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


(Mark One)

 /x/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 For the fiscal year ended July 31, 2003

                                                     or

/ / TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the transition period from____________________to_______________

                       Commission File Number 33-19048-NY

                         MURRAY UNITED DEVELOPMENT CORP.
                         (Name of Small Business Issuer)

             Delaware                                22-2856171
    (State or other jurisdiction of        (I.R.S. employer identification
   incorporation or organization)           no.)


   P.O. Box 224, Landing, New Jersey                        07850
(Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code: (908) 979-3025


Securities registered pursuant to Section 12(b) of the Act:         NONE


Securities registered pursuant to Section 12(g) of the Act:         NONE



<PAGE>



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

Yes   X       No
   ----------   ---------

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

The Registrant did not have any revenues during its fiscal year ended July 31,
2003.

As of October 22, 2003, the aggregate market value of the registrant's Common
Stock held by non-affiliates of the registrant as computed by reference to the
closing price of such stock on such date was approximately $1,549,363.

79,953,434 shares of the registrant's Common Stock were outstanding as of
October 22, 2003.

Transitional Small Business Disclosure Format:

Yes                      No           X
   ---------------------   ---------------------

Documents incorporated by Reference:  NONE






                                       2
<PAGE>

INDEX TO FORM 10-KSB -- Parts I - IV

                                                                     Page

Part I
         -  Item 1.      Description of Business                      4
         -  Item 2.      Description of Property                     17
         -  Item 3.      Legal Proceedings                           17
         -  Item 4.      Submission of Matters to a                  17
                                 Vote of Security Holders


Part II
         -  Item 5.      Market for Common Equity and                18
                                 Related Stockholder Matters
         -  Item 6.      Management's Discussion and                 21
                                 Analysis or Plan of Operation
         -  Item 7.      Financial Statements                        29
         -  Item 8.      Changes in and Disagreements                29
                                 With Accountants on Accounting
                                 and Financial Disclosure
         -  Item 8A.     Controls and Procedures                     29


Part III
         -  Item 9.      Directors, Executive Officers,              31
                             Promoters and Control Persons;
                             Compliance with Section 16(a)
                             of the Exchange Act
         -  Item 10.     Executive Compensation                      33
         -  Item 11.     Security Ownership of Certain               35
                              Beneficial Owners and Management
         -  Item 12.     Certain Relationships and Related           37
                             Transactions


Part IV
         -  Item 13.     Exhibits, Lists and Reports on              39
                         Form 8-K
                         Financial Statements Index
                         Signatures
                         Certifications
                         List of Exhibits
            Item 14.     Principal Accountant Fees                   40
                             and Services




                                       3
<PAGE>
                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS


BACKGROUND

         Murray United Development Corporation (sometimes referred to in this
Report as the "Company") is a development stage corporation that was formed
under Delaware law on October 13, 1987 to exploit commercially an internal
combustion engine (referred to in this Report as the "Rotorcam Engine") that
would run on fuels other than gasoline, that would have significantly fewer
parts, and that would be lighter and operate more efficiently than conventional
internal combustion engines.

         In October 1987 we acquired from our predecessor, Rotorcam Technology
Corp., an assignment of license under which we obtained the exclusive right and
license to exploit all existing technology relating to the Rotorcam Engine,
which had previously been licensed to Rotorcam Technology Corp. by one of our
former officers.

         From our inception in 1988 through fiscal 2000, we were engaged in
research, design and development relating to the Rotorcam Engine technology.
During such period, we spent approximately $840,000 on such research and
development. However, due principally to the lack of any operating revenue or
other sources of funding, we did not incur any expenses for research and
development for the Rotorcam Engine during our last three fiscal years.

         During such period, we attempted to locate a funding source for the
$350,000 to $375,000 required in order to complete a second prototype of the
Rotorcam Engine, which is a necessary step in attempting to commercialize it.
Possible sources of such funding included borrowing from private sources and/or
exercise of our 15,398,000 outstanding Class B Warrants. In order to encourage
Warrant holders to exercise their Class B Warrants, we filed a Registration
Statement with the United States Securities and Exchange Commission ("SEC"),
which became effective on May 3, 2000.



                                       4
<PAGE>

         The Registration Statement, together with the qualification or
exemptions from qualification obtained in several states where holders of our
class B Warrants reside, permit such holders to exercise their Class B Warrants
under the laws of the United States and those states where we have either
qualified or obtained an exemption from qualifying the shares of our Common
Stock for which the Warrants are exercisable. To date, however, none of such
Class B Warrant holders have exercised their Class B Warrants due principally to
the fact that, with limited exceptions, the market price of our Common Stock has
been lower than the exercise price of the Class B Warrants since the effective
date of the Registration Statement.

         Principally because of our inability to raise the funds necessary to
further develop the Rotorcam Engine, we have begun to research and develop other
technologies that may permit us to diversify into additional product areas.
These technologies consist of an environmentally safe cleaning solution and a
method of producing hydrogen from sunlight. Our investments in these
technologies have been guided by the Company's mission to commercialize
technologies that improve the environment. This has been our philosophy with the
Rotorcam Engine and continues with our efforts to produce hydrogen as a
substitute for fossil fuels and a cleaning solution that has the capability of
eliminating or reducing certain contaminants from the environment.


KLENZ-SAFE CLEANING SOLUTION

         In February 2002, we reached an agreement in principle with Mr. Anthony
Campo, the Chairman of the Company, and with Mr. Dwight Foster, Chief Executive
Officer of the Company, pursuant to which we would obtain a license to use and
sell a proprietary cleaning solution owned by Foster-Campo Corp,
("Foster-Campo"), a corporation owned by Mr. Foster and Mr. Campo. Under the
terms of the proposed license, Foster-Campo will manufacture the cleaning
solution and supply it to our customers. Foster-Campo will then invoice us for
their cost of doing so without any profit to Foster-Campo. Foster-Campo will
receive a royalty payment of 50% of our net profit on sales of the proprietary
solution to our customers. Calculation of our net profit will include, but not
be limited to, amounts Foster-Campo invoices us for supplying our customers with
the cleaning solution.


                                       5
<PAGE>

         In June 2000 Penn State Energy Institute, which is a facility of Penn
State University, agreed to conduct laboratory tests of the application of the
Klenz-Safe solution to the reduction of sulfur from coal burning flue gas. When
coal burning flue gas was introduced through Klenz-Safe using the Company's
proprietary methodology, the capture rate of sulfur exceeded 99.2% and
maintained a minimum of 98% rate throughout the testing.

         Due to the success of the initial testing, Penn State Energy Institute
applied to the U.S. Department of Energy ("DOE") for a grant to conduct a pilot
test of Klenz-Safe's ability's to capture sulfur in coal burning flue gas. Penn
State Energy Institute's grant request was not funded during the DOE's 2003
funding period. However, Penn State Energy Institute has informed us that it
intends to submit a new application for consideration during the DOE's 2004
funding period.

         If funding for the pilot study is granted, the pilot tests would be
conducted in a working smoke stack to simulate actual conditions. If such tests
are conducted and are successful, we intend to seek distribution partners to
assist us in marketing and selling the Klenz-Safe product to the coal burning
utility market. We cannot provide any assurances that the DOE will award such
grant, or that such testing will occur or, even if it does occur, that it will
be successful. If such tests are performed, results are not expected to be
available until approximately one year after the related grant monies are
received.

         We also engaged a certified indoor air quality laboratory to perform a
series of laboratory tests on Klenz-Safe to determine Klenz-Safe's ability to
remove pollutants and contaminants from building air and to examine other
potential industrial uses. The tests simulated wet scrubber equipment, which is
commonly used device for removing pollutants from building air. Based on
generally known industry practices, management believes that the range of
pollutants captured by Klenz-Safe and the rate of such capture have not been
previously achieved in a single operation. The following were the material
findings of the laboratory tests:

     o    Klenz-Safe captured 90% of carbon monoxide in tested air streams;

     o    Klenz-Safe captured 70% of both nitrogen dioxide and of nitrous oxide
          in tested streams;



                                       6
<PAGE>

     o    Klenz-Safe added no detectable volatile organic compounds to the air
          stream at elevated temperatures, indicating that Klenz-Safe could be
          applied to indoor air cleaning systems without the need of additional
          filtering.

         In October 2002 we conducted field tests of Klenz-Safe in an actual
working wet scrubber. These tests confirmed the prior laboratory results that
Klenz-Safe is able to capture sulfur dioxide in wet scrubber equipment. During
these tests, Klenz-Safe captured 100% of the sulfur dioxide and a high
percentage of other air contaminants in the air passing through the wet
scrubber. Klenz-Safe compared favorably in capture efficiency to a caustic
solution used in the testing for purposes of comparison, though the caustic
solution was somewhat more economical.

         Based on our tests of Klenz-Safe, management believes that Klenz-Safe
possesses the following environmentally beneficial attributes:

     o    Klenz-Safe is a non-toxic, non-hazardous composition that requires no
          special equipment to protect the personnel using it;

     o    Klenz-Safe achieves a higher starting alkalinity and has a longer
          operating life than can be obtained with commercial caustic materials
          or lime slurries;

     o    Klenz-Safe protects rather than corrodes metal compounds and surfaces.

         Management presently believes that Klenz-Safe may be useful in the
following applications:

     o    Air pollution control in wet scrubber equipment, which are commonly
          used to remove pollutants from building air;

     o    Containment and neutralization of liquids and compounds;

     o    Decontamination of equipment in pharmaceutical production;



                                       7
<PAGE>

     o    Air filtration in indoor air quality control;

     o    Flue and combustion gas scrubbing.

         We believe that potential markets for Klenz-Safe include the chemical
production, manufacturing, food processing, pharmaceutical production, utility
and indoor air quality control industries. However, we cannot provide any
assurances that we will be able to successfully market and sell our Klenz-Safe
products.

         To date, the cost of the research at Penn State was approximately
$9,000, and the cost of the research by the certified air quality laboratory was
approximately $5,000. Funding for such research was provided by loans to the
Company from our Chairman, Mr. Anthony Campo.

         We have been granted trademark protection for the name "Klenz-Safe"
from the US Patent and Trademark Office (PTO). The method of application of the
Klenz-Safe formula for removal of sulfur from coal burning flue gas was
developed by a consultant to the Company, who assigned to us his rights to such
know-how and his rights under a provisional patent application filed with the
PTO covering such know-how. In October 2002 we filed an application for a
provisional patent, which extends the Klenz-Safe technology into additional
indoor air quality applications. In February 2003, we filed an amendment to the
October 2002 provisional patent application that revised certain data in the
October 2002 provisional patent application. We intend to file a non-provisional
patent application relating to Klenz-Safe in February 2004. However, we cannot
provide any assurances that we will be able to do so or that the PTO will grant
a patent on our Klenz-Safe technology.

         We are presently demonstrating Klenz-Safe to potential end-user
customers. At such customers' request, we are performing further tests on
Klenz-Safe to determine its ability to meet the particular intended applications
of such customers.

HYDROGEN PRODUCTION TECHNOLOGY

         In light of the energy plan of President Bush encouraging the use of
hydrogen fuel cells in place of fossil fuels such as oils and gas, management
has begun to investigate a technology that would produce hydrogen from sunlight
through the use of a proprietary device and solution. The hydrogen gas produced
would be used to supply on demand, low cost hydrogen fuel to hydrogen-oxygen
fuel cells in order to meet stationary and mobile electric power requirements.
Stationary uses would include residential and commercial heating systems, and
mobile uses would include electric and hybrid fuel cell powered vehicles.



