downs and income taxes, for the fiscal year ended July 31, 2002 were $1,438,461 for the fiscal year ended July 31, 2002, compared to $1,297,524 for fiscal 2001, an increase of $140,937 or 10.9%. This increase was due in part from an increase in general liability insurance, sales and travel expenses and costs associated with the move to Utah. Marketing and selling expenses decreased to $56,984 in the fiscal year ended July 31, 2002, compared to $68,614 in fiscal 2001, and research and development expenses relating to trademarking and design fees for new product concepts increased to $9,053 in fiscal 2002, compared to $1,661 in fiscal 2001. The Company believes that expenses should decrease during the fiscal year ending July 31, 2003, compared to fiscal 2002, as the Company implemented an initiative to contain overall general and administrative expenses by consolidating certain functions.



B.

Liquidity and Capital Resources



At July 31, 2003, the Company had a working capital deficiency of $2,551,245, after classifying the full amount of long-term debt of $2,952,240 as a current liability.  Cash on hand July 31, 2003 amounted to $202,943, accounts receivable and prepaids aggregated $397,827 and inventory amounted to $188,083.  Current liabilities including $2,952,240 relating to current classification of three debt instruments totaled $3,340,098.



During 2003, the Company used $232,917 in operations compared to generating  $43,148 in 2002.  Net cash flows used in financing activities amounted to $118,703 in 2003 compared to $557,153 in 2002.  The $118,703 relates to principal payments of long-term debt amounting to $184,562 net of the issuance of common shares for $65,859 pursuant to a private placement



During the year the Company sold a ride pursuant to a joint venture agreement for $175,000.



Effect of Settlement of Debenture



On January 23, 2003, the Companyentered into a Satisfaction and Release Agreementwith the holderof a $5,950,000 the Debenture to satisfy and discharge all of the Companys obligations thereunder through a combination of cash and common shares of the Company. The Debenture, including accrued interest, was to have automatically converted into 6,368,247 common shares of the Company at $1.11 per share on December 31, 2002.  If the full conversion had taken place, the Debenture holder would have held a block of shares representing 26.68% of the post conversion shares of 23,872,744, (consisting of the pre-conversion number of shares outstanding of 17,504,497 plus the conversion shares of 6,368,247).



Under the terms of the agreement reached with the holder of the Debenture, the Company agreed to pay $120,000 in cash and issued 750,000 common shares to the holder in full and final satisfaction of the Debenture obligation. $60,000 of the $120,000 was paid on January 23, 2003 and the Company signed a promissory note for the remaining $60,000, payable in four monthly installments commencing on July 31, 2003.  On January 20, 2003 the Company completed a 2,000,000 unit private placement.  Each unit consisted of one common share at Cdn. $0.05 per share and one share purchase warrant exercisable at Cdn. $0.10 per share until January 20, 2004.  All securities issued in connection with this transaction are subject to a one year hold period and cannot be sold or transferred until January 20, 2004.  The proceeds received by the Company from this transaction were used to make the initial $60,000 cash payment to the Debenture holder.



The effect of the settlement as at January 23, 2003 is as follows:



|Convertible debenture plus accrued interest, including equity component of $495,381, prior to discharge | $7,564,127 
|------------------------------------------------------------------------------------------------------- | -----------
|Less consideration paid to Debenture Holder:                                                            |            
|Cash                                                                                                    | (60,000)   
|Note payable                                                                                            | (60,000)   
|Common Shares issued  750,000 at US $1.11                                                              | (832,500)  
|Equity component of debenture                                                                           | (495,381)  
|                                                                                                        | (1,447,881)
|Gain on settlement of convertible securities                                                            | $6,116,246 



At the time of the settlement, the potential 26.68% holdings of the Debenture holder were reduced to 3.7% of the 20,007,297 outstanding common shares.



Debt



As described below, the settlement with the Debenture holder reduced the Companys overall debt from $9,958,925 as at July 31, 2002 to $2,952,240 as at July 31, 2003, a 70% reduction.



|                                                                                                                                                                                                              | July 31,
2003 | July 31,
2002
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | -------------
|Convertible securities which are unsecured, bear interest at 6% per annum and is convertible into common shares of the Company at a conversion price of $1.11 per share (net of equity component of $495,381) | $            | $5,500,000   
|Accretion of implicit interest in convertible securities                                                                                                                                                      | -             | 455,439      
|6% implicit interest on convertible securities                                                                                                                                                                | -             | 979,368      
|Less $60,000 of convertible debenture, plus accrued interest converted into common shares                                                                                                                     | -             | (55,381)     
|                                                                                                                                                                                                              | -             | 6,879,426    
|Deferred gain on modification of convertible securities, net of amortization of $476,502                                                                                                                      | -             | 62,697       
|Note payable bearing interest at 5% per annum                                                                                                                                                                 | 60,000        | -            
|Amount due for settlement agreement                                                                                                                                                                           | 235,573       | 360,135      
|Non-convertible secured loan bearing interest at 10.5% per annum                                                                                                                                              | 2,656,667     | 2,656,667    
|                                                                                                                                                                                                              | 2,952,240     | 9,958,925    
|Less current portion of long-term debt                                                                                                                                                                        | (2,952,240)   | (7,390,987   
|Long-term debt as at July 31, 2003                                                                                                                                                                            | $-            | $2,567,938   



Making up the debt balance of $2,952,240 is the remaining $2,656,667 of a $4,000,000 non-convertible secured loan associated with the purchase of Skycoaster, Inc. in June 1998, the $60,000 promissory note associated with the convertible debenture and $235,573 related to a settlement agreement.



In anticipation of low cash reserves during the off season  November through April, 2003 - the Company informed the secured loan lender that without a re-structuring of the current payment terms of the loan, there was a high probability that the February 15, 2003 and May 15, 2003 principal and interest payments of $261,320 per quarter would not be made on time. As of July 31, 2003 the Company was only able to pay $70,349, which covered the interest component of the February 15, 2003 payment. Subsequent to July 31, 2003, the Company made the outstanding February 15, 2003 payment, however, it has been unable to make the May, August and November 15th payments totaling $783,957.  The Company has not been successful in re-negotiating more favorable terms with the secured lender and, as a result of these missed payments, the loan is not in good standing.  No formal demand has been made and the Company has informally been given time to cure the default by seeking out alternatives.  Due to the default status of this loan, it has been classified as a current liability, increasing the working capital deficiency.



Pursuant to the Top Eliminator® settlement agreement, the Company was required to make a lump sum payment in the amount of $100,000 on or before August 1, 2003.  The Company did not meet its payment obligation and is currently attempting to re-negotiate a settlement.  Due to the default status of this agreement, it has been classified as a current liability, increasing the working capital deficiency.



Pursuant to the terms of the $60,000 promissory note associated with the settlement of the convertible debenture, the Company was required to make four monthly payments in the amount of $15,000 plus interest in July, August, September and October 2003.  The Company did not meet its payment obligations and is currently attempting to re-negotiate a settlement.  The promissory note is now due on demand and bears interest at 18% per annum until the entire amount is paid in full.



There can be no assurances that the Company will be successful in generating sufficient cash to pay down its debt, re-negotiate more favorable terms with its existing lenders and/or arrange for financing with a new lender.



Outlook



A major accomplishment during fiscal 2003 included settling the Companys obligations with the convertible debenture holder.  The Company also implemented organizational changes which decreased its overall operating expenses.  These improved the Companys overall financial results and balance sheet in fiscal 2003.



However, against the backdrop of a sluggish economy and limited ride sales due in part because of territorial limitations built into our existing licensing agreements, the Company continues to struggle with servicing its heavy acquisition debt load as well as debt related to a settlement reached with another party in 1998.  We are attempting to renegotiate with our creditors; however, payments to our lenders are in arrears in an amount totaling approximately $950,000 as of the date hereof.  In addition to our substantial debt burden, our general liability insurance premiums have tripled since the events of September 11, 2001, rising from $124,750 for $10 million coverage to $375,600 for $5 million coverage this past fiscal year.



The Company does not believe that issuing shares to eliminate or reduce the debt load is a viable alternative at this time, given the relatively low price of the Companys common shares.  During the past few months, the Company has pursued the following actions to improve its business:



•

attempted to re-negotiate more favorable terms with our current lenders by extending the loan amortization periods and taking advantage of lower interest rates;

•

negotiated with a potential lender to refinance existing secured debt;

•

explored selling its investments in the ride business to satisfy its debt; and

•

exploring alternative business models and relationships with strategic partners.



During the past 6-12 months, the Company has been unsuccessful in its efforts to re-negotiate more favorable terms with its current lender or to find a new lender willing to refinance its existing secured debt.  Given the uncertain future in the amusement ride industry, the Company has explored a variety of options, including selling its assets and/or business in order to explore other business opportunities.  The Company believes that it may successfully negotiate the sale of its assets, including the proprietary patents and future royalty revenue from existing license agreements related to the Skycoaster® and Top Eliminator® for an amount in excess of the $836,226 in total assets reported in the Companys consolidated balance sheet as at July 31, 2003.



Events Subsequent to July 31, 2003



On January 23, 2004, the Company entered a letter of intent with Crates Thompson Capital, Inc. (CTC) and S&S Worldwide, Inc. (S&S), under which CTC has agreed to acquire certain assets and S&S has agreed to acquire all of the outstanding shares of Skycoaster, Inc. and Superstar Dragsters, Inc. on the following terms and conditions:



•

CTC and the Company will enter into an Asset Purchase Transaction whereby 100% of the Companys $2.750 million loan obligation relating to a secured debenture will be assumed by CTC. In return, the Company will sell and relinquish 100% of its rights to receive future license, royalty and other fees associated with specific long term license agreements and contracts between Skycoaster and Superstar and their current customers.

•

S&S and the Company will enter into a Share Purchase Agreement and Revenue Share Agreement whereby with the sale of 100% of the common stock of Skycoaster and Superstar held by the Company, the Company will be entitled to the following future cash flows:

o

100% of the gross profits arising out of the potential sale of a Top Eliminator® to a specific customer

o

100% of the gross profits arising out of the potential sale of a Skycoaster® to a specific customer

o

100% of the proceeds from specific accounts receivable owing to the Company.

o

30% of gross profits arising from all future sales of Skycoaster and Superstar amusement rides and any related gross profits from parts, service, training, licensing and royalty income generated from those future sales

o

30% of gross profits, excluding future license, royalty and other fees, arising from the future sale and provision of parts, services and training required to support the Skycoaster and Superstar customer base and license agreements acquired by CTC under the Asset Purchase Transaction.

•

The transactions contemplated in the letter of intent are subject to the negotiation, execution and delivery of definitive agreements.



The Revenue Share Agreement between the Company and S&S is expected to terminate when the Company has earned and has been paid $2,950,000 in gross profits from the future sales and provision of Skycoaster and Superstar products and services.



The elimination of the $2.750 million secured debenture debt and the other liabilities contemplated with this pending transaction will immediately strengthen the Companys financial picture.  Under the Revenue Share Agreement, the Company, as a Marketing and Sales Partner, will continue its involvement in the two business and will be entitled to participate in future cash flows without having to incur escalating operating costs such as product liability insurance.



CTC and S&S are leading ride manufacturers, which is expected to allow both companies to take advantage of economies of scale, their world wide marketing and sales capabilities and stronger customer support structure in supporting the Skycoaster® and Top Eliminator®.



If the Company is successful in completing the transaction contemplated in the letter of intent, the Company is expected to be debt free and intends to pursue alternative business opportunities.



C.

Research and Development, Patents and Licenses, etc.

The Companys research and development activities over the past three fiscal years have focused on improvements to its Skycoaster® ride system and Top E® attraction.  The Company spent $11,210, $9,053, and $1,661 on research and development for the fiscal years ended July 31, 2003, 2002, and 2001, respectively.  In 1998, the Company acquired a company which owned the patents and trademarks related to the Skycoaster® ride system.  The Skycoaster® was fully developed at that time.  The Company developed the Top E® attraction using a combination of its own personnel and outside resources.  The Company estimates that would be required to spend approximately $150,000 during the next twelve months for the engineering and design costs to continue it development efforts related to the SkySpiderTM.

D.

Trend Information

Revenue from operations declined in the fiscal year ended July 31, 2003, compared to fiscal 2002.  There exists a high probability that revenue during the first half of the fiscal year ending July 31, 2004 may be weaker than fiscal 2003 due to a general downturn in the U.S. economy, the continuing effect the events of September 11, 2001 have had and are anticipated to continue to have on tourism and the amusement park industry, and the current threat of war.  The Company anticipates that amusement parks may reduce or delay capital expenditures on amusement park rides, which may have a material adverse effect on the Companys business and results of operations.  .

E.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheets arrangements that have or are likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources (see Item F  Tabular Disclosure of Contractual Obligations - Operating Lease Obligations).



F.

Tabular Disclosure of Contractual Obligations



|                                                                   | Payments Due by Period
|------------------------------------------------------------------ | ----------------------
|Contractual Obligations as
of July 31, 2003                        | Total                 
|Long term debt reclassified as short term:                         |                       
|- Non-convertible secured
loan bearing interest at 10.5% per annum | $2,656,667            
|- Promissory Note bearing
interest at 5% per annum                 | $60,000               
|- Settlement Agreement                                             | $235,573              
|Capital Lease Obligations:                                         | 0                     
|Operating Lease Obligations:
(rent & office equipment)             | $86,727               
|Purchase Obligations:                                              | 0                     
|Other Long-Term Liabilities:                                       | 0                     
|                                                                   |                       
|Total                                                              | $3,038,967            



ITEM 6

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.

Directors and Senior Management

All of the directors of the Company are elected annually by the shareholders and hold office until the next annual general meeting of shareholders or until their successors are duly elected and qualified, unless they sooner resign or cease to be directors in accordance with the Companys Articles.  The Companys last annual regular general meeting was held on January 28, 2003.  The Companys executive officers are appointed by and serve at the pleasure of the Board of Directors.

The names, municipality of residence, position(s) with the Company and principal occupation(s) of each director and executive director of the Company are as follows:

|Name and Municipality                                  | First and Present Position with the Company                                                                                        | Principal Occupation During the Last Five Years                                                                                                                                
|------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Ralph Proceviat
Burnaby, British Columbia
Canada       | CEO & CFO
November 26, 2001 to August
28, 2002
Director and President
July 3, 2002 to present
Treasurer
August 30, 2002 to present | Thrilltime Entertainment
International, Inc.
November 2001 to present
CFO NxGen Networks, Inc.
June 2000 to July 2001
CFO Milborne Real Estate Corp.
September 1997 to May 2000
|Sherrill Cyr
Surrey, British Columbia
Canada           | Secretary
August 25, 1995 to present
Director
November 3, 1999 to
April 26, 2002
Director
August 28, 2002 to present               | Corporate Secretary/Director of Corporate Services
ThrillTime Entertainment International, Inc.
April 1994 to present                                                          
|Darrel Taylor
Coquitlam, British Columbia
Canada       | Director
August 28, 2002 to present                                                                                                | President
Attica Equipment Ltd.
1979 to present                                                                                                                                
|Frank Deacon
Port Coquitlam, British
Columbia   Canada | Director
November 25, 2002  to present                                                                                             | Director Sales & Marketing
Grimms Fine Foods
April 1989 to present                                                                                                             

The following is brief biographical information on each of the officers and directors listed above:

Ralph F. Proceviat, B. Comm., CA, age 53, joined the Company as CFO in December 2001.  He was appointed President and Director on July 3, 2002.  Mr. Proceviat has more than twenty years of business experience spanning a number of industries including high tech, telecommunications, real estate development and brokerage and manufacturing. He has held various CEO, CFO and COO positions with public and private organizations operating throughout the United States and Canada.  As the CEO of Cue Datawest, a large national based banking service provider to the credit union system, Mr. Proceviat oversaw the rebuilding of the company including the funding and development of a $50 million banking system that has been installed throughout the world.  Over his career, he has developed a specialty in turn-arounds, directing companies towards driving profitable growth and increasing shareholder value.  Mr. Proceviat received his Chartered Accountant designation during his tenure with PriceWaterhouse Coopers.  He has a Bachelor of Commerce degree from the University of British Columbia.