                                       8
<PAGE>

         In June 2002, we entered into an oral agreement with George Johnson and
William L. Johnson (the "Inventors") to develop a method and apparatus for
production of photo galvanic hydrogen (the "PGH Technology") and to prepare and
file a provisional patent application (the "Provisional Patent Application")
relating thereto in the U.S. Patent and Trademark Office ("PTO"). The Inventors
further agreed that, upon filing of the Provisional Patent Application, they
would negotiate with the Company for an assignment of all of their interest in
the PGH Technology and the Provisional Patent Application to the Company. In
consideration for the Inventors' services, the Company agreed to issue to each
of the Inventors 100,000 shares of the Company's Common Stock and to register
such shares with the Securities and Exchange Commission. The Company
subsequently formalized the oral agreement with the Inventors by a written
agreement dated as of June 1, 2002.

         In July 2003, the Inventors filed the Provisional Patent Application
with the PTO. By Agreement dated October 2, 2003 , the Company entered into a
Technology Assignment Agreement with the Inventors pursuant to which the
Inventors agreed to assign to the Company all of their rights in the PGH
Technology, in the Provisional Patent Application, and in all letters patent,
both domestic and foreign, that may be granted for the PGH Technology. In
consideration for such assignment, we granted to the Inventors a right of first
refusal to perform all consulting services derived from contracts and/or grants
entered into between the Company and third parties relating to the development
of the PGH Technology. We further agreed to reimburse the Inventors up to $5,000
for their out-of pocket expenses incurred for materials and supplies to build
apparatus relating to the PGH Technology and for collecting, and testing for,
the production of hydrogen.

         Pursuant to the Technology Assignment Agreement, the Inventors executed
an Assignment of Invention & Patent Rights, dated October 2, 2003 (the
"Assignment"), under which the Inventors assigned to the Company their rights in
the PGH Technology, all applications for Letters Patent that may be filed for
the PGH Technology, and all Letters Patent for the PGH Technology in any
country. The Company intends to file such Assignment with the PTO as soon as
reasonably practicable.

         The filing of a provisional patent application preserves a priority
filing date; however, it is not examined by the PTO for patentability. In order
to obtain a patent on the PGH Technology, we are required to file a
non-provisional patent application on or before July 18, 2004. Although we
intend to file a non-provisional application on or before the above date, we
cannot provide any assurances that we will be able to do so or, even if such
application is filed, that we will finally be able to obtain a patent on the PGH
Technology.



                                       9
<PAGE>

         By separate agreement dated as of October 2, 2003 but effective as of
July 18, 2003, we entered into Consulting Agreements with each of the Inventors
(the "Consulting Agreements") pursuant to which the Inventors agreed to assist
the Company in obtaining grants from and/or contracts with third parties for
research and development relating to the PGH Technology and in obtaining a
patent on the technology described in the Provisional Patent Application. In
consideration for such services, we agreed to issue to each of the Inventors
100,000 shares of the Company's Common Stock upon receipt of grants or contracts
resulting in at least $250,000 of revenue to the Company and an additional
100,000 shares of Common Stock upon the grant by the PTO of a patent on the PGH
Technology under the Provisional Patent Application. All such shares of Common
Stock will be "restricted securities" and may therefore not be sold or
transferred other than in accordance with an exemption from the registration
requirements of applicable federal and states securities laws. The term of the
Consulting Agreements is from the effective date of the agreement until the
services have been completed. However, the Company will have the right to
terminate the Consulting Agreements if a patent has not been issued by the PTO
on or before July 18, 2005.

         There is no material relationship between either of the Inventors and
the Company, any director or officer of the Company, or any associate of such
directors and officers.

         We intend to enter into an arrangement with the Pennsylvania Technology
Consortium to produce prototypes of the apparatus for production of photo
galvanic hydrogen. Mr. Robert Van Dine, the President of the Company, is a
principal owner of the Pennsylvania Technology Consortium. No terms of our
proposed arrangement with the Pennsylvania Technology Consortium have been
agreed upon. However, the Company intends that any such terms will be comparable
to those that may be obtained from an unaffiliated third party.

         We are presently producing hydrogen using our proprietary apparatus and
solution and have engaged a third-party laboratory to quantify the amount of
hydrogen being produced in order to determine feasibility of commercializing
this technology. We are also developing an improved apparatus and chemical
structures for production of photo galvanic hydrogen.


                                       10
<PAGE>


POTENTIAL MARKETS FOR COMPANY'S PRODUCTS

         We believe that potential markets for Klenz-Safe include the chemical
production, manufacturing, food processing, pharmaceutical production, utility
and indoor air quality control industries. We are presently seeking affiliations
with distribution firms and potential end users to solicit purchase order
contracts for sales of Klenz-Safe. However, we have not entered into any
distribution or other agreements with such potential business partners, and we
cannot provide any assurances that we will be able to do so in the future.

         Potential markets for the Company's hydrogen technology include
residential and commercial heating systems and electric and hybrid fuel cell
powered vehicles.

         Markets that may be available for the Rotorcam Engine include off-road
terrain equipment, such as earth-moving farm equipment, tanks, pony engines,
marine engines, generators, and co-generation systems that are used to cool, as
well as to provide an electrical power source for, home and industry.

COMPETITION

         If we are able to commercialize Klenz-Safe, we expect to compete by
means of higher value in use through combining the advantages of differing
technologies in one product. Because the Company is still engaged in testing the
viability of the Klenz-Safe product, we are unable to assess the competitive
environment for Klenz-Safe. We will be better able to determine the competitive
market after completion and analysis of further testing.

         We are not presently aware of any entities that may directly compete
with us in the production of photo galvanic hydrogen. Other companies are
engaged in the production and sale of hydrogen using electrolytic or other
electro-chemical processes. If we are able to develop and market our hydrogen
technology, we intend to compete on the basis that our technology is more
economical than electrolytic or other electro-chemical processes.

         If we are able to obtain sufficient funds to commercially exploit the
Rotorcam Engine, we expect to compete primarily on the basis of technological
advantage, which will permit favorable product cost and performance
differentials. Since engine technology is subject to rapid and dramatic changes,
however, competitors may develop better approaches to such technology, that
would seriously and adversely affect our ability to compete with them.


                                       11
<PAGE>


EMPLOYEES AND CONSULTANTS

         We currently have one employee, Mr. Dwight Foster, whom the Board
appointed as our President and Chief Executive Officer in December 1998. Mr.
Foster resigned his position as President in January 2000 upon the simultaneous
appointment of Mr. Robert Van Dine as President but remained as Chief Executive
Officer of the Company. Mr. Anthony Campo, who is our Chairman of the Board,
Executive Vice-President, Secretary and Treasurer, also provides us with general
administrative services. Mr. Robert Van Dine, our current President, has
rendered consulting services to us from January 2000 to the present.

         We have engaged George Johnson and William L. Johnson as consultants to
the Company to engage in research and development of the Company's hydrogen
technology. We have agreed to issue 100,000 shares of the Company's Common Stock
to each of Mr. George Johnson and Mr. William L. Johnson for past consulting
services. We have further agreed to issue 100,000 additional shares of such
Common Stock to each of such consultants provided we receive contracts or grants
relating to the PGH Technology resulting in at least $250,000 of revenue to the
Company and an additional 100,000 shares if a patent on the Company's PGH
Technology is granted by the U.S. Patent and Trademark Office.

         We have previously also retained the services of a consultant on an as
needed basis, who provides us with engineering services with payment being made
based on such consultants' hourly rate.

NEED FOR GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES

         Sales of our Klenz-Safe technology to power generating utilities will
require verification testing for pollutant capture. We expect that the cost of
compliance with such testing requirements will be minimal. We do not believe
that governmental approval will be required for other applications of our
Klenz-Safe product.

         We are not aware of any requirement for governmental approval of our
proposed hydrogen technology.

         If successfully developed, the Rotorcam Engine will be subject to a
series of governmental regulations with respect to safety, fuel efficiency and
pollution. We cannot provide you with any assurance that the Rotorcam Engine
will be able to meet these standards of pollution and safety. In addition, the
assembly and manufacture of products containing the Rotorcam Engine will be
subject to Federal and State regulations.


                                       12
<PAGE>

         We intend to comply with all regulations that may be applicable to our
business. However, the compliance with such regulations may cause delays and
additional expense that could adversely affect the commercial viability of our
potential products.


PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR
LABOR CONTRACTS, INCLUDING DURATION

         Under legal settlements signed in 1993 and 1996 with the Murrays, we
obtained title to seven U.S. patents and four international patents as well as
rights to various patents pending. Of these seven U.S. patents, three remain in
effect and four have expired due to lack of funds necessary to maintain such
patents. Each of the foreign patents and the rights to patents pending have also
expired due to a lack of funds necessary to acquire or maintain such patents.

         We have been granted trademark protection for the name "Klenz-Safe"
from the US Patent and Trademark Office (PTO). The method of application of the
Klenz-Safe formula for removal of sulfur from coal burning flue gas was
developed by a consultant to the Company, who has assigned to us his rights to
such know-how and his rights under a provisional patent application filed with
the PTO covering such know-how. In October 2002 we filed another application for
a provisional patent, which extends the Klenz-Safe technology into additional
indoor air quality applications. In February 2003, we filed an amendment to the
October 2002 provisional patent application that revised certain data in the
October 2002 provisional patent application. We intend to file a non-provisional
patent application related to Klenz-Safe prior to the end of the eligibility
period in February 2004. However, we cannot provide any assurances that we will
be able to do so or, even if such application is filed, that the PTO will grant
a patent on our Klenz-Safe technology.


         In July 2003, George Johnson and William L. Johnson (the "Inventors")
filed a provisional patent application with the U.S. Patent and Trademark Office
covering a method and apparatus for production of photo galvanic hydrogen (the
"PGH Technology"). Pursuant to a Technology Assignment Agreement between the
Company and the Inventors, the Inventors executed an Assignment of Invention &
Patent Rights, dated October 2, 2003, under which the Inventors assigned to the
Company their rights in the PGH Technology, all applications for Letters Patent
that may be filed for the PGH Technology, and all Letters Patent for the PGH
Technology in any country. The Company intends to file such Assignment with the
PTO as soon as reasonably practicable.


                                       13
<PAGE>

         The filing of a provisional patent application preserves a priority
filing date; however, it is not examined by the PTO for patentability. In order
to obtain patents on our Klenz-Safe and/or PGH technologies, we are required to
file a non-provisional patent application within twelve (12) months after filing
the related provisional patent application. Although we intend to file
non-provisional applications for both our Klenz-Safe and PGH technologies on or
before their respective due dates, we cannot provide any assurances that we
will, in fact, file such applications or that we will be able to obtain a patent
on either the Klenz-Safe or PGH technologies.


STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR SERVICE

         In 2003, Penn State Energy Institute applied to the U.S. Department of
Energy for a federal grant to conduct a pilot test of Klenz-Safe's ability's to
capture sulfur in coal burning flue gas. However, its application was not
granted during the DOE's 2003 funding period. s Penn State Energy Institute has
informed us that it intends to submit a new application for consideration during
the DOE's 2004 funding period. If it receives such funding, Penn State Energy
Institute intends to conduct a pilot study in a working smoke stack to simulate
actual conditions. If such tests are performed, results are not expected to be
available for approximately one year after receipt of funding of the pilot
tests.

         We are currently testing the ability of our PGH Technology to produce
hydrogen and have engaged a third-party laboratory to quantify the production.
We are also continuing to develop the apparatus and formula for production of
photo galvanic hydrogen.



                                       14
<PAGE>


EFFECTS OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS

Sarbanes-Oxley Act

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002
(the "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act imposes a wide variety of new
regulatory requirements on publicly held companies and their insiders. Many of
these requirements will affect us. For example:

     o    Our Chief Executive Officer and Chief Financial Officer must now
          certify the accuracy of all of our periodic reports that contain
          financial statements;

     o    Our periodic reports must disclose our conclusions about the
          effectiveness of our disclosure controls and procedures; and

     o    We may not make any loan to any director or executive officer and we
          may not materially modify any existing loans.

The Sarbanes-Oxley Act has required us to review our current procedures and
policies to determine whether they comply with the Sarbanes-Oxley Act and the
new regulations promulgated thereunder. We will continue to monitor our
compliance with all future regulations that are adopted under the Sarbanes-Oxley
Act and will take whatever actions are necessary to ensure that we are in
compliance.


PENNY STOCK

     Our common stock is "penny stock" as defined in Rule 3a51-1 of the
Securities and Exchange Commission. Penny stocks are stocks:

     o    with a price of less than five dollars per share;

     o    that are not traded on a "recognized" national exchange;

     o    whose prices are not quoted on the NASDAQ automated quotation system;

     o    whose issuer has net tangible assets in excess of $2,000,000 if the
          issuer has been in continuous operation for at least three years, or
          $5,000,000 if such issuer has been in continuous operation for less
          than three years, or has received average revenues of less than
          $6,000,000 for the last three years.


                                       15
<PAGE>


         Section 15(g) of the Exchange Act and Rule 15g-2 of the Securities and
Exchange Commission require broker/dealers dealing in penny stocks to provide
potential investors with a document disclosing the risks of penny stocks and to
obtain a manually signed and dated written receipt of the document before making
any transaction in a penny stock for the investor's account. You are urged to
obtain and read this disclosure carefully before purchasing any of our shares.

         Rule 15g-9 of the Securities and Exchange Commission requires
broker/dealers in penny stocks to approve the account of any investor for
transactions in these stocks before selling any penny stock to that investor.
This procedure requires the broker/dealer to:

     o    get information about the investor's financial situation, investment
          experience and investment goals;

     o    reasonably determine, based on that information, that transactions in
          penny stocks are suitable for the investor and that the investor can
          evaluate the risks of penny stock transactions;

     o    provide the investor with a written statement setting forth the basis
          on which the broker/dealer made his or her determination; and

     o    receive a signed and dated copy of the statement from the investor,
          confirming that it accurately reflects the investors' financial
          situation, investment experience and investment goals.

         Compliance with these requirements may make it harder for our
stockholders to resell their shares.


DISTRIBUTION METHODS OF PRODUCTS OR SERVICES

         If we successfully commercialize our Klenz-Safe technology, we plan to
distribute our Klenz-Safe products through third-party distribution channels
either on a commission or buy and resell basis.


                                       16
<PAGE>

         If we successfully produce hydrogen using the photo galvanic process,
we intend to develop a prototype apparatus to produce commercial quantities of
hydrogen and will seek distribution partners in order to market and distribute
our photo galvanic hydrogen product.

         If we are successful in our attempts to produce an engine that is
commercially viable, we intend to attempt to enter into licensing or contract
manufacturing arrangements with other companies for production and sale of the
Rotorcam Engine.


REPORTS TO SECURITY HOLDERS

         We have not in the past provided an annual report to our shareholders
and do not intend to do so until we are able to generate sufficient revenues to
fund the expense of such reports. We are subject to the disclosure rules of
Regulation S-B for a small business issuer under the Securities Act of 1933 and
the Securities Exchange Act of 1934 and are therefore required to file a Form
10-KSB annually and Forms 10-QSB quarterly. In addition, we are required to file
Forms 8-K and other information statements from time to time as required.

         The public may read and copy any materials we file with the Securities
and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an internet site (http://www.sec.gov). That contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with SEC.


ITEM 2.  PROPERTIES

We do not presently own or lease any properties.


ITEM 3.  LEGAL PROCEEDINGS

We are not presently a party to any pending legal proceedings.


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

Not applicable.




                                       17
<PAGE>



                                     PART II


ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

         Our Common Stock has been traded in on the over-the-counter market
since March 24, 1988 and is quoted on the OTC Bulletin Board under the symbol
MRAY. The range of high and low bid quotations as reported by the National
Quotation Bureau, Inc., without adjustment for retail markup, markdown or
commission, for the periods indicated below are:


                               Year Ended July 31,

                                2003                       2002
                                ----                       ----
                            High     Low              High     Low
                            ----     ---              ----     ----
1st Quarter                $0.04    $0.02            $0.17    $0.076
2nd Quarter                $0.04    $0.02            $0.10    $0.035
3rd Quarter                $0.04    $0.02            $0.11    $0.03
4th Quarter                $0.062   $0.016           $0.065   $0.02


         Reporting by the National Quotation Bureau, Inc. of quotations for our
Common Stock does not evidence an established public trading market for such
stock, and holders of our Common Stock may not be able to liquidate their
investment at acceptable prices. Moreover, such quotations reflect inter-dealer
prices without retail mark-up, mark-down or commission and may not be indicative
of actual trading transactions. As of October 23, 2002 there were approximately
825 holders of record of our Common Stock.

         Effective as of January 4, 2001, we issued 2,000,000 shares of our
common stock, $.0001 par value, to Mr. Frank Pecorella, who is a director of the
Company. These shares were issued in consideration of Mr. Pecorella's past
services to the Company. Mr. Pecorella has been serving as a director of the
Company since December 1998 without compensation. On January 4, 2001, the
closing price of our Common Stock as quoted on the Over the Counter Bulletin
Board was $0.0525 per share. Based solely on such market price, the value of the
grant to Mr. Pecorella was therefore approximately $105,000.


                                       18
<PAGE>

         On April 17, 2001, we issued 1,000,000 shares of our common stock to
Mr. Robert Van Dine and 250,000 shares of such common stock to Mr. Newell Dimen.
Such shares were issued as compensation for their services to the Company,
principally in connection with our efforts to diversify by engaging in the
testing of a proprietary cleaning solution for use in coal and oil burning smoke
stacks. On April 17, 2001, the closing price of our Common Stock as quoted on
the Over the Counter Bulletin Board was $0.034 per share. Based solely on such
market price, the value of the grant to Mr. Van Dine was therefore approximately
$34,000, and the value of the grant to Mr. Dimen was approximately $8,500.

         Effective on May 2, 2001, we issued 1,000,000 shares of our Common
Stock to James P. O'Day in satisfaction of $45,000 owed to Mr. O'Day for
accounting services previously performed by him and $5,000 of additional
accounting services to be performed after May 2, 2001. On May 2, 2001, the
closing price of our Common Stock was $0.05 per share. Based solely on such
market price, the value of the grant to Mr. O'Day was therefore approximately
$50,000.

         Effective on May 2, 2001, we issued 1,000,000 shares of our Common
Stock to Jubran Jubran in satisfaction of $40,000 owed to Mr. Jubran for tax and
financial consulting services previously performed by him for the Company and
$10,000 of additional financial consulting services to be performed after May 2,
2001. On May 2, 2001, the closing price of our Common Stock was $.005 per share.
Based solely on such market price, the value of the grant to Mr. Jubran was
therefore approximately $50,000.

         The shares issued to Messrs. Pecorella, Dimen, Van Dine, O'Day and
Jubran were issued in reliance upon the exemption from the registration
requirements of the Securities Act of 1933 permitted by Section 4(2) of such
Act. Since all of such shares have been held by such individuals for more than
two years, they may be resold or otherwise transferred in accordance with Rule
144 of the Securities Act of 1933.

         On April 9, 2002, Mr. Anthony Campo, the Chairman of the Board and
Executive Vice President of the Company, exercised a right to convert $37,500
indebtedness owed by the Company to Mr. Campo into 5,000,000 shares of our
Common Stock. The number of shares for which Mr. Campo exercised his conversion
right was computed at a rate of $.0075 for each such share of Common Stock. Mr.
Campo's conversion right contained in a Promissory Noted dated August 1, 2001 in
the principal amount of $1,337,552 issued by the Company to Mr. Campo. Under the
terms of the Promissory Note, Mr. Campo was given the right to convert all or
any portion of the unpaid principal and/or interest of the Note of a rate of one
share of Common Stock for each 3/4 of one cost of such principal and interest
converted, up to a maximum of 100,000,000 shares. The terms of such Promissory
Note are further described in our Form 10-KSB for the fiscal year ended July 31,
2003. Mr. Campo had previously exercised his conversion right under the August
1, 2001 Promissory Note on March 5, 2002. Under the March 5, 2002 exercise, Mr.
Campo converted $37,500 of indebtedness into 5 million shares of the Company's
Common Stock. All of the shares acquired by Mr. Campo upon conversion of amounts
due under his promissory note are eligible for sale or other transfer by Mr.
Campo in accordance with Rule 144 of the Securities Act of 1933.


                                       19
<PAGE>

         On April 11, 2002, the Board of Directors approved the issuance of 1
million shares of the Company's Common Stock to Robert Van Dine in consideration
for certain consulting services that Mr. Van Dine had agreed to perform for the
Company. Such services included (a) research and development of methods of using
the Klenz-Safe cleaning product for reducing or eliminating pollutants from
building air; (b) research and development of other uses of the Klenz-Safe
cleaning product; (c) marketing all technologies using the Klenz-Safe cleaning
product; and (d) upon request by the Board of the Company, serving as an
executive officer of the Company for a minimum of one year. On April 30, 2002
the Board requested Mr. Van Dine to serve as its President. Mr. Van Dine assumed
such position as of such date and continues to serve as President of the Company
to date.

         On April 11, 2002, the Board of Directors approved the issuance of
250,000 shares of the Company's Common Stock to Newell Dimen in consideration
for certain consulting services that Mr. Dimen had agreed to perform on behalf
of the Company. Such services included (a) research and development of methods
of using the Klenz-Safe cleaning product for reducing or eliminating pollutants
from building air; (b) research and development of other uses of the Klenz-Safe
cleaning product; and (c) marketing all technologies using the Klenz-Safe
cleaning product.

         The shares issued to Mr. Van Dine and Mr. Dimen were issued without
registration pursuant to Section 4(2) of the Securities Act of 1933 and are
therefore "restricted" securities. The closing price of the Company's Common
Stock on the day the shares were issued to Mr. Van Dine and Mr. Dimen was $.041
per share. Based solely on such market price, the values of the shares issued to
Mr. Van Dine and Mr. Dimen were $41,000 and $10,250, respectively. Since Mr. Van
Dine and Mr. Dimen have held such shares for more than one year, such shares may
be resold or otherwise transferred in accordance with Rule 144 of the Securities
Act of 1933.


                                       20
<PAGE>

         On April 11, 2002, the Board of Directors approved the issuance of a
non-qualified stock option (the "Option") for 6 million shares of the Company's
Common Stock to Dwight Foster, the Chief Executive Officer and a Director of the
Company. Mr. Foster had been serving as the Company's President and Chief
Executive Officer since December 1998 and as a Director since March 2000, in
each case without any compensation.