Sherrill Cyr, age 54, served on the Board of Directors from November 1999 to April 2002, when she resigned for personal reasons.   Ms. Cyr has been with the Company  since 1999 and has served as Corporate Secretary since August 25, 1995. She joined the Company in 1994 and as Director, Corporate Services is responsible for the Regulatory, Contractual, Risk Management and Corporate Governance functions for the ThrillTime group of companies.  Ms. Cyr was instrumental in setting up the internal administrative structure of the Company and was involved in the acquisition of Skycoaster, Inc.  As part of her corporate services functions, Ms. Cyr is responsible for filing the Companys proprietary patents and trademarks covering many countries throughout the world.  Although currently inactive, Ms. Cyr earned her Canadian securities license through the Canadian Securities Institute in 1981.  In 1995 she completed the Corporate Governance of VSE Issuers Course through Simon Fraser University, B.C.  Ms. Cyr was reappointed to the Board on August 28, 2002

Darrel Taylor, age 68, joined the Board of Directors on August 28, 2002.  Mr. Taylor brings a wealth of experience and knowledge gained in over 28 years in the materials handling industry. Mr. Taylor is President of Attica Equipment Ltd., specialists in providing heavy duty equipment such as forklift trucks, container handlers and log handling equipment to the industries of Western Canada, as well as servicing the golf cart industry in BC. He is also President of Canport Industries Ltd., specialists in heavy duty equipment leasing; and President of Mayfair Industrial Painting Ltd., providing paint services to the transportation equipment and movie industry in Western Canada.



Frank Deacon, age 53, joined the Board on November 25, 2002. He has been in the grocery industry for over 30 years, having worked in manufacturing, wholesaling and retailing. Mr. Deacon is currently Director of Sales and Marketing for Grimms Fine Foods, a manufacturer and supplier to the food industry in Canada and abroad.



No director and/or executive officer of the Company has been the subject of any order, judgment, or decree of any governmental agency or administrator or of any court of competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he is a director and/or executive officer, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he is an officer or director from engaging in or continuing any conduct, practice, or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security or any aspect of the securities business or of theft or of any felony.



No director or executive officer of the Company has any family relationship with any other officer or director of the Company.



No director or officer has any arrangement or understanding with major shareholders, customers, suppliers, or others, pursuant to which they were selected as a director or member of senior management.



B.

Compensation

The Company does not generally compensate its directors for their services as directors. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors.  The Board of Directors makes separate remuneration to any director undertaking services on behalf of the Company other than services ordinarily required of a director.  No director received any compensation for his services as a director, including any committee participation or special assignments.

The following table sets forth, for the last full financial year, the Company's most highly compensated executive officer.





|                              | Annual Compensation | Long-Term Compensation |             
|----------------------------- | ------------------- | ---------------------- | ------------
|                              |                     |                        |             
|Name and Principal Position   | Year                | Salary ($)             | Bonus ($)(1)
|                              |                     |                        |             
|Ralph Proceviat
CFO/President | 2003                | $111,428               | $74,260     



Notes:

1.  Bonus is based upon terms of an employment contract.  This amount was earned during the financial period but has not been paid as of the date hereof.

2.  Stock appreciation rights  consists of 700,000 stock options:  300,000 of which were granted on December 31, 2001 with an exercise price of Cdn. $0.16 per share and an expiry date of December 31, 2005, and 400,000 of which were granted on September 12, 2002 with an exercise price of Cdn. $0.10 per share and an expiry date of October 31, 2005.   On November 30, 2003, the initial 300,000 stock options were cancelled.

3.  Long-term incentive plan



Long Term Incentive Plan

The Company does not have a long term incentive plan.



Options and Stock Appreciation Rights ("SARs")

The following table sets forth details of incentive stock options granted to Ralph Proceviat, President and Director, during the most recently completed Financial Period.



|Name            | Securities
Under
Options/SARs
Granted (#) | Percentage of
Total
Options/SARs
Granted to
Employees in
Financial
Period | Exercise or
Base Price
($/Security) | Market Value
of Securities
underlying
Options/SARs
on the Date of
Grant
($/Security) | Expiration
Date
|--------------- | ----------------------------------------- | ------------------------------------------------------------------------- | ----------------------------------- | ------------------------------------------------------------------------------------ | ---------------
|Ralph Proceviat | 400,000                                   | 100%                                                                      | Cdn. $0.10                          | Cdn. $0.04                                                                           | Oct. 31, 2005  



There were no incentive stock options exercised by any Director or Senior Officer during the Financial Period.



On November 30, 2003, 300,000 stock options granted to Ralph Proceviat, exercisable at Cdn. $0.16 on or before December 31, 2005, were cancelled.



Pension Plan

The Company has no pension plan.

C.

Board Practices

Members of the Board of Directors are elected annually by the holders of the Companys shares to represent the interests of all shareholders.  The Board of Directors meets periodically to review significant developments affecting the Company and to act on matters requiring Board approval. Although the Board of Directors delegates many matters to others, it reserves certain powers and functions to itself.  The only standing committee of the Board of Directors of the Company is the Audit Committee.  As of July 31, 2003, the members of the Audit Committee of the Companys Board of Directors were Ralph Proceviat, Darrel Taylor and Frank Deacon.  This committee is directed to review the scope, cost and results of the independent audit of the Companys books and records, the results of the annual audit with management and the external auditors and the adequacy of the Companys accounting, financial and operating controls; to recommend annually to the Board of Directors the selection of the independent auditors; to consider proposals made by the Companys independent auditors for audit, audit related and non-audit services; and to report to the Board of Directors, when so requested, on any accounting or financial matters.  None of the Companys directors or executive officers are party to any arrangement or understanding with any other person pursuant to which said individual was elected as a director or officer of the Company.

Termination of Employment, Change in Responsibilities and Employment Contracts

Pursuant to an agreement entered into on November 8, 2001 between the Company and Mr. Ralph F. Proceviat, the Company agreed to engage the services of Mr. Proceviat as Chief Financial Officer.  In consideration, the Company agreed to compensate Mr. Proceviat on the following basis:

1.

Bonus equal to 1% of fiscal pre-tax accounting income for fiscal year 2002.  In successive years, 1% of fiscal pre-tax accounting income if fiscal pre-tax accounting income is greater than $2.0 million.  1 1/2% of fiscal pre-tax accounting income if fiscal pre-tax accounting income is greater than $3.5 million.  2% of fiscal pre-tax accounting income if fiscal pre-tax accounting income is greater than $5.0 million.

2.

300,000 stock options issued by the Company vesting according to the following schedule:

a)

100,000 options shall vest anytime after July 31, 2002 (Year One) provided that fiscal pre-tax accounting income is greater than $2.0 million in either Year One or Year Two (July 31, 2003);

b)

100,000 options shall vest anytime after July 31, 2003 (Year Three) provided that fiscal pre-tax accounting income is greater than $3.5 million;

c)

100,000 options shall vest anytime after July 31, 2004 (Year Four) provided that fiscal pre-tax accounting income is greater than $5.5 million; or

d)

If the target pre-tax accounting income in Years One, Two and/or Three is not achieved but the aggregate of Years One, Two, Three and Four pre-tax accounting income is equal to or greater than $10.5 million, then all options, aggregating 300,000, shall fully vest at the end of Year Four.

3.

Should the Company be acquired by way of a takeover and Mr. Proceviat is not offered equivalent employment he will be entitled to receive two months compensation per year of employment to a maximum of six months based on the prior years base salary plus bonus.  In the case of termination of employment, except for termination for just cause, Mr. Proceviat shall be entitled to two months base salary for each year of employment to a maximum of six months.

Compensation of Directors

During the financial period, no compensation was paid to the directors of the Company or any of its subsidiaries for their services in their capacity as directors, including any amounts payable for committee participation or special assignments pursuant to any standard or other arrangements; or as consultants or experts.

The Company has no plans or arrangements in respect of remuneration received or that may be received by executive officers of the Company in the current year to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, other than shown above.

D.

Employees

As of January 23, 2004, the Company had 6 full time employees, of whom 2 were involved in overseeing sales, manufacturing and installation, and 4 were in administration.  The Company has no current plans that would result in any material change in the number of employees or their respective assignments. The Company also has, under contract, a sales force of which 2 personnel are actively engaged in sales of the Companys products.

E.

Share Ownership

The Companys shares of common stock are publicly traded on the TSX Venture in Canada and quoted on the OTCBB in the United States.  Its shares are held by residents of Canada, the United States and other countries.  To the best of its knowledge, the Company is not controlled, directly or indirectly, by another corporation or any government and, as at July 31, 2003, no person owns more than 10% of the outstanding voting Shares of the Company.  As of July 31, 2003 the Company had 20,007,297 shares of common stock issued and outstanding.  (See Item 8. B Significant Changes)

The following tables sets forth certain information concerning the number of shares of our common stock owned beneficially as of January 23, 2004 by: (i) each person (including any group) known to us to own more than 5% of any class of our voting securities, (ii) each of our directors and named executive officers, and (iii) directors and executive officers as a group.  Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.

|Name of Jurisdiction of Residence of Beneficial Owner | Amount and Nature of
Beneficial Ownership | Percentage of Class(1)
|----------------------------------------------------- | ----------------------------------------- | ----------------------
|Sherrill Cyr
Canada                                   | 460,033                                   | 2.25%(2)              
|Frank Deacon
Canada                                   | 552,900                                   | 2.70%(3)              
|Ralph Proceviat
Canada                                | 800,000                                   | 3.88%(4)              
|Darrel Taylor
Canada                                  | 723,000                                   | 3.55%(5)              
|Officers and Directors, as a group
(4 persons)        | 2,535,933                                 | 11.63%(6)             



(1)

Based on 20,007,297 common shares issued and outstanding on January 23, 2004.

(2)

Includes 60,033 common shares, 50,000 share purchase warrants and 350,000 stock options exercisable within 60 days of January 23, 2004.

(3)

Includes 102,900 common shares, 100,000 share purchase warrants and 350,000 stock options exercisable within 60 days of January 23, 2004.

(4)

Includes 200,000 common shares, and 200,000 share purchase warrants and 400,000 stock options exercisable within 60 days of January 23, 2004.

(5)

Includes 373,000 common shares, and 350,000 stock options exercisable within 60 days of  January 23, 2004.

(6)

Includes 735,933 common shares, and 350,000 share purchase warrants and 1,450,000 stock options exercisable within 60 days of January 23, 2004.



There are no arrangements known to the Company which may at a subsequent date result in a change in control of the Company.



Stock Option Purchase Plan

Under the terms of the Companys Stock Option Plan approved by the shareholders at the Companys Annual General Meeting held on November 7, 1997, the Directors may, from time to time, designate full and part-time employees, officers and Directors of the Company or its subsidiaries, consultants and persons performing special technical or other services to the Company or its subsidiaries, (collectively, "Eligible Individuals"), and the personal holding corporations of any of the Eligible Individuals, as persons to whom options to purchase common shares of the Company may be granted, provided that the total number of common shares under option shall not exceed the aggregate limit of 3,407,850 (as approved by members at the Annual General Meeting held on January 22, 1999) and, further provided, that the total number of shares to be reserved for issuance to any one person shall not exceed 5 percent of the issued and outstanding shares of the Company.  Shares in respect of which options have expired unexercised or have been cancelled and are no longer subject to being purchased pursuant to the terms of any option shall be available for further options under the Plan.  Options which were issued and outstanding on the date the Plan was established are included in the aggregate limit established.  A person is entitled to have one or more stock options outstanding at a time.



The exercise price per share shall be fixed by the Directors when such option is granted, provided that such price as is acceptable to the TSX.  In accordance with the Policies of the TSX Corporate Finance Manual, the exercise price must not be less that the Discounted Market Price, subject to a minimum price of Cdn. $0.10.



The names and titles of the directors, executive officers and employees of the Company to whom outstanding stock options have been granted and the number of Shares subject to such stock options are set forth below as at January 23, 2004.  The exercise prices of the stock options are stated in Canadian dollars.

|Name of Optionees     | Options
Granted | Exercise
Price
(Cdn $) | Expiry Date   | Outstanding Options at December 31/03
|--------------------- | --------------- | ---------------------- | ------------- | -------------------------------------
|Officers & Directors: |                 |                        |               |                                      
|                      |                 |                        |               |                                      
|Sherrill Cyr          | 350,000         | $0.10                  | Oct. 31, 2005 | 350,000                              
|Frank Deacon          | 350,000         | $0.10                  | Oct. 31, 2005 | 350,000                              
|Ralph Proceviat       | 400,000         | $0.10                  | Oct. 31, 2005 | 400,000                              
|                      |                 |                        |               |                                      
|Darrel Taylor         | 350,000         | $0.10                  | Oct. 31, 2005 | 350,000                              
|                      |                 |                        |               |                                      
|Employees as a group: | 450,000         | $0.10                  | Oct. 31, 2005 | 450,000                              
|                      |                 |                        | Total         | 1,900,000                            

ITEM 7

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.

Major Shareholders

The Company is a publicly-owned corporation, the majority of the Common Shares of which are owned by persons resident outside of the United States.  To the best of the Companys knowledge, the Company is not directly owned or controlled by another corporation or by any foreign government.

There is 20,007,297 common shares issued and outstanding and as at December 12, 2003 (the record date set for the Companys Annual General Meeting to be held January 27, 2004),  3,465,413  common shares were held by Cede & Co. and 12,879,426 common shares were held by CDS & Co.  Automatic Data Processing, Inc., Investor Communication Services advised that there were 321 beneficial holders in the United States as of December 12, 2003.

To the best of the Companys knowledge, no shareholders beneficially own, directly or indirectly, more than 5% of the issued shares of the Company.  To the best knowledge of the Company, there are no voting arrangements with other shareholders of the Company.

B.

Related Party Transactions

Related Party Transactions

Except for the ownership of the Companys securities and the compensation described herein, none of the directors or executive officers of the Company, holders of ten percent of the Companys outstanding shares, or any associate or affiliate of such person, have, to the knowledge of the Company, had a material interest, direct or indirect, during the last fiscal year ended July 31, 2003 or in any proposed transaction which may materially affect the Company.

None of the executive officers or directors of the Company are indebted to the Company or were indebted to the Company during the fiscal year ended July 31, 2003.  (See Directors and Officers of Company and Compensation of Directors and Officers.)

C.

Interests Of Experts And Counsel

Not applicable.

ITEM 8

FINANCIAL INFORMATION

A.

Consolidated Statements and Other Financial Information

Financial Statements

Attached to this annual report are consolidated financial statements audited by independent auditors and accompanied by an Auditors Report and Comments by Auditors for U.S. Readers on Canada-U.S. Reporting Difference, consisting of the following:

•

Consolidated Balance Sheets as of July 31, 2003 and July 31, 2002;

•

Consolidated Statements of Operations and Deficit for the fiscal years ended July 31, 2003, 2002 and 2001;

•

Consolitated Statements of Cash Flows for the fiscal years ended July 31, 2003, 2002 and 2001; and

•

Notes to Consolidated Financial Statements.

Legal Claims

To the best of its knowledge, the Company is not subject to any active or pending material legal proceedings or claims against it or any of its properties other than ordinary routine litigation incidental to the Companys business.  However, from time to time, the Company may become subject to claims and litigation generally associated with any business venture.  In addition, attractions sold by the Company and the operation of those attractions are subject to risks of accident and injury and possible violations of environmental noise and other government regulations, some of which cannot be fully covered by insurance or other strategies.

Dividend Policy

No dividends have been declared or paid on the Common Shares since incorporation and it is not anticipated that any dividends will be declared or paid on the Common Shares in the immediate or foreseeable future.  Any decision to pay dividends on the Common Shares will be made by the board of directors on the basis of the Companys earnings, financial requirements and other conditions existing at such future time.

B.

Significant Changes



Subsequent to July 31, 2003, the following events have occurred:



Letter of Intent



On January 23, 2004, the Company entered into a letter of intent with Crates Thompson Capital, Inc. (CTC) and S&S Worldwide, Inc. (S&S), under which CTC has agreed to acquire certain assets and S&S has agreed to acquire all of the outstanding shares of Skycoaster, Inc. and Superstar Dragsters, Inc. on the following terms and conditions:



•

CTC and the Company will enter into an Asset Purchase Transaction whereby 100% of the Companys $2.750 million loan obligation relating to a secured debenture will be assumed by CTC. In return, the Company will sell and relinquish 100% of its rights to receive future license, royalty and other fees associated with specific long term license agreements and contracts between Skycoaster and Superstar and their current customers.

•

S&S and the Company will enter into a Share Purchase Agreement and Revenue Share Agreement whereby with the sale of 100% of the common stock of Skycoaster and Superstar held by the Company, the Company will be entitled a percentage of gross profits arising from future sales, parts, service, training , license and royalty income. (see Item 5 Operating and Financial Review and Prospects, Outlook)



These transactions are subject to the approval of the Companys shareholders and the secured lender, acceptance by the TSX Venture Exchange, due diligence examination by CTC and S&S, the execution of definitive agreements as well as customary closing conditions set out by both parties.





Stock Options Cancelled



On November 30, 2003, 300,000 stock options granted to Ralph Proceviat, exercisable at Cdn. $0.10 per share on or before December 31, 2005, were cancelled.