         The Option is exercisable, cumulatively, at an exercise price of $0.02
per share in accordance with the following schedule of vesting: 1 million shares
on October 11, 2002; 1 million shares on April 11, 2003; 1 million shares on
October 11, 2003; 1 million shares on April 11, 2004; 1 million shares on
October 11, 2004; and 1 million shares on April 11, 2005. From and after April
11, 2005 the Option may be exercised as to all optioned shares for which it had
not been previously exercised.

         The Option expires 10 years after the date of grant. If Mr. Foster's
employment with the Company is terminated for any reason other than death, Mr.
Foster may exercise only that portion of the Option that was exercisable on the
date such employment terminated. The Option issued to Mr. Foster was issued
without registration of such Option or the underlying shares pursuant to Section
4(2) of the Securities Act of 1933. The closing price of the Company's Common
Stock on the date the Option was granted to Mr. Foster was $.041 per share.


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

         The following discussion provides information that we believe is
relevant to your assessment and understanding of our results of operations and
financial condition. This discussion should be read in conjunction with the
financial statements and notes to the financial statements appearing elsewhere
in this Report on Form 10-KSB.

         Statements in this Report on Form 10-KSB that are not statements of
historical or current fact constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other unknown factors that could cause our actual results to be materially
different from the historical results or from any future results that are
expressed or implied by such forward-looking statements. In addition to
statements that explicitly describe such risks and uncertainties, you are urged
to consider statements labeled with the terms "believes," "belief," "intends,"
"anticipates" or "plans" to be uncertain and forward-looking. The
forward-looking statements contained in this Report on Form 10-KSB are also
subject generally to other risks and uncertainties that are described from time
to time in our reports filed with the SEC.



                                       21
<PAGE>




                         FISCAL YEAR ENDED JULY 31, 2003
            AS COMPARED TO FISCAL YEARS ENDED JULY 31, 2002 AND 2001


RESULTS OF OPERATIONS

         We have never derived any revenues from our operations and have
incurred cumulative losses from our inception on October 13, 1987 through July
31, 2003 of $4,308,257. Our revenues from inception through July 31, 2003,
totaling $66,465, were derived from interest earned. There was no change in
interest income earned in our fiscal year that ended on July 31, 2003, as was
the case in fiscal 2002, due to a continued shortage of funds for investment
purposes.

         Our cumulative loss from inception includes research and development
costs of $868,716. In fiscal 2003, we incurred no research and development
costs. We incurred research and development costs of $14,063 in fiscal 2002,
principally in connection with the testing of our Klenz-Safe product. We did not
incur any expenses for research and development during fiscal 2001.

         Our cumulative loss from inception includes general and administrative
expenses for the fiscal year ended July 31, 2003 of $105,597. General and
administrative expenses decreased by 27% in fiscal 2003 from $134,107 in fiscal
2002 due principally to a decrease in legal and accounting issues. General and
administrative expenses decreased by 55% to $134,107 in fiscal 2002 from
$292,979 in fiscal 2001. The decrease in fiscal 2002 was due to a decrease in
legal and accounting fees and other expenses.

         The cumulative loss from inception also includes past licensing fees of
$57,260 that had accrued and been paid to one of our former officers. It
includes interest expense of $669,733 on loans payable to our Chairman, Mr.
Anthony Campo, and to one of our former officers. Interest expense increased by
11% in fiscal 2003 over 2002 due to an increase in interest due on a promissory
note issued by the Company to Mr. Anthony Campo. Interest expense also increased
by 10% to $99,827 in fiscal 2002 from $90,943 in fiscal 2001 due to an increase
in interest costs associated with the amount outstanding on Mr. Campo's
promissory note from the Company.

         The net loss of $215,794 in fiscal 2003 decreased by $32,203 or 15%,
from fiscal 2002 due to decreased general and administrative costs.




                                       22
<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

         As of July 31, 2003 we had cash and short-term investments totaling
$8,252 (compared to liquid assets of $364 at July 31, 2002), a working capital
deficiency of $8,580 (compared to a working capital deficiency of $23,076 at
July 31, 2002), and a total stockholders' deficiency of $1,758,810 (compared to
$1,543,016 at July 31, 2002). Cash balances increased in fiscal 2003 because of
additional loans to the Company by the Chairman, whereas the decrease in working
capital in fiscal 2002 was due to a net loss of $247,997. The stockholders'
deficiency increased by $215,794 due to the net loss incurred in July 31, 2003,
as compared to a $121,747 increase in stockholders' deficiency at July 31, 2002.

         As of July 31, 2003 we had current liabilities in excess of current
assets of $8,580. Since we have not been able to commercially use our technology
to generate any revenues through that date, we have suffered recurring losses
from operations from inception that have generated the net capital deficiencies
at July 31, 2003 and 2002 and significant working capital deficiencies from time
to time. We do not expect to generate any significant revenues or positive cash
flows during the twelve-month period subsequent to July 31, 2003. Cash flows
used by operating activities were $203,700 and $160,608 in fiscal 2003 and
fiscal 2002, respectively. The limited amount of liquid resources that were
available to us as of July 31, 2003 and our inability to generate operating
revenues and cash flows raise substantial doubt about our ability to continue as
a going concern.


PLAN OF OPERATION

         In view of the Company's inability to raise the approximately $2.5 to
$3 million needed to develop the Rotorcam Engine, for commercialization,
management's current efforts are focused on certain other technologies that we
are in the process of developing.


KLENZ-SAFE TECHNOLOGY

         In February 2002, we reached an agreement in principle with Mr. Anthony
Campo, the Chairman of the Company, and with Mr. Dwight Foster, Chief Executive
Officer of the Company, pursuant to which we would obtain a license to use and
sell a proprietary cleaning solution owned by Foster-Campo Corp,
("Foster-Campo"), a corporation owned by Mr. Foster and Mr. Campo. Under the
terms of the proposed license, Foster-Campo will manufacture the cleaning
solution and supply it to our customers. Foster-Campo will then invoice us for
their cost of doing so without any profit to Foster-Campo. Foster-Campo will
receive a royalty payment of 50% of our net profit on sales of the proprietary
solution to our customers. Calculation of our net profit will include, but not
be limited to, amounts Foster-Campo invoices us for supplying our customers with
the cleaning solution.


                                       23
<PAGE>

         In June 2000 Penn State Energy Institute, which is a facility of Penn
State University, agreed to conduct laboratory tests of the application of the
Klenz-Safe solution to the reduction of sulfur from coal burning flue gas. When
coal burning flue gas was introduced through Klenz-Safe using the Company's
proprietary methodology, the capture rate of sulfur exceeded 99.2% and
maintained a minimum of 98% rate throughout the testing.

         Due to the success of the initial testing, Penn State Energy Institute
applied to the U.S. Department of Energy ("DOE") for a grant to conduct a pilot
test of Klenz-Safe's ability's to capture sulfur in coal burning flue gas. Penn
State Energy Institute's grant request was not funded during the DOE's 2003
funding period. However, Penn State Energy Institute has informed us that it
intends to submit a new application for consideration during the DOE's 2004
funding period.

         If funding for the pilot study is granted, the pilot tests would be
conducted in a working smoke stack to simulate actual conditions. If such tests
are conducted and are successful, we intend to seek distribution partners to
assist us in marketing and selling the Klenz-Safe product to the coal burning
utility market. We cannot provide any assurances that the DOE will award such
grant, or that such testing will occur or, even if it does occur, that it will
be successful. If such tests are performed, results are not expected to be
available until approximately one year after the related grant monies are
received.

         We also engaged a certified indoor air quality laboratory to perform a
series of laboratory tests on Klenz-Safe to determine Klenz-Safe's ability to
remove pollutants and contaminants from building air and to examine other
potential industrial uses. The tests simulated wet scrubber equipment, which is
commonly used device for removing pollutants from building air. Based on
generally known industry practices, management believes that the range of
pollutants captured by Klenz-Safe and the rate of such capture have not been
previously achieved in a single operation.



                                       24
<PAGE>



        The following were the material findings of the laboratory tests:

          o    Klenz-Safe captured 90% of carbon monoxide in tested air streams;

          o    Klenz-Safe captured 70% of both nitrogen dioxide and of nitrous
               oxide in tested streams;

          o    Klenz-Safe added no detectable volatile organic compounds to the
               air stream at elevated temperatures, indicating that Klenz-Safe
               could be applied to indoor air cleaning systems without the need
               of additional filtering.

         In October 2002 we conducted field tests of Klenz-Safe in an actual
working wet scrubber. These tests confirmed the prior laboratory results that
Klenz-Safe is able to capture sulfur dioxide in wet scrubber equipment. During
these tests, Klenz-Safe captured 100% of the sulfur dioxide and a high
percentage of other air contaminants in the air passing through the wet
scrubber. Klenz-Safe compared favorably in capture efficiency to a caustic
solution used in the testing for purposes of comparison, though the caustic
solution was somewhat more economical.

         Based on our tests of Klenz-Safe, management believes that Klenz-Safe
possesses the following environmentally beneficial attributes:

          o    Klenz-Safe is a non-toxic, non-hazardous composition that
               requires no special equipment to protect the personnel using it;

          o    Klenz-Safe achieves a higher starting alkalinity and has a longer
               operating life than can be obtained with commercial caustic
               materials or lime slurries;

          o    Klenz-Safe protects rather than corrodes metal compounds and
               surfaces.


                                       25
<PAGE>

         Management presently believes that Klenz-Safe may be useful in the
following applications:

         o        Air pollution control in wet scrubber equipment, which are
                  commonly used to remove pollutants from building air;

         o        Containment and neutralization of liquids and compounds;

         o        Decontamination of equipment in pharmaceutical production;

         o        Air filtration in indoor air quality control;

         o        Flue and combustion gas scrubbing.

         We believe that potential markets for Klenz-Safe include the chemical
production, manufacturing, food processing, pharmaceutical production, utility
and indoor air quality control industries. However, we cannot provide any
assurances that we will be able to successfully market and sell our Klenz-Safe
products.

         To date, the cost of the research at Penn State was approximately
$9,000, and the cost of the research by the certified air quality laboratory was
approximately $5,000. Funding for such research was provided by loans to the
Company from our Chairman, Mr. Anthony Campo.

         We have been granted trademark protection for the name "Klenz-Safe"
from the US Patent and Trademark Office (PTO). The method of application of the
Klenz-Safe formula for removal of sulfur from coal burning flue gas was
developed by a consultant to the Company, who assigned to us his rights to such
know-how and his rights under a provisional patent application filed with the
PTO covering such know-how. In October 2002 we filed an application for a
provisional patent, which extends the Klenz-Safe technology into additional
indoor air quality applications. In February 2003, we filed an amendment to the
October 2002 provisional patent application that revised certain data in the
October 2002 provisional patent application. We intend to file a non-provisional
patent application relating to Klenz-Safe in February 2004. However, we cannot
provide any assurances that we will be able to do so or that the PTO will grant
a patent on our Klenz-Safe technology.

         We are presently demonstrating Klenz-Safe to potential end-user
customers. At such customers' request, we are performing further tests on
Klenz-Safe to determine its ability to meet the particular intended applications
of such customers.