ITEM 9

THE OFFER AND LISTING

A.

The Offer

There is no offering of securities contemplated herein.

B.

Listing Details

Nature of Trading Market

The Companys shares of common stock trade on the TSX Venture in Canada and are quoted on the OTCBB in the United States.

The following tables set forth the reported annual high and low market prices of the Companys Common Shares on the designated exchanges for (a) the five most recent fiscal years; (b) each quarterly period for the past two fiscal years and subsequent first quarter (c) for the last six months ending December 31, 2003.

Five Most Recent Fiscal Years

|     | TSX Venture
(Cdn$) | NASD OTCBB
(US$)
|---- | ------------------ | ----------------
|     | High               | Low             
|2003 | 0.14               | 0.01            
|2002 | 0.07               | 0.01            
|2001 | 0.30               | 0.05            
|2000 | 0.75               | 0.11            
|1999 | 1.80               | 0.15            



Quarterly Periods

|                                       | TSX Venture
(Cdn$) | NASD OTCBB
(US$)
|-------------------------------------- | ------------------ | ----------------
|                                       | High               | Low             
|2004                                   |                    |                 
|Second Quarter Ended December 31, 2003 | 0.04               | 0.03            
|First Quarter Ended September 30, 2003 | 0.04               | 0.03            
|2003                                   |                    |                 
|Fourth Quarter Ended June 30, 2003     | 0.04               | 0.03            
|Third Quarter Ended March 31, 2003     | 0.10               | 0.05            
|Second Quarter Ended December 31, 2002 | 0.14               | 0.01            
|First Quarter Ended September 30, 2002 | 0.05               | 0.02            
|2002                                   |                    |                 
|Fourth Quarter Ended June 30, 2002     | 0.07               | 0.01            
|Third Quarter Ended March 31, 2002     | 0.10               | 0.03            
|Second Quarter Ended December 31, 2001 | 0.06               | 0.03            
|First Quarter Ended September 30, 2001 | 0.07               | 0.03            



Six Most Recent Months

|               | TSX Venture
(Cdn$) | NASD OTCBB
(US$)
|-------------- | ------------------ | ----------------
|               | High               | Low             
|December 2003  | 0.04               | 0.035           
|November 2003  | 0.04               | 0.03            
|October 2003   | 0.04               | 0.03            
|September 2003 | 0.04               | 0.03            
|August 2003    | 0.03               | 0.03            
|July 2003      | 0.04               | 0.03            



The closing price of our common shares on January 23, 2004 was CDN$0.035 on TSX Venture and US$0.025 on the NASD OTCBB.

ITEM 10

ADDITIONAL INFORMATION

A.

Share Capital

Not applicable.

B.

Memorandum and Articles of Association

Incorporation

The Company was incorporated on August 29, 1988, as a British Columbia corporation under the name Aramis Ventures Ltd. under Certificate of Incorporation number 350733.  In 1992, the Company, under new management, changed the nature of its business from mineral exploration to designing, manufacturing and marketing amusement park rides.  The Company discontinued all of its mineral exploration activities in connection with its change of business.  On April 5, 1994, the Company changed its name to Newera Capital Corporation.  On August 12, 1997, the Company changed its name to its current name, ThrillTime Entertainment International, Inc.  The memorandum of the Company was amended on January 22, 1999 to increase the authorized capital from 50,000,000 to 100,000,000 shares without par value (Common Shares).

Objects and Purposes of the Company

The Memorandum of the Company places no restrictions upon the Companys objects and purposes.

Directors Powers

Section 16.1 of the Articles of the Company (the Articles) provides that a director who is directly or indirectly interested in a proposed contract or transaction with the Company, or who holds any office or possesses any property whereby, directly or indirectly, a duty or interest might be created to conflict with his duty or interest as a director shall declare the nature and extent of his interest in such contract or transaction or of the conflict or potential conflict of his duty and interest as a director, as the case may be, in accordance with the provisions of the British Columbia Company Act.

Furthermore, a director shall not vote in respect of any contract or transaction with the Company in which the director is materially interested, and if the director does vote that vote shall not be counted, but the director shall be counted in the quorum present at the meeting at which such vote is taken.  The prohibition does not apply to:

(a)

any contract or transaction relating to a loan to the Company, which a director or a specified corporation or a specified firm in which the director has an interest has guaranteed or joined in guaranteeing the repayment of the loan or any part of the loan;

(b)

any contract or transaction made or to be made with, or for the benefit of an affiliated corporation of which a director is a director or officer;

(c)

determining the remuneration of the directors;

(d)

purchasing and maintaining insurance to cover directors against liability incurred by them as director under section 128(4) of the Company Act; or

(e)

the indemnification of any director by the Company under section 128 of the Company Act.

These exceptions may from time to time be suspended or amended to any extent approved by the Company in general meeting and permitted by the Company Act, either generally or in respect of any particular contract or transaction or for any particular period.

Section 17.6 of the Articles provides that the quorum necessary for the transaction of business at the meeting of directors may be fixed by the directors and if not so fixed shall be a majority of directors holding office at the time, or, if the number of directors is fixed at one, shall be one director.

Section 13.2 of the Articles provides that the remuneration of the directors may be determined from time to time by the directors or, if the directors shall so decide, by the members.  There are no restrictions in the Articles upon the directors power, in the absence of an independent quorum, to vote compensation to themselves or any members of their body.

Section 15.1 of the Articles gives directors a broad discretion to manage or supervise the management of, the affairs and business of the Company, and to exercise all such powers of the Company as are required by the Company Act or by the Memorandum or the Articles to be exercised by the Company in a general meeting.  Section 8.1 of the Articles specifically provides that the directors may from time to time on behalf of the Company, borrow money in such manner and amount, on such security, from such sources and upon such terms and conditions as they think fit, and may authorize the guaranteeing of any obligations of any other person.  Furthermore, the directors may issued bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person.  Finally, the directors may mortgage, charge, whether by way of specific or floating charge, or give other security on the undertaking, or on the whole or any part of the present and future property and assets of the Company.

The powers of the directors set forth in the Articles can be varied by altering the Articles of the Company, section 219 of the Company Act, by filing with the registrar of companies a certified copy of a special resolution altering the Articles.  A special resolution is a resolution passed by a majority of not less than three quarters of the votes cast by those members of a company who, being entitled to do so, vote in person or by proxy at a general meeting of the company.  Alternatively, a special resolution may be consented to in writing by every member of a company who would have been entitled to vote in person or by proxy at a general meeting of the company.

Qualifications of Directors

There is no provision in the Articles imposing a requirement for retirement or non-retirement of directors under an age limit requirement.

Section 13.3 of the Articles provides that director shall not be required to hold a share in the capital of the Company as qualification for his office but shall be qualified as required by the Company Act, to become or act as a director.  Section 114 of the Company Act provides that no person is qualified to act as a director if that person is:

(a)

under the age of 18 years;

(b)

found to be incapable of managing the persons own affairs by reason of mental infirmity;

(c)

a company;

(d)

an undischarged bankrupt;

(e)

unless the court orders otherwise, convicted in or out of British Columbia of an offence in connection with the promotion, formation or management of a company, or involving fraud, unless five years have elapsed since the expiration of the period fixed for suspension of the passing of sentence without sentencing or since a fine was imposed, or the term of imprisonment and probation imposed, if any, was concluded, whichever is the latest, but the disability imposed by this paragraph ceased on a pardon being granted under the Criminal Records Act(Canada); or

(f)

in the case of a reporting company, a person whose registration in any capacity has been cancelled under:

(i)

the Securities Act by either the British Columbia Securities Commission or the executive director, or

(ii)

the Mortgage Brokers Act by either the Commercial Appeals Commission or the registrar,

unless the commission, the executive director or the registrar, whichever is applicable, otherwise orders, or unless five years have elapsed since the cancellation of the registration.

Section 114(3) of the Company Act provides that every person who acts as a director of a company and is a person who, because of section 114(1) of the Company Act, is not qualified to act as a director of a company commits an offence.

Section 108 of the Company Act provides that every company must have at least one director, and a reporting company must have at least three directors.  Section 109(1) states that the majority of the directors of every company must be person ordinarily resident in Canada, and section 109(2) specifies that one director of every company must be ordinarily resident in British Columbia.

Section 130 of the Company Act provides that the office of director shall be vacated if the director: (i) resigns his office by notice in writing delivered to the registered office of the Company; (ii) is convicted of an indictable offence and the other directors shall have resolved to remove him; or (iii) ceases to be qualified to act as a director pursuant to the Company Act.  In addition, the Company may be special resolution remove any director before the expiration of his period of office, and may be an ordinary resolution appoint another person in his stead.

Share Rights

The Companys authorized capital consists of 100,000,000 common shares without par value, all of which are of the same class and, once issued as fully paid and non-assessable, rank equally as to dividends, voting powers, and participation in assets and in all other respects, on liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs after the Company has paid out its liabilities.  The Companys issued shares are not subject to call or assessment rights or any pre-emptive or conversion rights.  The holders of the Companys shares are entitled to one vote for each share on all matters to be voted on at a meeting of the members.  There are no provisions for redemption, purchase for cancellation, surrender or purchase funds.

Subject to the provisions of the Company Act, Part 6 of the Articles governs the alteration of the Companys share capital, including the alternation of rights and restrictions attached to issued and unissued shares.  Section 6.1 of the Articles permits the Company to alter its Memorandum by ordinary resolution to increase the authorized capital of the company by: (a) creating shares with par value or shares without par value, or both; (b) increasing the number of shares with par value or shares without par value, or both; or (c) increase par value of a class of shares with par value, if no share of that class are issued, but the Company cannot prejudice or interfere with the rights or special rights of issued shares unless it obtains from the holders of the affected class or series of share, as the case may be, consent by a separate resolution of requiring a majority of 75% of the votes cast in accordance with section 226 of the Company Act.

Meetings

By section 139 of the Company Act the Company is required to hold an annual general meeting of its members at least once in every calendar year and not more than 13 months after the date that the last annual general meeting was held, whichever is later.

Section 9.2 of the Articles provides that the directors of the Company may convene an extraordinary general meeting whenever they think fit.

In accordance with section 143 of the Company Act, the Company must give to its members entitled to receive notice of a general meeting not less than 21 days notice of any general meeting, but those members may waive or reduce the period of notice for a particular meeting by unanimous consent in writing.  Every member entitled to vote at a general meeting with notice of the general meeting and a form of proxy for use at such meeting, as well as with an information circular containing prescribed information regarding the matters to be dealt with and the conduct of the general meeting.  The directors of the Company must place before each annual general meeting of its member comparative financial statements, made up to a date not more than six months before the annual general meeting, the report of the auditor on such financial statements, and the report of the directors to the members.  Section 10.3 of the Articles states that a quorum for a meeting of members of the Company shall be one member or one proxy holder representing members holding not less than 5% of the issued shares entitled to be voted at such meeting.

Section 147 of the Company Act provides that one or more members of the Company holding not less than 5% of the issued voting shares can requisition a general meeting, and if such a requisition is delivered to the Company as required, the meeting shall be convened by the directors or, if not convened by the directors, may be convened by the requisitionists as provided by the Company Act.

Where the Articles do not make any provision for a meeting of the holders of a class of shares, section 148 of the Company Act states that the provisions of the Articles relating to the call and conduct of general meetings apply to such a class meeting, and despite the Articles, a quorum for a class meeting of the Company shall be at least one person holding or representing by proxy 1/3 of the class of shares affected.

Limitations of Ownership of Securities

There are no limitations on the right to own securities of the Company imposed either by foreign law or by the Memorandum or the Articles.

Change in Control of the Company

There is no provision in the Companys Memorandum or Articles that would have the effect of delaying, deferring, or preventing a change in control of the Company, and that would operate only with respect to a merger, acquisition or corporate restructuring of the Company or its subsidiaries, if any.

Ownership Threshold

There are no provisions in the Companys Articles governing the ownership threshold above which shareholder ownership must be disclosed.



C.

Material Contracts



Satisfaction and Release Agreement



On January 23, 2003, the Company entered into a Satisfaction and Release Agreement with the holder of a $5,950,000 convertible debenture (the Debenture) to satisfy and discharge all of the Companys obligations thereunder through a combination of cash and common shares of the Company. The Debenture, including accrued interest, was to have automatically converted into 6,368,247 common shares of the Company at $1.11 per share on December 31, 2002.  Under the terms of the agreement, the Company agreed to pay $120,000 in cash and issued 750,000 common shares to the holder in full and final satisfaction of the Debenture obligation.



Amendment to Loan Agreement



On March 13, 2002, the Company renegotiated the payment terms of the loan agreement.  It was agreed the loan would be repaid in sixteen (16) quarterly installments of principal and interest, the first four installments each in the amount of $70,349 commencing on February 15, 2002 and the last twelve installments each in the amount of $261,320 commencing February 15, 2003.  All other terms of the loan remain in fullforce and effect.



Letter of Intent



On January 23, 2004, the Company entered into a letter of intent with Crates Thompson Capital, Inc. (CTC) and S&S Worldwide, Inc. (S&S), under which CTC has agreed to acquire certain assets and S&S has agreed to acquire all of the outstanding shares of Skycoaster, Inc. and Superstar Dragsters, Inc. on the following terms and conditions:



•

CTC and the Company will enter into an Asset Purchase Transaction whereby 100% of the Companys $2.750 million loan obligation relating to a secured debenture will be assumed by CTC. In return, the Company will sell and relinquish 100% of its rights to receive future license, royalty and other fees associated with specific long term license agreements and contracts between Skycoaster and Superstar and their current customers.

•

S&S and the Company will enter into a Share Purchase Agreement and Revenue Share Agreement whereby with the sale of 100% of the common stock of Skycoaster and Superstar held by the Company, the Company will be entitled a percentage of gross profits arising from future sales, parts, service, training , license and royalty income. (see Item 5 Operating and Financial Review and Prospects, Outlook)



These transactions are subject to the approval of the Companys shareholders and the secured lender, acceptance by the TSX Venture Exchange, due diligence examination by CTC and S&S, the execution of definitive agreements as well as customary closing conditions set out by both parties.



D.

Exchange Controls

Canada has no system of exchange controls.  There are no exchange restrictions on borrowing from foreign countries nor on the remittance of dividends, interest, royalties and similar payments, management fees, loan repayments, settlement of trade debts, or the repatriation of capital.  However, any dividends remitted to U.S. Holders, as defined below, will be subject to withholding tax.  (See Item 10E  Taxation.)

There are limitations under the laws of the Province of British Columbia or in the memorandum and articles of the Company on the rights of non-Canadians to hold or vote the shares of the Company.  Under the provisions of the Investment Canada Act (the ICA), as amended by the Canada-United States Free Trade Implementation Act (Canada), and the Canada-United States Free Trade Agreement, review and approval of the transaction by the Investment Canada Agency (Investment Canada), the federal agency created by the ICA are required where a U.S. person directly acquires control of a Canadian business with assets of more than $209 million.  The term control is defined as any one or more non-Canadian persons acquiring all or substantially all of the assets used in the Canadian business, or the acquisition of the voting shares of a Canadian corporation carrying on the Canadian business.  The acquisition of the majority of the outstanding shares is deemed to be an acquisition of control of a corporation unless it can be established that the purchaser will not, in fact, control the Canadian corporation.

Subject to the comments contained in the following paragraph regarding WTO investors, investments requiring notification and review are all direct acquisitions of Canadian businesses with assets of Cdn. $5,000,000 or more; all indirect acquisitions of Canadian businesses with assets between Cdn. $5,000,000 and Cdn. $50,000,000 which represent more than 50% of the value of the total international transaction.  (Indirect acquisition means the acquisition of the voting rights of an entity controlling the Canadian corporation.)  In addition, specific acquisitions or new businesses in designated types of business activities related to Canadas cultural heritage or national identity, which would normally only be notifiable, could be reviewed if the Government of Canada considers it in the public interest to do so.

The ICA was amended with the implementation of the agreement establishing the World Trade Organization (WTO) to provide for special review thresholds for WTO investors, as defined in the Act.  WTO investor generally means (i) an individual, other than a Canadian, who is a national of a WTO member (such as, for example, the United States), or who has the right of permanent residence in relation to that WTO member, (ii) governments of WTO members, and (iii) entities that are not Canadian controlled, but which are WTO investor controlled, as determined by rules specified in the Act.  The special review thresholds for WTO investors do not apply, and the general rules described above do apply, to the acquisition of control of certain types of businesses specified in the Act, including a business that is a cultural business.  If the WTO Investor rules apply, an investment in the share of the Company by or from a WTO investor will be reviewable only if it is an investment to acquire control of the Company and the value of the assets of the Company is equal to or greater than a specified amount (the WTO Review Threshold).  The WTO Review Threshold is adjusted annually by a formula relating to increases in the nominal gross domestic product of Canada.  The 2001 WTO Review Threshold is $209,000,000.

If any non-Canadian, whether or not a WTO Investor, acquires control of the Company by the acquisition of shares, but the transaction is not reviewable as described above, the non-Canadian is required to notify the Canadian government and to provide certain basic information relating to the investment.  A non-Canadian, whether or not a WTO investor, is also required to provide a notice to the government on the establishment of a new Canadian business.  If the business of the Company is then a prescribed type of business activity relating to Canadas cultural heritage or national identity, and if the Canadian government considers it to be in the public interest to do so, then the Canadian government may give a notice in writing within 21 days requiring the investment be reviewed.

For non-Canadians (other than WTO investors), an indirect acquisition of control, by the acquisition of voting interests of an entity that directly or indirectly controls the Issuer, is reviewable if the value of the assets of the Company is then $50,000,000 or more.  If the WTO investor rules apply, then this requirement does not apply to a WTO investor, or to a person acquiring the entity from a WTO investor.  Special rules specified in the ICA apply if the value of the assets of the Company is more than 50% of the value of the entity so required.  By these special rules, if the non-Canadian (whether or not a WTO investor) is acquiring control of an entity that directly or indirectly controls the Issuer, and the value of the assets of the Company and all other entities carrying on business in Canada, calculated in the manner provided in the ICA and the regulations under the Act, is more than 50% of the value, calculated in the manner provided in the ICA and the regulations under the Act, of the assets of all entities, the control of the Company forms a part, then the thresholds for a direct acquisition of control as discussed above will apply.  That is, a WTO Review threshold of $209,000,000 (in 2001) for a WTO investor or threshold of $5,000,000 for a non-Canadian other than a WTO investor.  If the value exceeds that level, then the transaction must be reviewed in the same manner as a direct acquisition of control by the purchase of shares of the Issuer.

If an investment is reviewable, an application for review in the form prescribed by regulations is normally required to be filed with the agency established by the ICA (the Agency) prior to the investment taking place and the investment may not be consummated until the review has been completed.  There are, however, certain exceptions.  Applications concerning indirect acquisition may be filed up to 30 days after the investment is consummated and applications concerning reviewable investments in culture-sensitive sectors are required upon receipt of a notice for review.  There is, moreover, provision for the Minister (a person designated as such under the Act) to permit an investment to be consummated prior to completion of review, if he is satisfied that delay would cause undue hardship to the acquiror or jeopardize the operation of the Canadian business that is being acquired.  The Agency will submit the application to the Minister, together with any other information or written undertakings given by the acquiror and any representation submitted to the Agency by a province that is likely to be significantly affected by the investment.

The Minister will then determine whether the investment is likely to be of net benefit to Canada, taking into account the information provided and having regard for other factors where they are relevant.  Some of the factors to be considered are the effect of the investment on the level and nature of economic activity in Canada, including the effect on employment, on resource processing, on the utilization of parts, components and services produced in Canada, and on exports from Canada.

Additional factors of assessment include (i) the degree and significance of participation by Canadians in the Canadian business and in any industry in Canada of which it forms a part; (ii) the effect of the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Canada; (iii) the effect of the investment on competition within any industry or industries in Canada; (iv) the compatibility of the investment and the national industrial, economic and cultural policies taking into consideration industrial, economic and cultural objectives enunciated by the government or legislature of any province likely to be significantly affected by the investment; and (v) the contribution of the investment to Canadas ability to compete in world markets.

To insure prompt review and decision, the ICA sets certain time limits for the Agency and the Minister.  Within 45 days after a completed application has been received, the Minister must notify the acquiror that (a) he is satisfied that the investment is likely to be of net benefit to Canada, or (b) he is unable to complete his review, in which case he shall have 30 additional days to complete his review (unless the acquiror agrees to a longer period), or (c) he is not satisfied that the investment is likely to be of net benefit to Canada.

Where the Minister has advised the acquiror that he is not satisfied that the investment is likely to be of net benefit to Canada, the acquiror has the right to make representations and submit undertakings within 30 days of the date of the notice (or any further period that is agreed upon between the acquiror and Minister).  On the expiration of the 30-day period (or the agreed extension, the Minister must quickly notify the acquiror (a) that he is now satisfied that the investment is likely to be of net benefit to Canada or (b) confirming that he is not satisfied that the investment or is likely to be of net benefit to Canada.  In the latter case, the acquiror may not proceed with the investment or, if the investment has already been consummated, must relinquish control of the Canadian business.  The ICA authorizes the Minister to give written opinions, binding the Minister, on the application of the ICA or regulations to the persons seeking the opinions to the Agency or a designated official.  The ICA also authorizes the Minister to issue guidelines and interpretations with respect to the application and administration of any provision of the ICA or the regulations.

The ICA provides for civil penalties for non-compliance with any provision except breach of confidentiality or provision of false information, for which there are criminal penalties.

E.

Taxation

A brief description of certain provisions of the tax treaty between Canada and the United States is included below, together with a brief outline of certain taxes, including withholding provisions, to which United States security holders are subject under existing laws and regulations of Canada.  The consequences, if any, of provincial, state and local taxes are not considered.

The following information is general and security holders should seek the advice of their own tax advisors, tax counsel or accountants with respect to the applicability or effect on their own individual circumstances of the matters referred to herein and of any provincial, state or local taxes.

Certain Canadian Federal Income Tax Consequences

The discussion under this heading summarizes the principal Canadian federal income tax consequences of acquiring, holding and disposing of shares of common stock of the Company for a shareholder of the Company who is not a resident of Canada but is a resident of the United States and who will acquire and hold shares of common stock of the Company as capital property for the purposes of the Income Tax Act (Canada) (the Canadian Tax Act).  This summary does not apply to a shareholder who carries on business in Canada through a permanent establishment situated in Canada or performs independent personal services in Canada through a fixed base in Canada if the shareholders holding in the Company is effectively connected with such permanent establishment or fixed base.  This summary is based on the provisions of the Canadian Tax Act and the regulations thereunder and on an understanding of the administrative practices of Canada Customs & Revenue Agency, and takes into account all specific proposals to amend the Canadian Tax Act or regulations made by the Minister of Finance of Canada as of the date hereof.  It has been assumed that there will be no other relevant amendment of any governing law although no assurance can be given in this respect.  This discussion is general only and is not a substitute for independent advice from a shareholders own Canadian and U.S. tax advisors.

The provisions of the Canadian Tax Act are subject to income tax treaties to which Canada is party, including the Canada-United States Income Tax Convention (1980), as amended (the Convention).

Dividends on Common Shares and Other Income

Under the Canadian Tax Act, a non-resident of Canada is generally subject to Canadian withholding tax at the rate of 25% on dividends paid or deemed to have been paid to him or her by a corporation resident in Canada.  The Company is responsible for withholding of tax at the source.  The Convention limits the rate to 15% if the shareholder is a resident of the United States and the dividends are beneficially owned by and paid to such shareholder, and to 5% if the shareholder is also a corporation that beneficially owns at least 10% of the voting stock of the payor corporation.

The amount of a stock dividend (for tax purposes) would generally be equal to the amount by which the paid up or stated capital of the Company had increased by reason of the payment of such dividend.  Interest paid or deemed to be paid on the Companys debt securities held by non-Canadian residents may also be subject to Canadian withholding tax, depending upon the terms and provisions of such securities and any applicable tax treaty.

The Convention generally exempts from Canadian income tax dividends paid to a religious, scientific, literary, educational or charitable organization or to an organization constituted and operated exclusively to administer a pension, retirement or employee benefit fund or plan, if the organization is a resident of the United States and is exempt from income tax under the laws of the United States.

Dispositions Of Common Shares

Under the Canadian Tax Act, a taxpayers capital gain or capital loss from a disposition of a share of common stock of the Company is the amount, if any, by which his or her proceeds of disposition exceed (or are exceeded by, respectively) the aggregate of his or her adjusted cost base of the share and reasonable expenses of disposition.  The capital gain or loss must be computed in Canadian currency using a weighted average adjusted cost base for identical properties.  The capital gains net of losses included in income are 50%.    The amount by which a shareholders capital loss exceeds the capital gain in a year may be deducted from a capital gain realized by the shareholder in the three previous years or any subsequent year, subject to certain restrictions in the case of a corporate shareholder.

Under the Canadian Tax Act, a non-resident of Canada is subject to Canadian tax on taxable capital gains, and may deduct allowable capital losses, realized on a disposition of taxable Canadian property.  Shares of the common stock of the Company will constitute taxable Canadian property of a shareholder at a particular time if the shareholder used the shares in carrying on business in Canada, or if at any time in the five years immediately preceding the disposition 25% or more of the issued shares of any class or series in the capital stock of the Company belonged to one or more persons in a group comprising the shareholder and persons with whom the shareholder and persons with whom the shareholder did not deal at arms length and in certain other circumstances.

The Convention relieves United States residents from liability for Canadian tax on capital gains derived on a disposition of shares unless:

(a)

the value of the shares is derived principally from real property in Canada, including the right to explore for or exploit natural resources and rights to amounts computed by reference to production;

(b)

the shareholder was resident in Canada for 120 month during any period of 20 consecutive years preceding, and at any time during the 10 years immediately preceding, the disposition and the shares were owned by him when he or she ceased to be resident in Canada, or

(c)

the shares formed part of the business property of a permanent establishment that the holder has or had in Canada within the 12 months preceding the disposition.

U.S. Federal Income Tax Consequences



The following is a general discussion of certain possible U.S. federal income tax consequences, under current law, generally applicable to a U.S. Holder (as hereinafter defined) of common shares of the Company.  This discussion is of a general nature only and does not take into account the particular facts and circumstances, with respect to U.S. federal income tax issues, of any particular U.S. Holder.  In addition, this discussion does not cover any state, local or foreign tax consequences.  (See TaxationCertain Canadian Federal Income Tax Consequences above).

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations, published Internal Revenue Service (IRS) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time and which are subject to differing interpretations.  This discussion does not consider the potential effects, both adverse and beneficial, of any proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.

This discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any U.S. Holder or prospective U.S. Holder of common shares of the Company, and no opinion or representation with respect to the U.S. federal income tax consequences to any such U.S. Holder or prospective U.S. Holder is made.  Accordingly, U.S. Holders and prospective U.S. Holders of common shares of the Company should consult their own financial advisor, legal counsel or accountant regarding the U.S. federal, state, local and foreign tax consequences of purchasing, owning and disposing of common shares of the Company.

U.S. Holders

As used herein, a U.S. Holder means a holder of common shares of the Company who is (i) a  citizen or individual resident of the U.S., (ii) a corporation or partnership created or organized in or under the laws of the U.S. or of any political subdivision thereof, (iii) an estate whose income is taxable in the U.S. irrespective of source or (iv) a trust subject to the primary supervision of a court within the U.S. and control of a U.S. fiduciary as described Section 7701(a)(30) of the Code.

Persons Not Covered

This summary does not address the U.S. federal income tax consequences to persons (including persons who are U.S. Holders) subject to special provisions of U.S. federal income tax law, including (i) tax-exempt organizations, (ii) qualified retirement plans, (iii) individual retirement accounts and other tax-deferred accounts, (iv) financial institutions, (v) insurance companies, (vi) real estate investment trusts, (vii) regulated investment companies, (viii) broker-dealers, (ix) persons or entities that have a functional currency other than the U.S. dollar, (x) persons subject to the alternative minimum tax, (xi) persons who own their common shares of the Company as part of a straddle, hedging, conversion transaction, constructive sale or other arrangement involving more than one position, (xii) persons who acquired their common shares of the Company through the exercise of employee stock options or otherwise as compensation for services, (xiii) persons that own an interest in an entity that owns common shares of the Company, (xiv) persons who own, exercise or dispose of any options, warrants or other rights to acquire common shares of the Company, or (xv) persons who own their common shares of the Company other than as a capital asset within the meaning of Section 1221 of the Code.

Distribution on Common Shares of the Company

U.S. Holders receiving distributions (including constructive distributions) with respect to common shares of the Company are required to include in gross income for U.S. federal income tax purposes the gross amount of such distributions, equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that the Company has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions.  To the extent that distributions are made out of current or accumulated earnings and profits, preferential tax rates apply to such distributions to U.S. Holders that are individuals, estates or trusts.  Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holders U.S. federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder's U.S. federal taxable income by those who itemize deductions.  (See more detailed discussion at Foreign Tax Credit below).  To the extent that distributions from the Company exceed current or accumulated earnings and profits of the Company, such distributions will be treated first as a return of capital, to the extent of the U.S. Holders adjusted basis in the common shares, and thereafter as gain from the sale or exchange of the common shares of the Company.  (See more detailed discussion at Disposition of Common Shares of the Company below)

In the case of foreign currency received as a distribution that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt.  Generally any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss.  However, an individual whose realized gain does not exceed $200 will not recognize that gain, to the extent that there are no expenses associated with the transaction that meet the requirements for deductibility as a trade or business expense (other than travel expenses in connection with a business trip) or as an expense for the production of income.

Dividends paid on the common shares of the Company generally will not be eligible for the dividends received deduction allowed to corporate shareholders receiving dividends from certain U.S. corporations.  Under certain circumstances, a U.S. Holder that is a corporation and that owns shares representing at least 10% of the total voting power and the total value of the Companys outstanding shares may be entitled to a 70% deduction of the U.S. source portion of dividends received from the Company (unless the Company qualifies as a Foreign Personal Holding Company or a Passive Foreign Investment Company as defined below).  The availability of the dividends received deduction is subject to several complex limitations which are beyond the scope of this discussion, and U.S. Holders of common shares of the Company should consult their own financial advisor, legal counsel or accountant regarding the dividends received deduction.

Certain information reporting and backup withholding rules may apply with respect to certain payments related to the Companys common shares. In particular, a payor or middleman within the U.S., or in certain cases outside the U.S., will be required to withhold 28% (which rate is scheduled for periodic adjustment) of any payments to a U.S. Holder of the Companys common shares of dividends on, or proceeds from the sale of, such common shares within the U.S., if a U.S. Holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, the backup withholding tax requirements. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holders U.S. federal income tax liability, provided the required information is furnished to the IRS.  U.S. Holders should consult their own financial advisor, legal counsel or accountant regarding the information reporting and backup withholding rules applicable to the Companys common shares.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian or other foreign income tax with respect to the ownership of common shares of the Company may be entitled, at the option of the U.S. Holder, to either receive a deduction or a tax credit for U.S. federal income tax purposes with respect to such foreign tax paid or withheld.  Generally, it will be more advantageous to claim a credit because a credit reduces U.S. federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayers income subject to U.S. federal income tax.  This election is made on a year-by-year basis and applies to all foreign taxes paid by (or withheld from distributions to) the U.S. Holder during that year.

There are significant and complex limitations that apply to the foreign tax credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holders U.S. income tax liability that the U.S. Holders foreign source income bears to his or its worldwide taxable income.  In applying this limitation, the various items of income and deduction must be classified as either foreign source or U.S. source.  Complex rules govern this classification process.  In addition, this limitation is calculated separately with respect to specific classes of income such as passive income, high withholding tax interest, financial services income, shipping income, and certain other classifications of income.  Dividends distributed by the Company will generally constitute foreign source income, and will be classified as passive income or, in the case of certain U.S. Holders, financial services income for these purposes.

In addition, U.S. Holders that are corporations and that own 10% or more of the voting stock of the Company may be entitled to an indirect foreign tax credit under Section 902 of the Code with respect to the payment of dividends by the Company under certain circumstances and subject to complex rules and limitations.The availability of the foreign tax credit and the application of the limitations with respect to the foreign tax credit are fact specific, and each U.S. Holder of common shares of the Company should consult their own financial advisor, legal counsel or accountant regarding the foreign tax credit rules.

Disposition of Common Shares of the Company

A U.S. Holder will recognize gain or loss upon the sale or other taxable disposition of common shares of the Company equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholders tax basis in the common shares of the Company.  This gain or loss will be capital gain or loss if the common shares are a capital asset in the hands of the U.S. Holder, which will be long-term capital gain or loss if the common shares of the Company are held for more than one year.