                                       26
<PAGE>

HYDROGEN PRODUCTION TECHNOLOGY

         In light of the energy plan of President Bush encouraging the use of
hydrogen fuel cells in place of fossil fuels such as oils and gas, management
has begun to investigate technology that would produce hydrogen from sunlight
through the use of a proprietary device and solution. The hydrogen gas produced
would be used to supply on demand, low cost hydrogen fuel to hydrogen-oxygen
fuel cells in order to meet stationary and mobile electric power requirements.
Stationary uses would include residential and commercial heating systems, and
mobile uses would include electric and hybrid fuel cell powered vehicles.

         In June 2002, we entered into an oral agreement with George Johnson and
William L. Johnson (the "Inventors") to develop a method and apparatus for
production of photo galvanic hydrogen (the "PGH Technology") and to prepare and
file a provisional patent application (the "Provisional Patent Application")
relating thereto in the U.S. Patent and Trademark Office ("PTO"). The Inventors
further agreed that, upon filing of the Provisional Patent Application, they
would negotiate with the Company for an assignment of all of their interest in
the PGH Technology and the Provisional Patent Application to the Company. In
consideration for the Inventors' services, the Company agreed to issue to each
of the Inventors 100,000 shares of the Company's Common Stock and to register
such shares with the Securities and Exchange Commission. The Company
subsequently formalized the oral agreement with the Inventors by a written
agreement dated as of June 1, 2002.

         In July 2003, the Inventors filed the Provisional Patent Application
with the PTO. By Agreement dated October 2, 2003 , the Company entered into a
Technology Assignment Agreement with the Inventors pursuant to which the
Inventors agreed to assign to the Company all of their rights in the PGH
Technology, in the Provisional Patent Application, and in all letters patent,
both domestic and foreign, that may be granted for the PGH Technology. In
consideration for such assignment, we granted to the Inventors a right of first
refusal to perform all consulting services derived from contracts and/or grants
entered into between the Company and third parties relating to the development
of the PGH Technology. We further agreed to reimburse the Inventors up to $5,000
for their out-of pocket expenses incurred for materials and supplies to build
apparatus relating to the PGH Technology and for collecting, and testing for,
the production of hydrogen.


                                       27
<PAGE>

         Pursuant to the Technology Assignment Agreement, the Inventors executed
an Assignment of Invention & Patent Rights, dated October 2, 2003 (the
"Assignment"), under which the Inventors assigned to the Company their rights in
the PGH Technology, all applications for Letters Patent that may be filed for
the PGH Technology, and all Letters Patent for the PGH Technology in any
country. The Company intends to file such Assignment with the PTO as soon as
reasonably practicable.

         The filing of a provisional patent application preserves a priority
filing date; however, it is not examined by the PTO for patentability. In order
to obtain a patent on the PGH Technology, we are required to file a
non-provisional patent application on or before July 18, 2004. Although we
intend to file a non-provisional application on or before the above date, we
cannot provide any assurances that we will finally be able to obtain a patent on
the PGH Technology.

         By separate agreement dated as of October 2, 2003 but effective as of
July 18, 2003, we entered into Consulting Agreements with each of the Inventors
(the "Consulting Agreements") pursuant to which the Inventors agreed to assist
the Company in obtaining grants from and/or contracts with third parties for
research and development relating to the PGH Technology and in obtaining a
patent on the technology described in the Provisional Patent Application. In
consideration for such services, we agreed to issue to each of the Inventors
100,000 shares of the Company's Common Stock upon receipt of grants or contracts
resulting in at least $250,000 of revenue to the Company and an additional
100,000 shares of Common Stock upon the grant by the PTO of a patent on the PGH
Technology under the Provisional Patent Application. All such shares of Common
Stock will be "restricted securities" and may therefore not be sold or
transferred other than in accordance with an exemption from the registration
requirements of applicable federal and states securities laws. The term of the
Consulting Agreements is from the effective date of the agreement until the
services have been completed. However, the Company will have the right to
terminate the Consulting Agreements if a patent has not been issued by the PTO
on or before July 18, 2005.

         There is no material relationship between either of the Inventors and
the Company, any director or officer of the Company, or any associate of such
directors and officers.

         We intend to enter into an arrangement with the Pennsylvania Technology
Consortium to produce prototypes of the apparatus for production of photo
galvanic hydrogen. Mr. Robert Van Dine, the President of the Company, is a
principal owner of the Pennsylvania Technology Consortium. No terms of our
proposed arrangement with the Pennsylvania Technology Consortium have been
agreed upon. However, the Company intends that any such terms will be comparable
to those that may be obtained from an unaffiliated third party.

         We are presently producing hydrogen using our proprietary apparatus and
solution and have engaged a third-party laboratory to quantify the amount of
hydrogen being produced in order to determine feasibility of commercializing
this technology. We are also developing and improved apparatus and chemical
structures for production of photo galvanic hydrogen.



                                       28
<PAGE>

ROTORCAM ENGINE

         We do not presently expect to further develop the Rotorcam Engine
during the next 12-month period. We have been advised by Southwest Research
Institute that it will take up to 4 years and $3 million in order to develop the
Rotorcam Engine for commercial sale. We therefore first intend to use any funds
that may become available to further develop our Klenz-Safe and PGH
technologies, which we believe have the potential to generate operating revenues
much earlier than the Rotorcam Engine. We will, however, continue to evaluate
possible commercialization of the Rotorcam Engine in light of future facts and
circumstances.


ITEM 7.  FINANCIAL STATEMENTS

         The financial statements required by Item 7 of Form 10-KSB are set
forth where indicated in Item 13(a)1 of this Form 10-KSB.


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

         Not Applicable.


ITEM 8A. CONTROLS AND PROCEDURES


                                       29
<PAGE>

        As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and the with the participation of the
Company's management, including the Company's Chief Executive Officer and its
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's controls and procedures, as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e). Based upon that evaluation, the Company's Chief Executive Officer
and its Chief Financial Officer concluded that the Company's disclosure controls
and procedures are effective in enabling the Company to record, process,
summarize and report information required to be included in the Company's
periodic SEC filings within the required time period.


         There have been no significant changes in our internal controls or in
other factors during the most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our controls
over financial reporting.




                                       30
<PAGE>



                                    PART III

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

         In December 1998, Mr. Anthony Campo resigned as President and Chief
Executive Officer of the Company but remained as Chairman of the Board. Upon Mr.
Campo's resignation, the Board appointed Mr. Dwight Foster as President and CEO
and Mr. Campo as Executive Vice President, Secretary and Treasurer. In December
1998, the Board also appointed Mr. Frank Pecorella as a Director of the Company.
In April 2000, the Board appointed Mr. Dwight Foster as a Director of the
Company to replace Mr. Thomas Caltabiano, who resigned as a Director in April
2000. In April 2002, the Board appointed Robert Van Dine as President to replace
Mr. Foster who simultaneously resigned such office but who remains the Chief
Executive Officer of the Company. Our present executive officers and directors,
their ages and present positions are as follows:

                                                                 First Year
Name              Age        Position                        Elected/Appointed
----             ----        ---------                       -----------------
Anthony Campo     63         Chairman of the                       1993
                             Board, Executive
                             Vice President,
                             Secretary and Treasurer

Dwight Foster     54         Director and                          2000
                             Chief Executive Officer

Frank Pecorella   51         Director                              1998


Robert Van Dine   52         President                             2002


         All of our directors will hold office until the next meeting of
shareholders and until their successors have been duly elected and qualified.
All of our executive officers will hold office until the next annual meeting of
the directors and until their successors have been duly appointed and qualified.


                                       31
<PAGE>


ANTHONY S. CAMPO

         Mr. Anthony S. Campo has been a Director of the Company since January
1993. He was elected Chairman of the Board on July 28 1995 and was appointed
Secretary of the Company in December 1995 and President and Chief Executive
Officer in December 1997. In December 1998, Mr. Campo resigned as President and
Chief Executive Officer and was appointed as Executive Vice President, Secretary
and Treasurer of the Company. Mr. Campo was President of Chester Hill Manors,
Inc. from June 1996 through October, 2002 and of The Campo Organization, Inc.
from December 1998 through October, 2002. Each of such companies developed and
constructed residential housing. From October 2002 to the present, Mr. Campo has
managed various income-producing properties owned by him and his family.


DWIGHT FOSTER

         Mr. Dwight Foster was elected President and Chief Executive Officer of
the Company in December 1998 and was appointed to the Board of Directors in
March 2000. From 1983 to 2002 Mr. Foster was the owner/operator of the National
Automobile Dealers Exchange Services, which represented automobile dealers at
premier automobile auctions. In addition, from 1972 to the present, Mr. Foster
has been employed as a consultant to start-up and emerging companies, advising
such companies on product development, marketing, public relations and
financing. From February 1999 to the present, Mr. Foster has also acted as
President of Ultra One Corp. (formerly known as Sierra Cleansafe USA, Inc.),
which markets and sells environmentally safe cleaning products.


FRANK PECORELLA

         Mr. Frank Pecorella was appointed as a member of the Board of Directors
in December 1998. Since September 2001, Mr. Pecorella has been employed by Fleet
Bank/Quick & Reilly as an investment consultant. From March 2000 to August 2001,
Mr. Pecorella was employed by Citicorp Investment Services as an investment
consultant. From February 1999 to February 2000, Mr. Pecorella was employed by
Chase Investment Services as an investment consultant, and from January 1996 to
February 1999, Mr. Pecorella was employed by Citicorp Investment Services as an
investment consultant.


                                       32
<PAGE>

ROBERT VAN DINE

         Mr. Robert Van Dine was appointed President of the Company in April
2002. From approximately June 1998 to the present Mr. Van Dine has been a
consultant providing engineering and administrative services to two start-up
biotechnology companies. From January 2000 to the present Mr. Van Dine has been
a consultant to the Company providing engineering and administrative services to
us as well. From 1994 to 1998 Mr. Van Dine was employed as President by IMC,
Inc., a manufacturing technology consulting firm. Mr. Van Dine is a graduate of
the U.S. Naval Academy where he earned a Bachelor of Science degree in
engineering in 1973. Mr. Van Dine has served tours both in Vietnam and the
Middle East.

         There are no family relationships among our directors and officers.


CODE OF ETHICS

         The Company has not yet adopted a code of ethics for its principal
executive officer, principal financial officer, principal accounting officer or
controller due to the small number of executive officers involved with the
Company and due to the fact that the Company operates principally through
consultants with only one employee. The Board of Directors will continue to
evaluate, from time to time, whether a code of ethics should be developed and
adopted.


Item 10.  EXECUTIVE COMPENSATION

         Effective as of January 4, 2001, we issued 2,000,00 shares of our
Common Stock, $.0001 par value, to Mr. Frank Pecorella, who is a director of the
company. These shares were issued in consideration of Mr. Pecorella's past
services to the Company. Mr. Pecorella has been serving as a Director of the
Company since December 1998 without any compensation. The closing price of our
shares on January 4, 2001 was $.0525. Therefore, the value of the grant to Mr.
Pecorella, without considering any discount due to the restricted character of
such shares, was $105,000.

         On April 17, 2001, we issued 1,000,000 shares of our common stock to
Mr. Robert Van Dine. Such shares were issued as compensation for his services to
the Company, principally in connection with our efforts to diversify by engaging
in the testing of a proprietary cleaning solution for use in coal and oil
burning smoke stacks. On April 17, 2001, the closing price of our Common Stock
as quoted on the Over the Counter Bulletin Board was $0.034 per share. Based
solely on such market price, the value of the grant to Mr. Van Dine was
therefore approximately $34,000.