Preferential tax rates apply to long-term capital gains of U.S. Holders that are individuals, estates or trusts.  There are currently no preferential tax rates for long-term capital gains for a U.S. Holder that is a corporation (other than a corporation subject to Subchapter S of the Code).  Deductions for net capital losses are subject to significant limitations.  For U.S. Holders that are not corporations, any unused portion of such net loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted.  For U.S. Holders that are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

Other Considerations for U.S. Holders

In the following circumstances, the above sections of this discussion may not describe the U.S. federal income tax consequences to U.S. Holders resulting from the ownership and disposition of common shares of the Company:

Foreign Personal Holding Company

If at any time during a taxable year (i) more than 50% of the total voting power or the total value of the Companys outstanding shares is owned, directly or indirectly, by five or fewer individuals who are citizens or residents of the U.S. and (ii) 60% (or 50% in certain cases) or more of the Companys gross income for such year is foreign personal holding company income as defined in Section 553 of the Code (e.g., dividends, interest, royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions), the Company may be treated as a Foreign Personal Holding Company (FPHC)  In that event, U.S. Holders of common shares of the Company would be required to include in gross income for such year their allocable portions of such foreign personal holding company income to the extent the Company does not actually distribute such income.

The Company does not believe that it currently qualifies as a FPHC.  However, there can be no assurance that the Company will not be considered a FPHC for the current or any future taxable year.

Foreign Investment Company

If (i) 50% or more of the total voting power or the total value of the Companys outstanding shares is owned, directly or indirectly, by citizens or residents of the U.S., U.S. partnerships or corporations, or U.S. estates or trusts (as defined by the Code Section 7701(a)(30)), and (ii) the Company is found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, the Company may be treated as a "Foreign Investment Company" (FIC) as defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging common shares of the Company to be treated as ordinary income rather than capital gain.

The Company does not believe that it currently qualifies as a FIC.  However, there can be no assurance that the Company will not be considered a FIC for the current or any future taxable year.

Controlled Foreign Corporation

If more than 50% of the total voting power or the total value of the Companys outstanding shares is owned, directly or indirectly, by citizens or residents of the U.S., U.S. partnerships or corporations, or U.S. estates or trusts (as defined by the Code Section 7701(a)(30)), each of which own, directly or indirectly, 10% or more of the total voting power of the Companys outstanding shares (each a 10% Shareholder), the Company could be treated as a Controlled Foreign Corporation (CFC) under Section 957 of the Code.

The classification of the Company as a CFC would effect many complex results, including that 10% Shareholders of the Company would generally (i) be treated as having received a current distribution of the Companys Subpart F income and (ii) would also be subject to current U.S. federal income tax on their pro rata shares of the Companys earnings invested in U.S. property.  The foreign tax credit may reduce the U.S. federal income tax on these amounts for such 10% Shareholders (See more detailed discussion at Foreign Tax Credit above).  In addition, under Section 1248 of the Code, gain from the sale or other taxable disposition of common shares of the Company by a U.S. Holder that is or was a 10% Shareholder at any time during the five-year period ending with the sale is treated as ordinary income to the extent of earnings and profits of the Company attributable to the common shares sold or exchanged.

If the Company is classified as both a Passive Foreign Investment Company as described below and a CFC, the Company generally will not be treated as a Passive Foreign Investment Company with respect to 10% Shareholders.  The Company does not believe that it currently qualifies as a CFC.  However, there can be no assurance that the Company will not be considered a CFC for the current or any future taxable year.  The CFC rules are very complicated, and U.S. Holders should consult their own financial advisor, legal counsel or accountant regarding the CFC rules and how these rules may impact their U.S. federal income tax situation.

Passive Foreign Investment Company

Certain U.S. income tax legislation contains rules governing Passive Foreign Investment Companies (PFIC) which can have significant tax effects on U.S. Holders of foreign corporations.  Section 1297 of the Code defines a PFIC as a corporation that is not formed in the U.S. and, for any taxable year, either (i) 75% or more of its gross income is passive income or (ii) the average percentage, by fair market value (or, if the corporation is not publicly traded and either is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of passive income is 50% or more.  Passive income includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.  However, gains resulting from commodities transactions are generally excluded from the definition of passive income if substantially all of a merchants, producers or handlers business is as an active merchant, producer or handler of such commodities.



For purposes of the PFIC income test and the assets test, if a foreign corporation owns (directly or indirectly) at least 25% by value of the stock of another corporation, such foreign corporation shall be treated as if it (a) held a proportionate share of the assets of such other corporation, and (b) received directly its proportionate share of the income of such other corporation.  Also, for purposes of such PFIC tests, passive income does not include any interest, dividends, rents or royalties that are received or accrued from a related person to the extent such amount is properly allocable to the income of such related person which is not passive income.  For these purposes, a person is related with respect to a foreign corporation if such person controls the foreign corporation or is controlled by the foreign corporation or by the same persons that control the foreign corporation.  For these purposes, control means ownership, directly or indirectly, of stock possessing more than 50% of the total voting power of all classes of stock entitled to vote or of the total value of stock of a corporation.



U.S. Holders owning common shares of a PFIC are subject to the highest rate of tax on ordinary income in effect for the applicable taxable year and to an interest charge based on the value of deferral of tax for the period during which the common shares of the PFIC are owned with respect to certain excess distributions on and dispositions of PFIC stock under Section 1291 of the Code.  However, if the U.S. Holder makes a timely election to treat a PFIC as a qualified electing fund ("QEF") with respect to such shareholder's interest therein, the above-described rules generally will not apply.  Instead, the electing U.S. Holder would include annually in his gross income his pro rata share of the PFIC's ordinary earnings and net capital gain regardless of whether such income or gain was actually distributed.  A U.S. Holder of a QEF can, however, elect to defer the payment of U.S. federal income tax on such income inclusions.  In addition, subject to certain limitations, U.S. Holders owning, actually or constructively, marketable (as specifically defined) stock in a PFIC will be permitted to elect to mark that stock to market annually, rather than be subject to the tax regime of Section 1291 of Code as described above.  Amounts included in or deducted from income under this alternative (and actual gains and losses realized upon disposition, subject to certain limitations) will be treated as ordinary gains or losses.



The Company believes that it was not a PFIC for its fiscal year ended July 31, 2003.  However, there can be no assurance that the Company will not be considered a PFIC for the current or any future taxable year.  There can be no assurance that the Company's determination concerning its PFIC status will not be challenged by the IRS, or that it will be able to satisfy record keeping requirements that will be imposed on QEFs in the event that it qualifies as a PFIC.



The PFIC rules are very complicated, and U.S. Holders should consult their own financial advisor, legal counsel or accountant regarding the PFIC rules and how these rules may impact their U.S. federal income tax situation.



F.

Dividends and Paying Agents

Generally, dividends that are paid by Canadian corporations to non-resident shareholders are subject to non-resident tax of 25%.  However, Paragraph 2 of Article X of the Tax Convention provides that, dividends paid by a Canadian corporation to a corporation resident in the United States, which owns at least 10% of the voting stock of the corporation paying the dividend, are subject to Canadian Non-Resident withholding tax at the source of 5% of the gross amount of the dividend.

In all other cases, when a dividend is paid by a Canadian corporation to the beneficial owner of shares resident in the United States, the Canadian Non-Resident withholding tax at the source is 15% of the gross amount of the dividend.

G.

Statements by Experts

Not Applicable.

H.

Documents on Display

Any documents referred to above can be viewed at the offices of the Companys principal executive office at 322-4585 Canada Way, Burnaby, British Columbia, V5G 4L6.  All of the documents referred to above are in English.

I.

Subsidiary Information

Not Applicable.

ITEM 11

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys financial results are quantified in United States dollars and a majority of our obligations and expenditures with respect to our operations are incurred in United States dollars.  In the past, we have raised equity funding through the sale of securities denominated in Canadian dollars, and we may in the future raise additional equity funding denominated in Canadian dollars.  It is anticipated that any future debt financings would be in United States dollars.  We do not believe we currently have any materially significant market risks relating to our operations resulting from foreign exchange rates.  However, if we enter into financings or other business arrangements denominated in a currency other than the United States dollar, variations in the exchange rate may give rise to foreign exchange gains or losses that could be significant.

We do not use financial instruments for trading purposes and are not a party to any derivatives.  In the event we experience substantial growth in the future, our business and results of operations may be materially effected by changes in interest rates on new debt financings, the granting of credit or lease financing options to our customers for new rides at applicable market interest rates, or rollovers of an existing 10.5% debt issue and, certain other credit risks associated with our operations.

ITEM 12

DEBT SECURITIES

Not applicable.

PART II

ITEM 13

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

ITEM 14

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15

CONTROL AND PROCEDURES

Under the supervision and with the participation of our management, including our President and Treasurer, Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e)under the Securities Exchange Act of 1934 (the Exchange Act)).  Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in timely alerting them to the material information relating to us (or our consolidated subsidiaries) required to be included in the reports we file or submit under the Exchange Act.

During the fourth fiscal quarter covered by this annual report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f)under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our Principal Executive Officer and Principal Financial Officer does not expect that our disclosure controls or internal controls will prevent all errors and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable assurance, not absolute assurance, that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered in relation to the costs.  Because of inherent limitation in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, with the Company has been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake.  Additional controls can be circumvented by the individual act of some persons, by collusion of two or more people, or by management override of the control.  The design of any system of controls also is based partly on certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

ITEM 16

ITEM 16A

AUDIT COMMITTEE FINANCIAL EXPERT

The Companys Board of Directors has determined that Ralph Proceviat qualifies as an audit committee financial expert as defined by the rules of the SEC.  Mr. Proceviat is a current member of the Canadian Institute of Chartered Accountants and the British Columbia Institute of Chartered Accountants.  Mr. Proceviat earned his Chartered Accountant designation in 1979.  He graduated from the University of British Columbia, Canada with a Bachelor of Commerce, majoring in Accounting and Management Information Systems.  Mr. Proceviat does not qualify as an independent director under the criteria set forth in Rule 10A-3 and NASD Rule 4350(d) and 4200 related to independent directors serving on audit committees of Nasdaq National Market listing companies.



ITEM 16B

CODE OF ETHICS

The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.  A copy of the Companys code of ethics is posted on the Companys website at www.thrilltime.com.



ITEM 16C

PRINCIPAL ACCOUNTANT FEES AND SERVICES



KPMG LLP (KPMG) has served as our independent auditors since July 31, 1997.  Upon recommendation of its Audit Committee, our Board of Directors has recommended that our shareholders approve the appointment of KPMG as our independent auditors for the fiscal year ending December 31, 2004.



Services and Fees of KPMG



The following table presents fees for services rendered by KPMG for fiscal 2003.



|Description        | Fees   
|------------------ | -------
|                   | 2003   
|Audit fees         | $33,411
|Audit-related fees | --     
|Tax                | $10,364
|All other fees     | --     
|Total              | $43,775



The Audit Committee has determined that the provision by KPMG of non-audit services to the Company in fiscal 2003 is compatible with KPMGs maintaining its independence.  The Audit Committee approved all of the tax services provided by KPMG in 2003.



KPMG has been approved by the Audit Committee to perform the following non-audit services during fiscal 2004: Periodic tax consultations and compliance services in various local, regional and national tax jurisdictions.



Audit Committee Preapproval Policy



Effective August 1, 2003, all services to be performed for the Company by KPMG must be preapproved by the Audit Committee or a designated member of the Audit Committee.  The Committee will annually review and preapprove the services that may be provided by the independent auditor without obtaining specific preapproval from the Committee. The Committee will revise the list of general preapproved services from time to time, based on subsequent determinations. The Committee does not delegate its responsibilities to preapprove services performed by the independent auditor to management.



AUDIT SERVICES



The annual Audit services engagement terms and fees will be subject to the specific preapproval of the Committee. The Committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Company structure or other matters.



In addition to the annual Audit services engagement specifically approved by the Committee, the Committee may grant general preapproval for other Audit services, which are those services that only the independent auditor reasonably can provide.



AUDIT-RELATED SERVICES



Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Companys financial statements or that are traditionally performed by the independent auditor; provided that such services do not impair the independence of the auditor.



TAX SERVICES



The Committee believes that the independent auditor can provide certain Tax services to the Company, such as tax compliance, tax planning and tax advice, without impairing the auditors independence.  However, the Committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations.



ALL OTHER SERVICES



The Committee may grant general preapproval to those permissible non-audit services classified as All Other services that it believes are routine and recurring services and would not impair the independence of the auditor.  In no event shall the Committee approve non-audit services prohibited by the SEC.



PREAPPROVAL FEE LEVELS



Preapproval fee levels for all services to be provided by the independent auditor will be established annually by the Committee. Any proposed services exceeding these levels will require specific preapproval by the Committee.



PROCEDURES



Requests or applications to provide services that require specific approval by the Committee will be submitted to the Committee by both the independent auditor and the Chief Financial Officer and must include a joint statement as to whether, in their view, the request or application is consistent with the SECs rules on auditor independence.





ITEM 16D

EXEMPTIONS FROM THE LISTING STANDARDS

FOR AUDIT COMMITTEES



Not applicable.





ITEM 16E

PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND

AFFILIATED PURCHASERS



There were no purchases made by or on behalf of the Company or any affiliated purchaser of the Companys equity securities.



PART III

ITEM 17

FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company as at July 31, 2003 and 2002 and for each of the years in the three year period ended July 31, 2003 have been reported on by KPMG LLP, Chartered Accountants. These financial statements have been prepared in accordance with Canadian GAAP.  Differences between Canadian GAAP and US GAAP are set forth in Note 17 to the financial statements.

---

Kpmg

KPMG  LLP

Chartered Accountants

Box 10426, 777 Dunsmuir Street

Vancouver BC V7Y 1K3

Canada

Telephone (604) 691-3000

Telefax      (604) 691-3031

www.kpmg.ca

AUDITORS' REPORT

To the Shareholders of ThrillTime Entertainment International, Inc.

We have audited the consolidated balance sheets of ThrillTime Entertainment International, Inc. as at 
July 31, 2003 and 2002 and the consolidated statements of operations and deficit and cash flows for the years ended July 31, 2003, 2002 and 2001.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform an audit to obtain reasonable assurance 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.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at July 31, 2003 and 2002 and the results of its operations and its cash flows for the years ended July 31, 2003, 2002 and 2001 in accordance with Canadian generally accepted accounting principles.

KPMG LLP (signed)

Chartered Accountants

Vancouver, Canada

October 22, 2003

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S. REPORTING DIFFERENCE

In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Companys ability to continue as a going concern, such as those described in note 1 to the consolidated financial statements.  Our report to the Shareholders dated October 22, 2003 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors report when these are adequately disclosed in the financial statements.

KPMG LLP (signed)

Chartered Accountants

Vancouver, Canada

October 22, 2003



---

THRILLTIME ENTERTAINMENT INTERNATIONAL, INC.

Consolidated Balance Sheets

(Expressed in U.S. Dollars)



As at July 31, 2003



|                                                         | 2003              | 2002            
|-------------------------------------------------------- | ----------------- | ----------------
|                                                         |                   |                 
|Assets                                                   |                   |                 
|                                                         |                   |                 
|Current assets:                                          |                   |                 
|Cash and cash equivalents                                | $         202,943 | $        265,729
|Accounts receivable                                      | 378,055           | 396,830         
|Inventories (note 3)                                     | 188,083           | 172,732         
|Prepaid expenses                                         | 19,772            | 18,125          
|                                                         | 788,853           | 853,416         
|                                                         |                   |                 
|Capital assets (note 4)                                  | 22,373            | 64,914          
|                                                         |                   |                 
|Other assets:                                            |                   |                 
|Deferred financing costs                                 | 25,000            | 72,206          
|Investment (note 5)                                      | −                 | 1               
|Patent rights (note 6)                                   | −                 | 1,005,160       
|                                                         | 25,000            | 1,077,367       
|                                                         |                   |                 
|                                                         | $      836,226    | $     1,995,697 
|                                                         |                   |                 
|Liabilities and Shareholders’ Deficiency                
|                                                         |                   |                 
|Current liabilities:                                     |                   |                 
|Accounts payable and accrued liabilities                 | $      366,385    | $        212,603
|Income and other taxes payable                           | 21,473            | 55,248          
|Current portion of long-term debt  (note 7)              | 2,952,240         | 7,390,987       
|                                                         | 3,340,098         | 7,658,838       
|                                                         |                   |                 
|Long-term debt (note 7)                                  | −                 | 2,567,938       
|                                                         | 3,340,098         | 10,226,776      
|                                                         |                   |                 
|Shareholders’ deficiency:                                |                   |                 
|Share capital (note 8):                                  |                   |                 
|Authorized: 100,000,000 common shares, without par value |                   |                 
|Issued: 20,007,297 common shares                         | 7,801,123         | 7,905,999       
|Contributed surplus (note 8(b))                          | 505,236           | −               
|Shares held in treasury: 247,200 common shares           | −                 | (1,003,235)     
|                                                         | 8,306,359         | 6,902,764       
|Equity component of convertible debentures (note 7)      | −                 | 495,381         
|Deficit                                                  | (10,810,231)      | (15,629,224)    
|                                                         | (2,503,872)       | (8,231,079)     
|Continuing operations (note 1)                           |                   |                 
|Commitments and contingencies (note 14)                  |                   |                 
|                                                         |                   |                 
|                                                         |                   |                 
|                                                         | $      836,226    | $     1,995,697 



On behalf of the Board:





Ralph Proceviat

Director

Sherrill Cyr

Director

---

THRILLTIME ENTERTAINMENT INTERNATIONAL, INC.

Consolidated Statements of Operations and Deficit

(Expressed in U.S. Dollars)



Years ended July 31, 2003, 2002 and 2001



|                                                                                             | 2003           | 2002            | 2001           
|-------------------------------------------------------------------------------------------- | -------------- | --------------- | ---------------
|                                                                                             |                |                 |                
|Product sales                                                                                | $    963,749   | $     1,678,899 | $   2,950,306  
|                                                                                             |                |                 |                
|Cost of sales                                                                                | 592,897        | 1,110,444       | 2,439,128      
|                                                                                             |                |                 |                
|Gross margin (note 16)                                                                       | 370,852        | 568,455         | 511,178        
|                                                                                             |                |                 |                
|Other revenue:                                                                               |                |                 |                
|Royalty revenue                                                                              | 1,024,889      | 982,547         | 1,141,134      
|Other revenue                                                                                | 261,166        | 299,650         | 88,974         
|                                                                                             | 1,656,907      | 1,850,652       | 1,741,286      
|Operating expenses:                                                                          |                |                 |                
|General and administration                                                                   | 1,285,377      | 1,372,424       | 1,227,248      
|Marketing and selling                                                                        | 37,178         | 56,984          | 68,614         
|Research and development                                                                     | 11,210         | 9,053           | 1,661          
|                                                                                             | 1,333,765      | 1,438,461       | 1,297,524      
|                                                                                             |                |                 |                
|Operating income (loss) before interest expense, income taxes, amortization, and under noted | 323,142        | 412,191         | 443,762        
|                                                                                             |                |                 |                
|Interest expense net of interest income                                                      | 513,792        | 676,054         | 657,795        
|Amortization of capital assets                                                               | 44,318         | 103,326         | 117,003        
|Amortization of patent rights                                                                | 1,005,160      | 1,664,946       | 1,664,947      
|Write-down of assets, legal and other costs (note 9)                                         | 1              | 331,000         | 876,495        
|Gain on settlement of convertible securities (note 7(a))                                     | (6,116,246)    | −               | −              
|                                                                                             | (4,552,975)    | 2,775,326       | 3,316,240      
|                                                                                             |                |                 |                
|Income (loss) before income taxes                                                            | 4,876,117      | (2,363,135)     | (2,872,478)    
|                                                                                             |                |                 |                
|Income tax expense (note 10)                                                                 | (57,124)       | (80,031)        | (193,465)      
|                                                                                             |                |                 |                
|Net income (loss) for the year                                                               | 4,818,993      | (2,443,166)     | (3,065,943)    
|                                                                                             |                |                 |                
|Deficit, beginning of year                                                                   | (15,629,224)   | (13,186,058)    | (10,120,115)   
|                                                                                             |                |                 |                
|Deficit, end of year                                                                         | $ (10,810,231) | $ (15,629,224)  | $  (13,186,058)
|                                                                                             |                |                 |                
|Earnings (loss) per share (note 8(e))                                                        | $ 0.26         | $ (0.14)        | $ (0.18)       
|                                                                                             |                |                 |                



---

THRILLTIME ENTERTAINMENT INTERNATIONAL, INC.

Consolidated Statements of Cash Flows

(Expressed in U.S. Dollars)



Years ended July 31, 2003, 2002 and 2001



|                                                         | 2003            | 2002            | 2001            
|-------------------------------------------------------- | --------------- | --------------- | ----------------
|                                                         |                 |                 |                 
|Cash flows from (used in) operating activities:          |                 |                 |                 
|Operating income/loss for the period                     | $ 4,818,993     | $  (2,443,165)  | $   (3,065,943) 
|Items not involving cash:                                |                 |                 |                 
|Amortization of capital assets                           | 44,318          | 103,326         | 117,003         
|Amortization of patent rights                            | 1,005,160       | 1,664,946       | 1,664,947       
|Amortization of deferred financing costs                 | 47,206          | 85,297          | 85,296          
|Amortization of deferred gain (note 7(a))                | (62,697)        | (150,475)       | (150,474)       
|Gain on settlement of convertible securities (note 7(a)) | (6,611,627)     | −               | −               
|Gain on disposal of Skycoaster® (note 4)                 | (175,000)       | −               | −               
|Loss on disposal of capital asset                        | 6,173           | −               | −               
|Stock compensation                                       | 9,855           | −               | −               
|Non-cash interest on convertible securities              | 189,320         | 452,220         | 452,220         
|Write-down of inventory                                  | −               | 331,000         | 676,496         
|Write-down of investment                                 | 1               | −               | 199,999         
|Cash flows from (used in) operations                     | (232,917)       | 43,148          | (20,456)        
|Change in non-cash operating working capital:            |                 |                 |                 
|Accounts receivable                                      | 18,775          | 254,516         | (115,390)       
|Inventories                                              | (15,351)        | 190,194         | (53,971)        
|Prepaid expenses                                         | (1,647)         | 1,272           | 14,943          
|Accounts payable and accrued liabilities                 | 153,782         | (692,892)       | 404,697         
|Customers deposits                                       | −               | (25,000)        | (1,382)         
|Income and other taxes payable                           | (33,775)        | (36,487)        | 5,799           
|Cash flows from (used in) operating activities           | (111,133)       | (265,249)       | 234,240         
|                                                         |                 |                 |                 
|Cash flows from (used in) financing activities:          |                 |                 |                 
|Repayment of long-term debt                              | (184,562)       | (557,153)       | (667,070)       
|Issuance of common shares                                | 65,859          | −               | −               
|Cash flows from (used in) financing activities           | (118,703)       | (557,153)       | (667,070)       
|                                                         |                 |                 |                 
|Cash flows from (used in) investing activities:          |                 |                 |                 
|Capital assets                                           | (7,950)         | (3,853)         | (2,946)         
|Proceeds on disposal of Skycoaster®                      | 175,000         |                 | −               
|Cash flows from (used in) investing activities           | 167,050         | (3,853)         | (2,946)         
|                                                         |                 |                 |                 
|Decrease in cash and cash equivalents                    | (62,786)        | (826,255)       | (435,776)       
|                                                         |                 |                 |                 
|Cash and cash equivalents, beginning of year             | 265,729         | 1,091,984       | 1,527,760       
|                                                         |                 |                 |                 
|Cash and cash equivalents, end of year                   | $       202,943 | $       265,729 | $      1,091,984



Supplementary cash flow information (note 11)



See accompanying notes to the consolidated financial statements.

---



THRILLTIME ENTERTAINMENT INTERNATIONAL, INC.

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)



Years ended July 31, 2003, 2002 and 2001





|The Company is incorporated under the Company Act (British Columbia) and its principal business activities are the sale and development of actual experience amusement rides.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1.
Continuing operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|These financial statements have been prepared on the going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities and commitments in the ordinary course of business notwithstanding that, at July 31, 2003, the Company had a working capital deficiency of $2,551,245, shareholders deficiency of $2,503,872, non-compliance with terms in certain debt instruments (note 7), negative cash flows from operating activities for 2003, and with income being generated in the current fiscal year primarily due to a gain on the settlement of convertible securities, and losses in each of the previous two fiscal years.  Operations to date have been primarily financed by long-term debt and equity transactions. As a result, the Companys future operations are dependent upon the identification and successful completion of additional long-term or permanent equity financing, the continued support of creditors and shareholders, and, ultimately, the achievement of profitable operations.
There can be no assurances that the Company will be successful in raising additional cash to finance operations or that the continued support of creditors and shareholders will be available. If it is not, the Company will be required to reduce operations or liquidate assets. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.
Significant accounting policies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(a)
Basis of presentation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Superstar Dragsters, Inc. and Skycoaster, Inc., both incorporated under the laws of the State of Nevada, U.S.A. These financial statements have been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP) which are substantially in accordance with United States generally accepted accounting principles (U.S. GAAP), except as disclosed in note 15.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(b)
Cash and cash equivalents:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Cash and cash equivalents consist of cash on hand and balances with banks, and investments in money market instruments with a term to maturity of three months or less on acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(c)
Inventories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Inventories are stated at the lower of cost, on a first-in, first-out basis, and net realizable value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(d)
Capital assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Capital assets are recorded at cost and are amortized over their remaining estimated useful economic life as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



|Asset       | Method and rate                                                            
|----------- | ---------------------------------------------------------------------------
|            |                                                                            
|Equipment   | Declining-balance basis at between 20% and 30% per annum                   
|Skycoasters | Straight-line basis over the term of their operating agreements (3-5 years)



|(e)
Deferred financing costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Deferred financing costs relate to the issuance of convertible securities during 1998 and the secured loan during fiscal 2000 (note 7). These costs are being amortized to interest expense over the terms of the respective debt instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(f)
Investments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Investments in shares of companies where the Company does not have the ability to exercise significant influence over the operating, financing and investing activities of the investee are carried at cost, less a provision for other than temporary decline in value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(g)
Patent rights:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Patent rights acquired as a result of business acquisitions are amortized on a straight-line basis over their remaining useful life, which on acquisition, was estimated to be 5 years. Management reassesses the net recoverable amount of the patents on a periodic basis, based on the estimated undiscounted future net cash flows. An impairment charge is recognized to the extent that the carrying value exceeds its net recoverable amount.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(h)
Stock based compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Effective August 1, 2002, the Company adopted, on a prospective basis, the standard in Section 3870 of the CICA Handbook for accounting for stock-based compensation.  The new standard requires the Company to account for direct share awards and grants of options to non-employees using the fair value method of accounting for stock-based compensation.  Options granted to employees and directors will be accounted for using the intrinsic value method of accounting for stock-based compensations.  Accordingly, no compensation cost has been recognized for such grants of options to employees and directors, as the exercise price is equal to the market price of the stock on the grant date.
Under the fair value based method, stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable.  The fair value of stock-based payments to non-employees is periodically re-measured until counterparty performance is complete, and any change therein is recognized over the period and in the same manner as if the Company had paid cash instead of paying with or using equity instruments.  The cost of stock-based payments to non-employees that are fully vested and nonforfeitable at the grant date is measured and recognized at that date.
The Company issues shares and share options under its share-based compensation plans as described in note 8(c).  Any consideration paid by employees on exercise of the share options or purchase of shares is credited to share capital.
|(i)
Translation of foreign currencies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|The Companys functional currency is the U.S. dollar.   Amounts denominated in foreign currencies but for which the functional currency of the operation is the United States dollar are translated at the exchange rate in effect at the transaction date.  Monetary assets and liabilities denominated in currencies other than the functional currency are translated at the exchange rate prevailing at the balance sheet date.  Exchange gains and losses on translation are included in earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(j)
Revenue recognition:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Revenues from the sale of entertainment rides are recognized by the percentage of completion method whereby revenue recognized in the statement of operations is the percentage of estimated total revenue relating to the contract that incurred costs to date bear to estimated total costs, after giving effect to estimates of costs to complete based upon most recent information. To the extent that payments received from the purchaser pursuant to the agreement are in excess of the revenue recognized, such excess is presented as deferred revenue on the balance sheet. Royalty revenues are recorded as earned in accordance with the specific terms and conditions of the royalty agreement. Other revenues, consisting primarily of sales of parts, are recorded at the time of delivery.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(k)
Income taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|The Company follows the asset and liability method of accounting for income taxes. Under this method, future income taxes are recognized for the future income tax consequences attributable to differences between the financial statement carrying values of existing assets and liabilities and their respective income tax bases (temporary differences). The resulting changes in the net future income tax asset or liability are included in income. Future income tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on future income tax assets and liabilities of a change in tax rates is included in income in the period that includes the enactment or substantive enactment date. Future income tax assets are evaluated and if realization is not considered more likely than not, a valuation allowance is provided.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(l)
Use of estimates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Financial statements prepared in conformity with Canadian generally accepted accounting principles require management to make estimates and assumptions which can affect the reported balances. In determining estimates of net recoverable amounts and net realizable values, or whether there has been a permanent impairment in value, for accounts receivable, inventories, capital assets, investments, patent rights and other assets, the Company relies on assumptions regarding applicable industry performance and prospects, as well as general business and economic conditions that prevail and are expected to prevail. Assumptions underlying asset valuations are limited by the availability of reliable comparable data and the uncertainty of predictions concerning future events.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|By nature, asset valuations are subjective and do not necessarily result in precise determinations. Should the underlying assumptions change, the estimated net recoverable amounts and net realizable values may change by a material amount.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(m)
Earnings per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average shares outstanding during the reporting period. Diluted earnings per share are computed similar to basic earnings per share except that the weighted average shares outstanding are increased to include additional shares from the assumed exercise of stock options, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options were exercised and that the proceeds from such exercises were used to acquire shares of common stock at the average market price during the reporting period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(n)
Comparative figures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Certain of the prior years comparative figures have been reclassified to conform with the presentation adopted for the current year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3.
Inventories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Top Eliminator:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Spare parts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Skycoaster:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Spare parts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



|During the year ended July 31, 2002, the Company wrote-down Top Eliminator work-in-progress inventory by $331,000 (note 9) after an assessment of the carrying value of its inventory relative to the estimated net realizable value.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.
Capital assets:                                                                                                                                                                                                                   



|            |          |              | 2003     | 2002    
|----------- | -------- | ------------ | -------- | --------
|            |          | Accumulated  | Net book | Net book
|            | Cost     | Amortization | Value    | Value   
|            |          |              |          |         
|Equipment   | $132,483 | $110,110     | $22,373  | $27,967 
|Skycoasters | 112,089  | 112,089      | −        | 36,947  
|            |          |              |          |         
|            | $244,572 | $222,199     | $22,373  | $64,914 