                                       33
<PAGE>


         On April 11, 2002, the Board of Directors approved the issuance of 1
million shares of the Company's Common Stock to Robert Van Dine in consideration
for certain consulting services that Mr. Van Dine had agreed to perform for the
Company. Such services included (a) research and development of methods of using
the Klenz-Safe cleaning product for reducing or eliminating pollutants from
building air; (b) research and development of other uses of the Klenz-Safe
cleaning product; (c) marketing all technologies using the Klenz-Safe cleaning
product; and (d) upon request by the Board of the Company, serving as an
executive officer of the Company for a minimum of one year. On April 30, 2002
the Board requested Mr. Van Dine to serve as its President, and Mr. Van Dine
assumed such position as of such date. The closing price of the Company's Common
Stock on the date the shares were issued to Mr. Van Dine was $.041. Based soley
on such closing price, the value of the shares issued to Mr. Van Dine was
$41,000.

         On April 11, 2002, the Board of Directors approved the issuance of a
non-qualified stock option (the "Option") for 6 million shares of the Company's
Common Stock to Dwight Foster, the Chief Executive Officer and a Director of the
Company. In issuing such Option, the Board noted that Mr. Foster had been
serving as the Company's President and Chief Executive Officer since December
1998 and as a Director since March 2000, in each case without any compensation.

         The Option granted to Mr. Foster is exercisable, cumulatively, at an
exercise price of $0.02 per share in accordance with the following schedule of
vesting: 1 million shares on October 11, 2002; 1 million shares on April 11,
2003; 1 million shares on October 11, 2003; 1 million shares on April 11, 2004;
1 million shares on October 11, 2004; and 1 million shares on April 11, 2005.
From and after April 11, 2005 the Option may be exercised as to all optioned
shares for which it had not been previously exercised.

         The Option expires 10 years after the date of grant. If Mr. Foster's
employment with the Company is terminated for any reason other than death, Mr.
Foster may exercise only that portion of the Option that was exercisable on the
date such employment terminated. The Option issued to Mr. Foster was issued
without registration pursuant to Section 4(2) of the Securities Act of 1933. The
closing price of the Company's Common Stock on the date the Option was granted
to Mr. Foster was $.041 per share.

         No options or stock appreciation rights have been granted during the
latest fiscal year to any executive or other officer or to any Director of the
Company.


                                       34
<PAGE>

         The following table indicates the total number and value of exercisable
and unexercisable stock options held by all Executive Officers as of July
31,2003.

<TABLE>
<CAPTION>


                                 Number of Securities                        Value of Unexercised
                                Underlying Unexercised                       In-the-Money Options
                             Options at Fiscal Year-End(#)                 At Fiscal Year-End($)(1)
                            ------------------------------             -------------------------------
Name                       Exercisable          Unexercisable          Exercisable          Unexercisable
-------------------       --------------        -------------        ---------------        -------------
<S>                         <C>                   <C>                    <C>                   <C>
Dwight Foster               2,000,000             4,000,000              $10,000               $20,000

</TABLE>

         (1) Based on the OTC Bulletin Board last sales price for our common
stock on October 22, 2003 in the amount of $.025 per common share.

         During the past three fiscal years, we have not paid any cash or other
compensation to any director or executive officer of the Company except for the
grants to Mr. Pecorella, Mr. Van Dine and Mr. Foster described above.

         Mr. Anthony Campo, our Chairman of the Board, Executive Vice President,
Secretary and Treasurer, received no compensation for his services to us during
our fiscal years ended July 31, 2003, 2002 or 2001. No other person served as an
executive officer of the Company during the fiscal year ended July 31, 2003,
and, except for the grant of stock to Mr. Pecorella and the Option granted to
Mr. Foster described above, none of our directors received any compensation for
serving in such capacity during our fiscal years ended July 31, 2003 or 2002.

         We do not have any employment agreement with any of our executive
officers, nor are there any compensatory plans or arrangements that would
provide compensation to any executive officer upon his resignation, retirement
or other termination of employment, or as a result of a change in control of the
Company or a change in such executive officer's responsibilities following a
change in control of the Company.



Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         We have provided below information as of October 22, 2003 concerning
the beneficial ownership of our Common Stock by (i) all persons whom we know to
own beneficially 5% or more of our Common Stock, (ii) each of our directors and
executive officers individually, and (iii) all of our directors and executive
officers as a group.




                                       35
<PAGE>



Name and                               Amount and
Address of                              Nature of             Percent
Beneficial Owner (1)(2)           Beneficial Ownership       of Class

Anthony S. Campo (3)                 104,503,500              60.7%

Dwight Foster (4)                      1,596,510               1.9%

Frank Pecorella                        3,390,000               4.2%

Robert Van Dine                        2,000,000               2.5%

All Directors and
Executive Officers
as a Group (4 persons)               111,490,000              63.7%


(1) Unless otherwise indicated, the address of each beneficial owner is in care
of the Company, P.O. Box 224, Landing, New Jersey 07850.

(2) Except as indicated below, all of such persons have sole investment and
voting power over the shares listed as being owned by them. Unless otherwise
indicated, we believe that all persons named in the table have sole voting and
investment power with respect to all shares of Common Stock beneficially owned
by them. A person is deemed to be the beneficial owner of securities, which may
be acquired by such person within 60 days from the date of this Report upon the
exercise of options, warrants or convertible securities. Each beneficial owner's
percentage ownership is determined by assuming that options, warrants or
convertible securities that are held by such person (but not those held by any
other person) and which are exercisable or convertible within 60 days of this
Report have been exercised or converted.

(3) In addition to 5,570,000 owned individually by Mr. Campo, includes (i)
2,150,000 shares held by Mr. Campo's wife, (ii) 4,772,400 shares held by Mr.
Campo's children, (iii) 1,100,000 shares that may be acquired by Mr. Campo upon
the exercise of Class B Warrants, (iv) 911,100 shares that may be acquired by
the children of Mr. Campo upon exercise of Class B Warrants, and (v) 90,000,000
shares that may be acquired by Mr. Campo upon the conversion of his Promissory
Note from the Company dated August 1, 2003 (see "Certain Transactions".)


                                       36
<PAGE>

(4) Includes 21,500 shares held by Mr. Foster's wife and 3,000,000 shares that
may be acquired by Mr. Foster within sixty(60) days upon exercise of the stock
option granted to him on April 11, 2002. Does not include 3,000,000 shares that
may be acquired upon exercise of such option with respect to which such option
is not exercisable within sixty (60) days of the date hereof.


Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On April 20, 1994, in consideration of prior loans made to us by Mr.
Anthony Campo, we issued to Mr. Campo a promissory note in the amount of
$100,000. On November 15, 1994 we issued another promissory note to Mr. Campo
for $79,300 in return for additional loans that he had made to us. On March 9,
1995 we again issued a new note in the amount of $328,000 to Mr. Campo that
consolidated the amounts that we owed to him under the previous two notes and an
additional $149,200 that he had advanced to us between November 15, 1994 and
March 9, 1995.

         On October 20, 1995 we renegotiated the March 9, 1995 promissory note
and issued a new note in the amount of $568,000, which included the former
principal amount of $328,500, accrued interest thereon, additional cash advances
that Mr. Campo had made to us during fiscal 1995, and our purchase of an
engineering workstation and software from Mr. Campo. The new note bore interest
at 7.5 % per annum and matured on July 1, 1998. The note was convertible, in
whole or in part, into Common Stock of the Company at the conversion rate one
share of our Common Stock for each of $.0075 in principal of the note converted.
The conversion feature was subject to anti-dilution. We did not make any
payments to Mr. Campo under the October 20, 1995 promissory note.

         We subsequently issued a new promissory note to Mr. Campo, dated August
1, 1998, in the amount of $807,280, which consolidated amounts owed under the
$568,000 note; accrued interest on such note to July 31, 1998 in the amount of
$122,070; cash advances made by Mr. Campo to us or on our behalf between October
20, 1995 and July 31, 1998 in the amount of $60,090; cash advances in the amount
of $42,000 made by Mr. Campo between May 6, 1993 and July 14, 1993 for which he
had not previously been credited; and interest on such 1993 advances through
July 31, 1993 in the amount of $15,120. The August 1, 1998 note bore interest at
7.5% per annum and matured on July 3l, 2000. The note was convertible into our
Common Stock at a conversion rate of one share of our Common Stock for each
$.0075 in principal amount of the note converted up to a maximum of 100 million
shares. As of the maturity date of the August 1, 1998 Note, we had defaulted on
the payment of all obligations to pay principal of and interest on such Note.


                                       37
<PAGE>

         In September 2000, the Board approved the issuance of a new Note to Mr.
Campo dated August 1, 2000 in the principal amount of $1,193,294 to replace the
August 1, 1998 Note that matured on August 1, 2000. The principal amount of the
August 1, 2000 Note consolidated all amounts the Company owed Mr. Campo as of
August 1, 2000, including accrued interest thereon through July 31. 2000. Except
for the increased principal amount of the August 1. 2000 Note, the terms of such
Note were the same as the August 1, 1998 Note.

         In September 2001, the Board approved the issuance of a new Note to Mr.
Campo dated August 1, 2001 in the principal amount of $1,337,552 to replace the
August 1, 2000 Note that matured on August 1, 2001. The principal amount of the
August 1, 2001 Note consolidated all amounts the Company owed Mr. Campo as of
August 1, 2001, including accrued interest thereon through July 31, 2001. Except
for the increased principal amount of the August 1, 2001 Note, the terms of such
Note were the same as the August 1, 1998 and August 1, 2000 Notes. In March 2002
and April 2002, Mr. Campo exercised his conversion right under the August 2001
Note to acquire a total of 10,000,000 shares of our Common Stock in exchange for
retirement of $75,000 of debt under the Note.

         In October 2002, the Board approved the issuance of a new Note to Mr.
Campo dated as of August 1, 2002 in the principal amount of $1,430,148 to
replace the August 1, 2001 Note that matured on August 1, 2002. The principal
amount of the August 1, 2002 Note consolidated all amounts the Company owed Mr.
Campo as of August 1, 2002, including accrued interest thereon through July 31,
2002 in the amount of $99,827. Except for the increased principal amount of the
August 1, 2002 Note and the reduction of the number of shares that Mr. Campo may
acquire upon exercise of his conversion right to 90 million shares resulting
from his exercise of the conversion right for 10 million shares in March and
April 2002, the terms of such Note are the same as the August 1, 1998, August 1,
2000 and August 1, 2001 Notes.

         In October 2003, the Board approved the issuance of a new Note to Mr.
Campo dated as of August 1, 2003 in the principal amount of $1,652,106 to
replace the August 1, 2002 Note that matured on August 1, 2003. The principal
amount of the August 1, 2003 Note consolidated all amounts the Company owed Mr.
Campo as of August 1, 2003, including accrued interest thereon through July 31,
2003 in the amount of $110,197. Other than the principal amount and maturity
dates, the terms of the August 1, 2003 Note are materially the same as the
August 1, 2002 Note.


                                       38
<PAGE>

         Since we do not have any revenues, it is very doubtful that we will be
able to pay any interest or principal amounts due under the August 1, 2003 Note
until such time as we have operating revenues or until we raise funds from an
independent source, both of which events may not occur at any time.