|Cost of equipment as of July 31, 2002 was $168,518 and cost of Skycoasters as at July 31, 2002 was $542,911. Accumulated amortization at July 31, 2002 was $140,551 and $505,964, respectively.  During fiscal 2003 the Company sold one of the previously leased Skycoasters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5.
Investment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|During fiscal 1997, the Company entered into a sales and licence agreement with Malibu Entertainment Worldwide, Inc. (Malibu) to provide 32 lanes of the Top Eliminator ride in fiscal 1997, 40 lanes in fiscal 1998 and 48 lanes in fiscal 1999. During fiscal 1999, Malibu advised the Company that it would not be ordering the 48 lanes pursuant to the fiscal 1999 portion of the contract, and defaulted on the terms of the fiscal 1998 portion of the contract. As at July 31, 1999, installment payments in conjunction with the 1998 portion of the contract were in arrears for $1.1 million, which was included in accounts receivable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|During fiscal 2000, the Company entered into a settlement agreement whereby Malibu paid the Company the $1.1 million in cash due to the Company regarding the 1998 portion of the contract, and issued to the Company Malibu common shares having a trading value at the date of issuance of $1.5 million in exchange for 20 of the 40 lanes pursuant to the fiscal 1998 portion of the contract and for the Company canceling Malibus obligation to acquire the 48 additional lanes pursuant to the fiscal 1999 portion of the contract. The Company received 4,633,922 shares of Malibu that had an average trading value of $0.3237 per share at the time of issuance. The shares received were subject to a one year hold period (that expired February 18, 2001), and thereafter, could be sold in accordance with a formula arrangement that limit the number of shares the Company could sell on a monthly basis. The settlement agreement provided Malibu the option to purchase the shares from the Company for cash of $1.5 million to August 16, 2000, which expired unexercised. As a result of the above restrictions and other factors, the Company initially recorded the Malibu shares received at their estimated fair value of $500,000.
As at July 31, 2000, the quoted market value of the Malibu shares was $0.22 per share. At November 10, 2000, the quoted market value of Malibu shares had declined to $0.045 per share. As a result of this and other factors, the Company recorded a provision for the other than temporary decline in value of the Malibu shares of $300,000 as at July 31, 2000.
As at July 31, 2001, the quoted market value of the Malibu shares was $0.02 per share. Accordingly, the Company recorded a provision for the other than temporary decline in value of the Malibu shares of $199,999 to $1 (note 9).
On January 21, 2002, Malibu announced that it would terminate the registration of its common shares under the Securities and Exchange Act of 1934 and to cause its common shares to cease to be traded on the OTC Bulletin Board on January 24, 2002.
As at July 31, 2003, Malibu had filed for bankruptcy and its assets were subsequently purchased by a third party during the fiscal 2003 year.  As a result the Company has written off the carrying value of the Malibu shares to nil (note 9).
|6.
Patent rights:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|The continuity of patents rights is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Cost of patent rights acquired during fiscal 1998                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Purchase price adjustments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Write-down during fiscal 1999                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Balance at July 31, 2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Balance at July 31, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Balance at July 31, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Balance at July 31, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|7.
Long-term debt:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Convertible securities which are unsecured, bear interest at 6% per annum and are convertible into common shares of the Company at a conversion price of $1.11 per share (net of equity component of $495,381 (note 7(a))                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Accretion of implicit interest in convertible securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|6% implicit interest on convertible securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Less $60,000 of convertible securities, plus accrued interest, converted into common shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Deferred gain on modification of convertible securities, net of amortization of $476,502 (note 7(a))                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Note payable bearing interest at 5% per annum (note 7(a))                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Amount due for settlement agreement (note 7(b))                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Non-convertible secured loan bearing interest at 10.5% per annum (note 8(c))                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Less current portion of long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(a)
Convertible securities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|During fiscal 1998, the Company issued convertible securities for $6,000,000 which were convertible into common shares of the Company at a conversion price of the lesser of $2.50 per share or 85% of the quoted market price of the Companys common shares until June 30, 2001. The securities bore interest at 6% per annum and were unsecured. At the Companys option, any time before the holders elected to convert their convertible securities into common shares, the Company could repay the convertible securities for cash at 120% of the face value of the convertible securities, if the quoted market price of the Companys common shares was less than $3.00 per share, and at 130% of the face value of the convertible securities, if the quoted market price of the Companys common shares was greater than $3.00 per share. The convertible securities were split between long-term debt and equity components for accounting purposes at issuance.
During fiscal 1999, $60,000 of convertible securities, plus accrued interest of $927, were converted into 165,159 common shares of the Company.
During fiscal 2000, certain terms of the convertible securities were amended. The balance of outstanding convertible securities of $5,940,000 were then convertible into common shares of the Company at a fixed conversion price of $1.11 per share until December 31, 2002, when, subject to certain defined events not occurring, any remaining amounts owing would automatically be converted into common shares at the fixed conversion rate of $1.11 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Interest on the convertible securities accrued until the convertible securities were converted or repaid. Interest on the convertible securities could be paid by way of cash or additional common shares of the Company at the option of the Company. As part of the amendment agreement, accrued interest payable to November 1, 1999 of $476,502 was waived. This gain was deferred and amortized to operations as a reduction of interest expense over the remaining term of the renegotiated debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Under the terms of the amendment agreement, the Company filed a Registration Statement with the U.S. Securities and Exchange Commission to register the 5,351,352 common shares issuable upon the conversion of the convertible securities. The Registration Statement became effective on April 28, 2000. The convertible securities were incrementally convertible on a monthly basis with certain restrictions regarding the amount and timing of conversions, until fully converted. The holder of the convertible securities agreed to restrictions as to the number of shares that could be sold as well as the timing of such sales.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|During fiscal 2001, the Company filed a Registration Statement with the US Securities and Exchange Commission to register the 1,016,895 common shares related to the maximum amount of interest which could accrue at maturity on December 31, 2002. The issuance of these shares were approved by CDNX on December 14, 2000 and shareholder approval was received at the annual general meeting held January 11, 2001. The Registration Statement became effective on June 29, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|On December 31, 2002, the convertible securities were not converted.  On January 23, 2003, the Company reached an agreement with the holder of a $5,950,000 convertible debenture (the Debenture) to satisfy and discharge all of the Companys obligations through a combination of cash and common shares of the Company.  The Debenture, including accrued interest, was to have automatically converted into 6,368,247 common shares of the Company at $1.11 per share on December 31, 2002.  If the full conversion had taken place, the Debenture holder would have held a block of shares representing 26.68% of the post conversion shares of 23,872,744 common shares, (consisting of the pre-conversion number of shares outstanding of 17,504,497 plus the conversion shares of 6,368,247).  At the time of the settlement, the potential 26.68% holdings of the Debenture holder was reduced to 3.7% of the 20,007,297 outstanding common shares.
Under the terms of the agreement reached with the holder of the Debenture, the Company agreed to pay $120,000 in cash and issue 750,000 common shares to the holder in full and final satisfaction of the Debenture obligation.  $60,000 of the $120,000 was paid on January 23, 2003 and the Company signed a promissory note for the remaining $60,000 whereby the principal amount together with interest is to be paid in four monthly installments commencing July 31, 2003.
The Company did not meet its payment obligations and the promissory note is now due on demand and bears interest at 18% per annum until the entire amount is paid in full.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|The effect of the settlement as at January 23, 2003 is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Convertible debenture plus accrued interest, including equity component of $495,381, prior to discharge                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Less consideration paid to Debenture Holder:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Note payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Common shares converted and issued  750,000 at US $1.11                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Equity component of debenture                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Gain on settlement of convertible securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



|(b)
Amount due for settlement agreement:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|During fiscal 1998, the Company entered into a participation and cooperation agreement (the Agreement) with a third party related to the acquisition and further development of an improved amusement park dragster concept and ride. In fiscal 1999, the Company issued 300,000 common shares to the third party pursuant to the Agreement. In addition, pursuant to an option agreement with the third party, the Company granted the third party 500,000 stock options exercisable at $4.00 per share to February 1, 2000 and 200,000 stock options exercisable at $4.25 per share to February 1, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|The Agreement provided that should the quoted market price of common shares of the Company received or acquired on exercise of the options be trading at less than $10 on five consecutive days at any time between the date of the agreement and February 1, 2000, the Company would, at the option of the third party, be required to pay to the third party an amount equal to the number of common shares of the Company that the third party acquired pursuant to the terms and conditions of the Agreement, and which were still held by the third party on February 1, 2000, multiplied by the difference between $10 and the market price in U.S. dollars for a common share of the Company as of February 1, 2000 (the Share Price Differential). In the event that the Company was unable to fulfill this obligation, the third party would no longer be bound by the terms and conditions of the Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|If the Company had been required to settle this liability on July 31, 1999, the amount payable to the third party would have been approximately $4,933,000 (based on 500,000 common shares of the Company covered by the Agreement held by the third party at July 31, 1999 and the quoted market price of the Companys common shares at July 31, 1999 of Cdn. $0.20).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|During fiscal 2000, the Company renegotiated the terms and conditions of the Agreement with the third party by entering into a settlement agreement. The Company agreed to pay the third party a total of $750,000, which was accrued as at July 31, 1999, in installments during the period to August 1, 2003, and granted the third party an option to acquire two Skycoasters at the Companys cost. The parties also agreed to cancel the 500,000 unexercised stock options and eliminate the previous terms regarding the Share Price Differential and all other terms and conditions relating to the original Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|On August 1, 2001, the Company paid $200,000 to the third party and on June 28, 2002 renegotiated the remaining $250,000 that was due on or before March 31, 2002. The Company agreed to pay the principal sum of $260,135, which included legal fees, bearing interest at the rate of 8.5%, amortized over a period of twenty-four months, in equal monthly payments of $11,825 beginning August 1, 2002. The Company granted to the third party security interest in ten Top Eliminator dragsters (individual vehicles). In addition to the $260,135, as part of the settlement, $100,000 is due and payable August 1, 2003 which the Company was unable to pay.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(c)
Non-convertible secured loan:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|On November 5, 1999, the Company completed a $4,000,000 financing by way of a non-convertible secured loan bearing interest at 10.5% per annum which is repayable over five years in quarterly installments of principal and interest totaling $261,319.  The funds were used to complete the acquisition of SkyFun 1, Inc.  Under the terms of the loan agreement, the Company has pledged to the lender its common shares of Skycoaster, Inc., the Companys subsidiary that merged with SkyFun 1, Inc., as well as the Skycoaster worldwide patents, trademarks and royalty stream. The loan may be repaid at any time with a penalty equal to the interest the lender would have otherwise earned over the remaining term of the loan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|On March 13, 2002, the Company renegotiated the payment terms of the loan agreement. It was agreed the loan would be repaid in sixteen (16) quarterly installments of principal and interest, the first four installments each in the amount of $70,349 commencing on February 15, 2002 and the last twelve installments each in the amount of $261,320 commencing February 15, 2003. All other terms of the loan remain in full force and effect.
As at July 31, 2003 the Company was in default on the February and May principal repayments totaling $386,999 and therefore the loan is now due on demand.  Accordingly, the entire balance of the promissory note has been classified as current.  Subsequent to year end the February payment was made in full.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|8.
Share capital:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(a)
Authorized:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|100,000,000 common shares without par value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(b)
Issued:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Balance at July 31, 2000, 2001 and 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Issued for cash:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Private placement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Issued pursuant to discharge of convertible securities (note 7(a))                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Treasury shares cancelled                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Balance at July 31, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|During the year, the Company cancelled 247,200 shares held in treasury with a stated value of $1,003.235.
As a result of the discharge of the convertible debenture (note 7(a)), the Company recognized an increase in contributed surplus of $495,831 which represents a settlement of the equity component of  the debenture at an assigned value of $nil.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(c)
Stock options:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Stock options to purchase shares from the Company are granted to directors and employees of the Company on the terms and conditions acceptable to the applicable securities regulatory authorities in Canada, in particular the TSX Venture Exchange (TSX). In 2002, all options were granted in Canadian dollars which is the functional currency in which the grantee is remunerated. The Company has a formal stock option plan (the Plan) that allows the directors to grant stock options to purchase up to a total of 3,407,850 common shares, provided that stock options in favour of any one individual may not exceed 5% of the issued and outstanding shares. No stock option granted under the Plan is transferable by the optionee other than by will or the laws of descent and distribution, and each stock option is exercisable during the lifetime of the optionee only by such optionee. The exercise price of all stock options granted under the Plan must not be less than the Discounted Market Price (the last closing price of the listed shares before the date of the grant, less the applicable discounts), subject to a minimum price of Cdn. $0.10 per share, and the maximum term of each stock option may not exceed five years. Vesting provided at the discretion of the directors and once vested, options are exercisable at any time. Any shares issued on the exercise of stock options must be legended with a four month hold period commencing on the date the stock options were granted.
|The continuity of stock options for fiscal 2003 is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



|Expiry                                    | Exercise   | July 31,  |           |           | Expired or | July 31, 
|----------------------------------------- | ---------- | --------- | --------- | --------- | ---------- | ---------
|Date                                      | Price      | 2002      | Granted   | Exercised | Cancelled  | 2003     
|                                          |            |           |           |           |            |          
|10/28/02                                  | Cdn. $0.24 | 30,000    |          |          | (30,000)   |          
|11/03/02                                  | Cdn. $0.24 | 400,000   |          |          | (400,000)  |          
|12/31/03                                  | Cdn. $0.16 | 300,000   |          |          | (300,000)  |          
|11/25/05                                  | Cdn. $0.10 |           | 2,075,000 |           | (175,000)  | 1,900,000
|12/31/05                                  | Cdn. $0.16 | 300,000   |           |          |           | 300,000  
|                                          |            | 1,030,000 | 2,075,000 |          | (905,000)  | 2,200,000
|Weighted average exercise prices (Cdn. $) | $0.19      | $0.10     | $        | $(0.20)   | $0.11     
|Number of options exercisable             |            |           |           | 2,100,000



|The summary continuity of stock options for fiscal 2002 is as follows:
|----------------------------------------------------------------------



|                                          |       | July 31,  |         |           | Expired or | July 31, 
|----------------------------------------- | ----- | --------- | ------- | --------- | ---------- | ---------
|                                          |       | 2001      | Granted | Exercised | Cancelled  | 2002     
|                                          |       |           |         |           |            |          
|                                          |       | 1,235,000 | 300,000 |          | (505,000)  | 1,030,000
|Weighted average exercise prices (Cdn. $) | $0.60 | $0.16     | $      | $(1.15)   | $0.19     



|The summary continuity of stock options for fiscal 2001 is as follows:
|----------------------------------------------------------------------



|                                          |       | July 31,  |         |           | Expired or | July 31, 
|----------------------------------------- | ----- | --------- | ------- | --------- | ---------- | ---------
|                                          |       | 2000      | Granted | Exercised | Cancelled  | 2001     
|                                          |       |           |         |           |            |          
|                                          |       | 1,390,000 | 300,000 |          | (455,000)  | 1,235,000
|Weighted average exercise prices (Cdn. $) | $0.68 | $0.16     | $      | $(0.58)   | $0.60     



|As outlined in note 1(h), the Company adopted, on a prospective basis, the standards in Section 3870 of the CICA Handbook for accounting for stock-based compensation.  As permitted by Section 3870, the Company did not adopt the provisions in respect of the fair value method of accounting for all employees stock-based compensation.  As a result, pro forma disclosure is required to reflect the impact on the Company as if it had elected to adopt the fair value method of accounting provisions of CICA Handbook Section 3870.
If compensation costs for the Companys employee stock options issued in 2003 had been determined using the fair value method of accounting for stock-based compensation, for the year ended July 31, 2003, the Companys net income would have decreased by $135,682 to $4,683,311 and by $0.01 per share to $0.25 per share.
Options issued in 2003 had a weighted fair value of Cdn. $0.10 per share.  The fair value was determined using the Black-Scholes valuation model using the following weighted average assumptions:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Expected life                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Expected dividend                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Expected volatility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Risk-free interest rate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(d)
Share purchase warrants:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Expiry                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Date                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|01/20/04                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|On January 20, 2003, the Company completed a private placement for 2,000,000 shares.  Each share includes one share purchase warrant exercisable at Cdn. $0.10 per share until January 20, 2004.  All securities issued in connection with this transaction are subject to a one-year hold period and cannot be sold or transferred until January 20, 2004.
There were no share purchase warrants outstanding for fiscal 2002 and 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(e)
Weighted-average shares outstanding:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Loss per share has been calculated using the weighted-average number of common shares outstanding during the year of 18,679,000 (2002  17,257,297; 2001  17,257,297). Diluted loss per share does not differ from basic loss per share as all potential common shares are anti-dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|9.
Write-down of assets, legal and other costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|The Company incurred the following costs in connection with restructuring various agreements and assessing the carrying value of its assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Write-down of Top Eliminator inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Write-down of investment in Malibu                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.
Income taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|The income tax rate for the years ended July 31, 2003, 2002 and 2001 varied from the basic federal and British Columbia provincial income tax rate as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Basic rate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Tax benefits of losses not recognized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Foreign taxes differing from basic rate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Gain on settlement of convertible securities not taxable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Withholding taxes on inter-corporate interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Amortization of patent rights not tax deductible                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Effective rate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Income tax expense comprises the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|United States federal and state income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Withholding taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



|The tax effect of the temporary differences that give rise to future tax assets and future tax liabilities are presented below:
|-------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                               
|                                                                                                                               
|Future income tax assets                                                                                                       
|Tax loss carry forwards                                                                                                        
|Research and development and other                                                                                             
|Unpaid interest                                                                                                                
|Capital assets                                                                                                                 
|Patent rights                                                                                                                  
|Total gross future income tax assets                                                                                           
|less:  valuation allowance                                                                                                     
|Total future income tax assets                                                                                                 
|Total future income tax liability                                                                                              
|                                                                                                                               



|Management believes that it is not more likely than not that it will create sufficient taxable income to realize its future tax assets. As a result, a full valuation allowance has been recognized.
At July 31, 2003, the Company has non-capital losses carried forward for tax purposes totaling approximately $962,000 which are available to reduce taxable income of future years in the amount of $194,000 in Canada and $768,000 in the United States. The losses in Canada expire commencing in 2010 and in the United States commencing in 2018 through 2022.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|11.
Supplementary cash flow information:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Supplementary non-cash operating, financing and investing activities are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Financing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Share issued on settlement of convertible securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Interest paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Income taxes paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|12.
Financial instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(a)
Fair value:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|As at July 31, 2003 and 2002, the carrying amounts of the Company’s current financial instruments, including cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate fair value due to the immediate or short-term maturity of these financial instruments. The Companys long-term debt approximates the fair value due to the immediate maturity of the financial instrument (2002 - $9,896,228).                                                
|(b)
Concentration of credit risk:                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|One customer representing the sale of an amusement ride accounted for 22% of all product sales for the year ended July 31, 2003 (2002  two customers accounted for 46%; 2001  four customer accounted for 72%). As at July 31, 2003, the customer was not indebted to the Company but in the previous two years accounts receivable from them represented the following percentage of total assets (2002  1%; 2001  8%). Management utilizes established credit policies to mitigate this risk.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|13.
Segment disclosures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|The Company considers its business to comprise a single operating segment, being the development, construction and sale of actual experience amusement rides. Supplementary information disclosed by geographic area based on customer location is as follows:                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2003:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Revenues including interest income                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Income for the year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Identifiable assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2002:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Revenues including interest income                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Loss for the year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Identifiable assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2001:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Revenues including interest income                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Loss for the year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Identifiable assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



|14.
Commitments and contingencies:                                                                                                            
|----------------------------------------------------------------------------------------------------------------------------------------------
|In addition to the commitments and contingencies disclosed elsewhere in these financial statements, the Company has the following commitments:
|(a)
The Company has aggregate office lease and estimated lease cost commitments during the next five years approximately as follows:          



|2004 | $45,342
|---- | -------
|2005 | 32,636 
|2006 | 4,020  
|2007 | 3,783  
|2008 | 946    
|     | $86,727



|(b)
Due to the nature of the Company's business, and the potential personal injury lawsuits and claims against the park operators and the Company as a manufacturer, the Company carries general liability insurance, which provides coverage of up to a general aggregate limit of $1 million (2002 - $5 million) per loss occurrence with a self-insured retention of $25,000 (2002 - $25,000).  Matters that are probable of unfavorable outcome to the Company and which can be reasonably estimated are accrued. Such accruals are based on information known about such matters, the Company's estimates of the outcome of such matters and its experience in contesting, litigating and settling similar matters.  However, should the claim be settled for amounts in excess of the established reserves, such costs will be charged to operations as incurred.  None of the actions known to management are believed to involve amounts that would be material to the Company's consolidated financial position, operations, or liquidity.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|15.
Differences between Canadian and United States generally accepted accounting principles:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Accounting practices under Canadian and United States generally accepted accounting principles (GAAP), as they affect the Company, are substantially the same, except for the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(a)
Presentation of gross margin and operating income (loss):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Under U.S. GAAP, the inventory write-down of $nil (2002 - $331,000, 2001  $676,496) would be included in cost of sales and the amortization of capital assets of $44,318 (2002 - $103,326, 2001 - $117,003), amortization of patent rights of $1,005,160 (2002 - $1,664,946, 2001 - $1,664,947), the write-down of other assets, legal and other costs of $1 (2001 - nil, 2001 - $199,999) would be included in operating expenses. The negative gross margin under U.S. GAAP in 2001 is due to the significant cost of sales which includes a write-down of $676,496 of Top Eliminator inventory which has no comparable revenue in 2001. These differences are summarized as follows:                                                                                                                                                                                                                                                                                                                                                           



|                                       | 2003     | 2002      | 2001      
|-------------------------------------- | -------- | --------- | ----------
|                                       |          |           |           
|Gross margin under Canadian GAAP       | $370,852 | $568,455  | $511,178  
|Write-down of Top Eliminator inventory | -        | (331,000) | (676,496) 
|                                       |          |           |           
|Gross margin under U.S. GAAP           | $370,852 | $237,455  | $(165,318)



|                                                  | 2003        | 2002         | 2001        
|------------------------------------------------- | ----------- | ------------ | ------------
|                                                  |             |              |             
|Operating income (loss) under Canadian GAAP       | $323,142    | $412,191     | $443,762    
|Amortization of capital assets                    | (44,318)    | (103,326)    | (117,003)   
|Amortization of patent rights                     | (1,005,160) | (1,664,946)  | (1,664,947) 
|Write-down of other assets, legal and other costs | 1           | -            | (199,999)   
|                                                  |             |              |             
|Operating income (loss) under U.S. GAAP           | $(726,335)  | $(1,356,081) | $(1,538,187)



|(b)
Impairment of long-lived assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Under U.S. GAAP, the $2,405,344 write-down of patent rights in 1999 (note 6) would have been calculated using discounted estimated future cash flows. Under such calculation methods, using a discount rate of 10%, an additional provision of $1,245,202 would have been recorded. In fiscal 2000 and future years, this difference will reduce amortization of patent rights for U.S. GAAP purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(c)
Convertible securities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Under Canadian GAAP, convertible securities are split into their liability and equity components based on their fair values at the time of issuance. Subsequent to initial recognition, the implied debt discount is recognized as additional interest expense over the term to maturity. Under U.S. GAAP, the intrinsic value of the embedded beneficial conversion feature of convertible securities issued with a non-detachable conversion feature that are in-the-money at the date of issuance is allocated to additional paid in capital. The amount allocated is to be accounted for as additional interest expense over the minimum period in which the holder can realize its return. The beneficial conversion option on the convertible debt described in note 7(a) at the date of its issuance was $975,000. The deemed discount attributable to this beneficial conversion option was amortized to interest expense over the period to the first conversion date.
|As a result of these differences and settlement of the convertible securities as at January 23, 2003 (note 7(a)), under U.S. GAAP, convertible securities in long-term debt as at July 31, 2003 would be $nil (2002 - $5,940,000), equity component of convertible debentures as at July 31, 2003 would be $nil (2002 - $975,000), the value of share capital issued on conversion of convertible securities in 1999 would be increased by $9,000, interest expense for the year ended July 31, 2003 would decrease by $48,941 (2002 - $95,820, 2001 - $95,820), the contributed surplus from the discharge component of the convertible securities for the year ended July 31, 2003 would increase by $479,619 (2002 - $nil)  and deficit at July 31, 2003 would increase by $479,619 (2002 - $528,561).                                                                                                                                                                      
|Differences affecting the Companys financial statements are summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



|                                                                                | 2003       | 2002         | 2001        
|------------------------------------------------------------------------------- | ---------- | ------------ | ------------
|                                                                                |            |              |             
|Income (loss) for the year under Canadian GAAP                                  | $4,818,993 | $(2,443,166) | $(3,065,943)
|Reduction in amortization of patent rights (b)                                  | 208,604    | 345,533      | 345,533     
|Interest expense adjustments for equity component of convertible securities (c) | 48,941     | 95,820       | 95,820      
|                                                                                |            |              |             
|Income (loss) for the year under U.S. GAAP                                      | $5,076,538 | $(2,001,813) | $(2,624,590)
|                                                                                |            |              |             
|Earnings (loss) per share under U.S. GAAP                                       | $0.27      | $(0.15)      | $(0.09)     



|                                           | Under Canadian GAAP | Adjustments to reconcile to U.S. GAAP | Under U.S. GAAP
|------------------------------------------ | ------------------- | ------------------------------------- | ---------------
|                                           |                     |                                       |                
|2003                                       |                     |                                       |                
|Issued share capital                       | $7,801,123          | $9,000                                | $7,810,123     
|Contributed surplus                        | 505,236             | 479,619                               | 984,855        
|                                           | 8,306,359           | 488,619                               | 8,794,978      
|                                           |                     |                                       |                
|Deficit beginning of the year              | (15,629,224)        | (737,164)                             | (16,366,388)   
|                                           |                     |                                       |                
|Income for the year                        | 4,818,993           | 48,941                                | 5,076,538      
|                                           |                     | 208,604                               |                
|                                           |                     |                                       |                
|Deficit end of year                        | (10,810,231)        | (479,619)                             | (11,289,850)   
|                                           |                     |                                       |                
|Shareholders deficiency                   | $(2,503,872)        | $9,000                                | $(2,494,872)   
|                                           |                     |                                       |                
|2002                                       |                     |                                       |                
|Issued share capital                       | $7,905,999          | $9,000                                | $7,914,999     
|Shares held in treasury                    | (1,003,235)         | -                                     | (1,003,235)    
|                                           | 6,902,764           | 9,000                                 | 6,911,764      
|                                           |                     |                                       |                
|Equity component of convertible securities | 495,381             | 479,619                               | 975,000        
|                                           |                     |                                       |                
|Deficit beginning of the year              | (13,186,058)        | (1,178,517)                           | (14,364,575)   
|                                           |                     |                                       |                
|Income (loss) for the year                 | (2,443,166)         | 95,820                                | (2,001,813)    
|                                           |                     | 345,533                               |                
|                                           |                     |                                       |                
|Deficit end of year                        | (15,629,224)        | (737,164)                             | (16,366,888)   
|                                           |                     |                                       |                
|Shareholders deficiency                   | $(8,231,079)        | $(248,545)                            | $(8,479,624)   



---

ITEM 18

FINANCIAL STATEMENTS

Not applicable.

ITEM 19

EXHIBITS

A.

Financial Statements



See Index to Financial Statements.



B.

Exhibits



See Exhibit Index.







---

SIGNATURES



Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Company certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorised.





THRILLTIME ENTERTAINMENT

INTERNATIONAL, INC.



By:Ralph Proceviat

Ralph Proceviat, President



Date:  January 29, 2004



Executed at Burnaby,



British Columbia, Canada











---

INDEX TO FINANCIAL STATEMENTS





Cover Page

F-1



Auditors Report to the Shareholders

F-2



Comments by Auditors for US Readers on Canada-US Reporting Difference

F-2



Consolidated Balance Sheets as at July 31, 2003 and 2002

F-4



Consolidated Statements of Operations and Deficit for each of the three years ended

July 31, 2003, 2002 and 2001

F-5



Consolidated Statements of Cash Flows for each of the three years

ended July 31, 2003, 2002 and 2001

F-6



Notes to Consolidated Financial Statements for each of the three years ended

July 31, 2003, 2002 and 20010

F-7









---







EXHIBIT INDEX



|Exhibit
Number | Description                                                                                                                                    | Sequentially Numbered Page
|-------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------
|1.1 (1)        | Memorandum and Articles of Association of Newera, as amended                                                                                   |                           
|1.2 (4)        | Memorandum of Company, as amended by change of name from Newera to ThrillTime effective August 12, 1997                                        |                           
|1.3 (4)        | Articles of Association of Company, as amended effective July 28, 1998                                                                         |                           
|2.1 (4)        | Form of 6% Convertible Debenture Offshore Purchase Agreement, dated June 30, 1998                                                              |                           
|2.2 (4)        | Registration Rights Agreement, dated June 30, 1998, among the Company, Atlantis Capital Ltd., Advantage Bermuda Ltd. and Dominion Capital Ltd. |                           
|2.3 (4)        | Form of Non-Transferable Share Purchase Warrant, dated June 30, 1998                                                                           |                           
|2.4 (4)        | Form of 6% Convertible Debenture, dated June 30, 1998                                                                                          |                           
|3.1 (2) (3)    | Top E Manufacturer/User Agreement, dated November 17, 1995, between Superstar and Kentucky Kingdom, Inc.                                     |                           
|3.2 (2) (3)    | Top E Purchase and License Agreement, dated January 19, 1996, between Superstar and Lagoon Corporation Inc.                                  |                           
|3.3 (2) (3)    | Master Purchase and License Agreement, dated December 12, 1996, among Newera, Superstar and Mountasia Entertainment International, Inc.        |                           
|3.5 (2) (3)    | Snowmobile Racing Ride Contract/Agreement, dated December 4, 1996, among Newera, S & S Original Amusements, Inc. and Sandy Checketts           |                           
|3.6 (1)        | Assignment Agreement, dated December 15, 1994 between Newera and Superstar                                                                     |                           
|3.7 (1)        | Form of Directors Incentive Stock Option Agreement                                                                                            |                           
|3.8 (1)        | Form of Employee Incentive Stock Option Agreement                                                                                              |                           
|3.9 (1)        | Employment Agreement, dated May 9, 1997, between Newera and Alvin D. Bissett                                                                   |                           
|3.10 (1)       | Form of Warrants for Purchase of Common Shares                                                                                                 |                           
|3.11 (1)       | Lease of Office Space, dated February 19, 1997, between Newera and Metropolitan Life Insurance Company, as amended April 1, 1997               |                           



|Exhibit
Number | Description                                                                                                                               | Sequentially Numbered Page
|-------------- | ----------------------------------------------------------------------------------------------------------------------------------------- | --------------------------
|3.12 (4)       | Second Amended and Restated Letter Agreement, dated June 16, 1998, among the Company, Sky Fun 1, Inc., Skycoaster, and William J. Kitchen |                           
|3.13 (4)       | Term Sheet, dated July 3, 1998, between Skycoaster and William J. Kitchen                                                                 |                           
|3.14 (4)       | Form of Top E® Purchase and License Agreement                                                                                             |                           
|3.15 (4)       | Letter Agreement, dated September 24, 1997, between Superstar and Malibu Entertainment Worldwide, Inc.                                    |                           
|3.16 (4)       | Warrant for purchase of 1,000,000 Common Shares held by Malibu Entertainment Worldwide, Inc.                                              |                           
|3.17 (4)       | Form of Skycoaster® Purchase and License Agreement                                                                                        |                           
|3.18 (4)       | Stock Option Plan                                                                                                                         |                           
|3.19 (4)       | Form of Incentive Stock Option Agreement pursuant to Stock Option Plan                                                                    |                           
|3.20 (4)       | Consulting Agreement, dated November 13, 1998, between the Company and Alvin Bissett                                                      |                           
|3.21 (4)       | Employment Agreement, dated September 24, 1998, between the Company and Frank L. Harper                                                   |                           
|3.22 (4)       | Sales Representative Agreement, dated December 16, 1998, between the Company and Trevor Quinn.                                            |                           
|3.23 (5)       | Sales Representative Agreement, dated December 14, 1998, between the Company and Ride Entertainment Systems, Inc.                         |                           
|3.24 (5)       | Sales Representative Agreement, dated July 14, 1999, between the Company and Ride Entertainment Systems, Inc.                             |                           
|3.25 (5)       | Loan Agreement, dated November 5, 1999, between the Company and Fitraco, N.V.                                                             |                           
|3.26 (5)       | Settlement Agreement, dated December 21, 1999, between the Company, Superstar and Malibu                                                  |                           
|3.27 (5)       | Memorandum of Understanding, dated August 17 and November 2, 1999, between the Company and William J. Kitchen                             |                           
|3.28 (5)       | Settlement Agreement, dated August 20, 1999, between the Company, Superstar, Castles N Coasters, George Brimhall, et al.                 |                           



|Exhibit
Number | Description                                                                                                                 | Sequentially Numbered Page
|-------------- | --------------------------------------------------------------------------------------------------------------------------- | --------------------------
|3.29 (5)       | Skycoaster, Inc. 401(k) Profit Sharing Plan and Trust, effective August 1, 1999                                             |                           
|3.30 (5)       | Debenture Amendment Agreement, dated November 1, 1999, between the Company and Park, LLC                                    |                           
|3.31(6)        | Employment Agreement, dated August 29, 2000, between the Company and Charles L. Bo Moody                                  |                           
|3.32(7)        | Employment Agreement, dated November 8, 2001 between the Company and Ralph F. Proceviat                                     |                           
|3.33(8)        | Satisfaction and Release Agreement, dated December 20, 2002 between the Company and Park LLC                                |                           
|3.34(8)        | Amendment to Loan Agreement dated March 13, 2002 between the Company and Fitraco N.V.                                       |                           
|3.35(8)        | Addendum to Settlement Agreement, dated June 28, 2002 between the Company and Castles n Coasters                           |                           
|12.1           | Certifications of Principal Executive Officer and Principal Financial Officer required by Rule 13a-14(a)                    |                           
|12.2           | Section 906 of the Sarbanes-Oxley Act of 2002 Certifications of Principal Executive Officer and Principal Financial Officer |                           



(1)

Previously filed with the Securities and Exchange Commission as an exhibit to the Form 20-F as originally filed on May 30, 1997.

(2)

Confidential treatment with respect to certain information contained herein has been granted by the Securities and Exchange Commission pursuant to an Order under Rule 24b-2 of the Securities Exchange Act of 1934, issued on November 4, 1997.

(3)

Previously filed with the Securities and Exchange Commission as an exhibit to Post-Effective Amendment No. 2 to Form 20-F as filed on October 10, 1997.

(4)

Previously filed with the Securities and Exchange Commission as an exhibit to the Form 20-F as filed on March 1, 1999.

(5)

Previously filed with the Securities and Exchange Commission as an exhibit to the Form 20-F filed on January 31, 2000.

(6)

Previously filed with the Securities and Exchange Commission as an exhibit to the Form 20-F filed on January 26, 2001.

(7)

Previously filed with the Securities and Exchange Commission as an exhibit to the Form 20-F filed on January 30, 2002.

(8)

Previously filed with the Securities and Exchange Commission as an exhibit to the Form 20-F filed on January 29, 2003.









---



Exhibit 99.1







CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002







In connection with the Annual Report of ThrillTime Entertainment International, Inc. (the Company) on Form 20-F for the period ended July 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Ralph Proceviat, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)

The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.





Ralph Proceviat



Chief Executive Officer and Chief Financial Officer

January 29, 2004