                                     PART IV


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(A) Exhibits and Financial Statements:

    1.  Financial Statements

    The following documents are included in Part II:

    (i)     Report of Independent Accountants
    (ii)    Balance Sheets as of July 31, 2003 and July 31, 2002
    (iii)   Statements of Income for the fiscal years ended
            July 31, 2003, 2002 and 2001
    (iv)    Statement of Cash Flows for the fiscal years ended
            July 31, 2003, 2002, and 2001
    (v)     Statements of Changes in Stockholders' Equity for the fiscal
            years ended July 31, 2003, 2002 and 2001
    (vi)    Notes to Financial Statements

    2. The exhibits which are required by Item 601 of regulation S-B are
    listed in the Index to Exhibits beginning on Page 42 of this Form
    10-KSB.


(B) Reports on Form 8-K.

    Report dated October 2, 2003 relating to the Company's acquisition of
    the rights of the Inventors to the Hydrogen Technology.


                                       39
<PAGE>

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES


AUDIT FEES

         The aggregate fees billed by the Company's auditors for professional
services rendered in connection with the audit of the Company's annual
consolidated financial statements for fiscal 2003 and 2002 and reviews of the
consolidated financial statements included in the Company's Forms 10-KSB for
fiscal 2003 and 2002 were approximately $16,000 and $16,000 respectively.


AUDIT-RELATED FEES

         For fiscal 2003 and 2002, the Company's auditors did not bill any
additional fees for assurance and related services that are reasonably related
to the performance of the audit or review of the Company's financial statements
and are not reported under "Audit Fees" above.


TAX FEES

         The aggregate fees billed by the Company's auditors for professional
services for tax compliance, tax advice, and tax planning were $0 and $0 for
fiscal 2003 and 2002, respectively.

All other fees

         The aggregate fees billed by the Company's auditors for all other
non-audit services rendered to the Company, such as attending meetings and other
miscellaneous financial consulting, in fiscal 2003 and 2002 were $0 and $0,
respectively.





                                       40
<PAGE>


                         MURRAY UNITED DEVELOPMENT CORP.
                              FINANCIAL STATEMENTS
                                      INDEX



                                                                     Page  No.

(i) Report of Independent Accountants                                   F-1


(ii)     Balance Sheets as of July 31, 2003 and July 31, 2002           F-2


(iii)    Statements of Operations for the fiscal years
         ended July 31, 2003, 2002 and 2001                             F-3


(iv)     Statements of Changes in Stockholders'
         Equity (Deficiency) for the fiscal years
         ended July 31, 2003, 2002 and 2001                         F-4 to F-10


(v)      Statement of Cash Flows for the fiscal
         years ended July 31, 2003, 2002, and 2001                      F-11


(vi)     Notes to Financial Statements                              F-12 to F-18



<PAGE>


                                      F -1

A L B R E C H T , V I G I A N O , Z U R E C K & C O M P A N Y , P . C .

                                                    CERTIFIED PUBLIC ACCOUNTANTS
                                                                25 SUFFOLK COURT
                                                             HAUPPAUGE, NY 11788
                                                                  (631) 434-9500


                               ACCOUNTANTS' REPORT


To the Board of Directors and Stockholders
Murray United Development Corporation
Landing, New Jersey

We have audited the accompanying balance sheets of Murray United Development
Corporation (a Company in the development stage) as of July 31, 2003 and 2002,
and the related statements of operations, cash flows and stockholders' equity
(deficiency) 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain a reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Murray United Development
Corporation as of July 31, 2003 and 2002, and its results of operations and cash
flows for the years ended July 31, 2003, 2002, and 2001, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, as of July 31, 2003, the Company had not generated any
operating revenues and had suffered recurring losses from operations from
inception and had a net capital deficiency. These matters raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.





Hauppauge, New York
October 16, 2003
<PAGE>


                                TABLE OF CONTENTS



                                                                        Page

INDEPENDENT AUDITORS' REPORTS.....................................       F-1

FINANCIAL STATEMENTS

    Balance Sheets................................................       F-2

    Statements of Operations......................................       F-3

    Statements of Stockholders' Equity (Deficiency)...............   F-4 - F-10

    Statements of Cash Flows......................................      F-11

    Notes to Financial Statements.................................   F-12 - F-18




<PAGE>

                                      F-2


                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                                 BALANCE SHEETS
                             JULY 31, 2003 and 2002

<TABLE>
<CAPTION>

                                                                              2003          2002
ASSETS                                                                      ---------      ---------
<S>                                                                        <C>                 <C>

CURRENT ASSETS
     Cash and cash equivalents                                             $    8,252          $ 364
     Loan Receivable                                                            2,000          2,000
                                                                           ----------      ---------
                                                 Total Current Assets          10,252          2,364
FURNITURE AND EQUIPMENT, NET                                                   50,004         58,336
                                                                           ----------      ---------
                                                                           $   60,256       $ 60,700
                                                                           ==========      =========

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES
     Accounts payable                                                      $   18,832       $ 25,440
                                                                           ----------      ---------
                                            Total Current Liabilities          18,832         25,440
                                                                           ----------      ---------
LONG-TERM LIABILITIES
     Accrued compensation                                                     148,128        148,128
     Accrued interest payable                                                 110,197         99,827
     Notes payable - stockholder                                            1,541,909      1,330,321
                                                                           ----------      ---------
                                          Total Long Term Liabilities       1,800,234      1,578,276
                                                                           ----------      ---------
     Total Liabilities                                                      1,819,066      1,603,716
                                                                           ----------      ---------
STOCKHOLDER'S EQUITY (DEFICIENCY)
     Capital stock - par value $.0001; authorized
        200,000,000 shares; issued and outstanding
     79,953,434 and 79,953,434 shares                                           7,996          7,996
     Additional paid-in capital                                             2,541,451      2,541,451
     Deficit accumulated in the development stage                          (4,308,257)    (4,092,463)
                                                                           ----------      ---------

                              Total Stockholders' Equity (Deficiency)      (1,758,810)    (1,543,016)
                                                                           ----------      ---------

                                                                             $ 60,256       $ 60,700
                                                                           ==========      =========

</TABLE>

      See independent auditors' report and notes to financial statements


<PAGE>

                                      F-3


                   MURRAY UNITED DEVELOPMENT CORPORATION
                      (A Company in the Development Stage)
                            STATEMENTS OF OPERATIONS
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)
<TABLE>
<CAPTION>

                                                                                                           Cumulative
                                                                                                          Amounts From
                                                                2003           2002           2001         Inception
                                                            -----------     ----------     ----------     -----------
INCOME

<S>                                                          <C>            <C>            <C>             <C>
Interest Income                                                   $ -0-          $ -0-          $ -0-        $ 66,465

EXPENSES

Research and development costs                                      -0-         14,063            -0-         868,716
Licensing fees stockholder and affiliate                            -0-            -0-            -0-          57,260
General and administrative expenses                             105,597        134,107        292,979       2,779,013
Interest expense stockholder and affiliate                      110,197         99,827         90,943         669,733
                                                            -----------     ----------     ----------     -----------
                                         Total Expenses         215,794        247,997        383,922       4,374,722
                                                            -----------     ----------     ----------     -----------
                                               Net loss      $ (215,794)    $ (247,997)    $ (383,922)    $(4,308,257)
                                                            -----------     ----------     ----------     -----------
NET LOSS PER COMMON SHARE                                    $   (0.003)    $   (0.003)    $   (0.005)    $    (0.054)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING                                           79,953,434     74,328,434     64,912,336      79,953,434
                                                            -----------     ----------     ----------     -----------


</TABLE>

      See independent auditors' report and notes to financial statements


<PAGE>




                                      F-4



                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)
<TABLE>
<CAPTION>

                                                                                      Deficit
                                           Common                                   Accumulated
                                           Stock                       Additional     in the           Stock
                                         Number of                       Paid in   Developmental   Subscriptions
                                           Shares         Amounts        Capital       Stage         Receivable        Total
                                         ----------     ----------     ----------  ------------     -------------   ----------

<S>                                        <C>            <C>                                          <C>
Issuance in October 1987 to
   Principal Stockholder                   49,000,000     $ 4,900                                      $ (4,900)

Issuance in October 1987 for cash           3,000,000         300       $ 49,800                           (100)       $50,000

Issuance through initial public
   offering of 15,000,000 units in
   February 1988 for cash at $.05
   per unit, net of Issuance cost of
   $220,900                                15,000,000       1,500        527,600                                       529,100

Net Loss - 1988                                                                      $ (156,821)                      (156,821)

Exercise of Class A Warrants:

at $.045 per share                            312,588          31         14,035                                        14,066

at $.10 per share                              21,000           2          2,098                                         2,100

Costs relating to continuing
   registration of warrants                                              (29,532)                                      (29,532)

Reclassification of common stock             (333,588)        (33)       (16,133)                                      (16,166)

Net Loss - 1989                                                                        (362,922)                      (362,922)
                                          -----------   ---------      ---------    -----------       ---------      ---------
Balance, July 31, 1989                     67,000,000     $ 6,700       $547,868     $ (519,743)       $ (5,000)       $29,825
                                          ===========   =========      =========    ===========       =========      =========

</TABLE>

      See independent auditors' report and notes to financial statements


<PAGE>

                                      F-5

                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)


<TABLE>
<CAPTION>
                                                                                      Deficit
                                               Common                               Accumulated
                                               Stock                  Additional      in the            Stock
                                             Number of                  Paid in    Developmental     Subscriptions
                                              Shares     Amounts        Capital        Stage          Receivable       Total
                                           ----------- ----------   -------------  -------------     -------------   ----------

<S>                                       <C>            <C>           <C>          <C>                  <C>        <C>
Exercise of Class A Warrants:

at $.045 per share                          5,201,205       $ 520       $233,534                                     $ 234,054

at $.10 per share                             409,000          41         40,859                                        40,900

Exercise of Class B Warrants:

at $.15 per share                              25,000           3          3,747                                         3,750

Costs relating to continuing
   registration and solicitation of
   warrants                                                              (24,588)                                      (24,588)

Cash received for stock subscription                                                                      5,000          5,000

Reclassification of common stock           (5,635,205)       (564)      (278,140)                                     (278,704)

Charge for stock bonus                                                    40,000                                        40,000

Net Loss - 1990                                                                        (422,314)                      (422,314)
                                          -----------   ---------      ---------    -----------       ---------      ---------
Balance, July 31, 1990                     67,000,000     $ 6,700       $563,280     $ (942,057)          $ -0-      $(372,077)
                                          ===========   =========      =========    ===========       =========      =========


</TABLE>

      See independent auditors' report and notes to financial statements


<PAGE>


                                      F-6

                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)

<TABLE>
<CAPTION>

                                                                                      Deficit
                                               Common                               Accumulated
                                               Stock                  Additional      in the            Stock
                                             Number of                  Paid in    Developmental     Subscriptions
                                              Shares     Amounts        Capital        Stage          Receivable       Total
                                           ----------- ----------   -------------  -------------     -------------   ----------

<S>                                        <C>            <C>           <C>         <C>                   <C>        <C>
Sale of 3,297,000 shares
   through private placement

at $.08 per share                           3,297,000       $ 329       $244,871                                     $ 245,200

Exercise of Class A Warrants:

at $.10 per share                           3,152,472         315        314,933                                       315,248

Exercise of Class B Warrants:

at $.15 per share                              60,000           6          8,994                                         9,000

Costs relating to continuing
   registration of warrants                                              (80,607)                                      (80,607)

Reclassification of common stock           (3,212,472)       (321)      (323,927)                                     (324,248)

Net Loss - 1991                                                                        (354,727)                      (354,727)
                                          -----------   ---------      ---------    -----------       ---------      ---------
Balance, July 31, 1991                     70,297,000     $ 7,029       $727,544    $(1,296,784)          $ -0-      $(562,211)
                                          ===========   =========      =========    ===========       =========      =========

</TABLE>

      See independent auditors' report and notes to financial statements


<PAGE>

                                      F-7

                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A Company in the Development Stage)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)

<TABLE>
<CAPTION>
                                                                                      Deficit
                                               Common                               Accumulated
                                               Stock                  Additional      in the
                                             Number of                  Paid in    Developmental
                                              Shares     Amounts        Capital        Stage          Total
                                           ----------- ----------   -------------  -------------    ----------



Exercise of Class A Warrants:

<S>                                         <C>             <C>        <C>                            <C>
at $.10 per share                           3,779,425       $ 378      $ 377,565                      $ 377,943

Exercise of Class B Warrants:

at $.15 per share                               4,000           1            599                            600

Exercise of underwriters warrants              63,000           6          4,719                          4,725

Costs relating to:

Exercise of warrants                                                     (33,191)                       (33,191)

Registration of privately placed
   shares                                                                (55,496)                       (55,496)

Issuance for: Compensation at
   $.065 per share                             50,000           5          3,245                          3,250

Agency fee at $.10 per share                   25,000           2          2,498                          2,500

Claim settlement at $.085 per share             1,000           1             84                             85

Reclassification of common stock            9,181,265         918        618,200                        619,118

Charge for compensation                                                  180,900                        180,900

Net Loss - 1992                                                                        (606,508)       (606,508)
                                          -----------   ---------      ---------    -----------      ----------
Balance, July 31, 1992                     83,400,690     $ 8,340    $ 1,826,667   $ (1,903,292)      $ (68,285)
                                          ===========   =========    ===========   ============      ==========

</TABLE>

      See independent auditors' report and notes to financial statements
<PAGE>



                                      F-8


                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A Company in the Development Stage)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)
<TABLE>
<CAPTION>

                                                                                      Deficit
                                               Common                               Accumulated
                                               Stock                  Additional      in the
                                             Number of                  Paid in    Developmental
                                              Shares     Amounts        Capital        Stage          Total
                                           ----------- ----------   -------------  -------------    ----------


<S>                                           <C>      <C>          <C>           <C>              <C>
Compensation at $.065 per share               100,000  $       10   $     6,490                    $    6,500

Exercise of Underwriters warrants at
   $.075 per share                            500,000          50        37,450                        37,500

Exercise of Class B Warrants at
   $.15 per share                              13,000           1         1,949                         1,950

Retirement of 8,970,300 shares of stock    (8,970,300)       (897)                                       (897)

Net loss for 1993                                                                     470,621)       (470,621)
                                          -----------   ---------      ---------    -----------    ----------

Balance, July 31, 1993                     75,043,390  $    7,504   $ 1,872,556   $ (2,373,913)    $ (493,853)
                                          ===========   =========    ===========   ============    ==========

</TABLE>







<PAGE>


                                      F-9


                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)

<TABLE>
<CAPTION>
                                                                                           Deficit
                                             Common                                      Accumulated
                                              Stock                       Additional        in the
                                            Number of                       Paid in     Developmental
                                             Shares           Amounts       Capital         Stage           Total
                                            ---------       ----------    ----------    -------------     ---------
               ISSUANCE FOR:
               -------------
<S>                                         <C>                  <C>        <C>                            <C>
Prior period adjustment                                                                   $ 369,329      $ 369,329

Net loss for 1994                                                                          (342,783)      (342,783)
                                           ----------       --------    -----------    ------------    ------------
Balance, July 31, 1994                     75,043,390        $ 7,504    $ 1,872,556    $ (2,347,367)    $ (467,307)
                                           ==========       ========    ===========    ============    ============
Issuance for: Compensation at $.015
   per share                                2,000,000            200         29,800                         30,000

Net loss for 1995                                                                          (354,155)      (354,155)
                                           ----------       --------    -----------    ------------    ------------
Balance, July 31, 1995                     77,043,390        $ 7,704    $ 1,902,356    $ (2,701,522)    $ (791,462)
                                           ==========       ========    ===========    ============    ============

Issuance for services                       2,000,000            200        262,814                        263,014

Issuance for services                         340,000             34          6,766                          6,800

Private placement                           8,182,833            818                                           818

Retired shares                             (2,055,556)          (205)       (92,294)                       (92,499)

Net loss for 1996                                                                          (275,551)      (275,551)
                                           ----------       --------    -----------    ------------    ------------
Balance, July 31, 1996                     85,510,667        $ 8,551    $ 2,079,642    $ (2,977,073)    $ (888,880)
                                           ==========       ========    ===========    ============    ============

Video fee                                     200,000           $ 20        $ 1,980           $ -0-        $ 2,000

Legal fees                                  2,548,867            254         37,979                         38,233

Retirement                                 (2,548,867)          (254)                                         (254)

Net loss for 1997                                                                          (170,924)      (170,924)
                                           ----------       --------    -----------    ------------    ------------
Balance, July 31, 1997                     85,710,667        $ 8,571    $ 2,119,601    $ (3,147,997)   $(1,019,825)
                                           ==========       ========    ===========    ============    ============
Retired                                   (24,757,233)        (2,475)                                       (2,475)

Net loss for 1998                                                                           (96,900)       (96,900)
                                           ----------       --------    -----------    ------------    ------------
Balance, July 31, 1998                     60,953,434        $ 6,096    $ 2,119,601    $ (3,244,897)   $(1,119,200)
                                           ==========       ========    ===========    ============    ============

</TABLE>


      See independent auditors' report and notes to financial statements


<PAGE>

                                      F-10


                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)

<TABLE>
<CAPTION>
                                                                                           Deficit
                                             Common                                      Accumulated
                                              Stock                       Additional        in the
                                            Number of                       Paid in     Developmental
                                             Shares           Amounts       Capital         Stage           Total
                                            ---------       ----------    ----------    -------------    ---------
               ISSUANCE FOR:
               -------------

<S>                                         <C>                <C>         <C>                <C>         <C>
Issuance for services                       2,500,000          $ 250       $ 49,750           $ -0-       $ 50,000

Net loss for 1999                                                                          (210,594)      (210,594)
                                           ----------       --------    -----------    ------------    -----------

Balance, July 31, 1999                      2,500,000        $ 6,346    $ 2,169,351    $ (3,455,491)   $(1,279,794)
                                           ==========       ========    ===========    ============    ===========
Net loss for 2000                                                                            (5,053)        (5,053)
                                           ----------       --------    -----------    ------------    -----------
Balance, July 31, 2000                      2,500,000        $ 6,346    $ 2,169,351    $ (3,460,544)   $(1,284,847)
                                           ==========       ========    ===========    ============    ===========

Issuance for services                       3,250,000            325        147,175                        147,500

Issuance for services                       2,000,000            200         99,800                        100,000

Net loss for 2001                                                                          (383,922)      (383,922)
                                           ----------       --------    -----------    ------------    -----------
Balance, July 31, 2001                     68,703,434        $ 6,871    $ 2,416,326    $ (3,844,466)   $(1,421,269)
                                           ==========       ========    ===========    ============    ===========

Issuance for debt                          10,000,000          1,000         74,000                         75,000

Issuance for services                       1,250,000            125         51,125                         51,250

Net loss for 2002                                                                          (247,997)      (247,997)
                                           ----------       --------    -----------    ------------    -----------
Balance, July 31, 2002                     79,953,434        $ 7,996    $ 2,541,451    $ (4,092,463)   $(1,543,016)
                                           ==========       ========    ===========    ============    ===========

Net loss for 2003                                                                          (215,794)      (215,794)
                                           ----------       --------    -----------    ------------    -----------
Balance, July 31, 2003                     79,953,434        $ 7,996    $ 2,541,451    $ (4,308,257)   $(1,758,810)
                                           ==========       ========    ===========    ============    ===========


</TABLE>



      See independent auditors' report and notes to financial statements


<PAGE>

                                      F-11

                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A Company in the Development Stage)
                            STATEMENTS OF CASH FLOWS
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)

<TABLE>
<CAPTION>
                                                                                                                 Cumulative
                                                                                                               Amounts From
                                                                         2003          2002          2001        Inception
                                                                      ----------     ---------     ---------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                  <C>             <C>           <C>          <C>
    Net loss                                                         $ (215,794)     $(247,997)    $(383,922)   $ (4,308,257)
    Adjustments to reconcile net loss to net
      cash used by operating activities:
    Depreciation and amortization                                         8,332          8,333        10,175         210,492
    Expenses paid through issuance of
      common stock by:
      Company                                                               -0-         51,250       247,500         523,785
      Principal stockholder                                                 -0-            -0-           -0-         220,900
    Changes in operating assets and liabilities:
      Loans Receivable                                                      -0-            -0-        (2,000)         (2,000)
      Accounts payable and accrued expenses                               3,762         27,806       (69,973)        277,160
                                                                      ---------      ---------     ----------    -----------
                          Net Cash Used by Operating Activities        (203,700)      (160,608)     (198,220)     (3,077,920)
                                                                      ---------      ---------     ----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
    Acquisition of fixed assets                                             -0-            -0-           -0-        (260,497)
                                                                      ---------      ---------     ----------    -----------
                          Net Cash Used by Investing Activities             -0-            -0-           -0-        (260,497)
                                                                      ---------      ---------     ----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from notes payable - stockholder                           211,588        158,702       190,694       1,668,576
    Payments to notes payable - stockholder                                 -0-        (75,000)          -0-        (126,667)
    Proceeds from issuance of common stock                                  -0-         75,000           -0-       1,804,760
                                                                      ---------      ---------     ----------    -----------

                      Net Cash Provided by Financing Activities         211,588        158,702       190,694       3,346,669
                                                                      ---------      ---------     ----------    -----------
Net Increase (Decrease) in Cash  7,888ash equivalants                    (1,906)        (7,526)         8,252

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                              364          2,270         9,796             -0-
                                                                      ---------      ---------     ----------    -----------
                       Cash and Cash Equivalents at End of Year         $ 8,252          $ 364       $ 2,270         $ 8,252
                                                                      =========      =========     ==========    ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    Cash paid during the year for interest                                  -0-            -0-            -0-         32,420



</TABLE>

      See independent auditors' report and notes to financial statementsw
<PAGE>




                                      F-12

                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             July 31, 2003 and 2002

NOTE 1 - ORGANIZATION AND BUSINESS AND BASIS OF PRESENTATION

The Company was incorporated on October 13, 1987 under the laws of the State of
Delaware. It was organized to further develop and exploit commercially certain
technology for a rotary internal combustion engine that would utilize
alternative fuels. The patent and related rights to the use of the technology
have been assigned to the Company.

The Company has been in the development stage since inception. Activities of the
Company have been limited to the acquisition of funds from the sale of its
common stock; the acquisition of the licensing rights for and, subsequently,
title to, the engine technology; research and development related to the
development of an initial fuel-driven prototype of the engine that was
successfully tested on a preliminary basis in January 1990; additional testing
and development of the engine prototype to obtain performance data for the
demonstration of the engine to potential licensees; and research relating to the
ability of a proprietary cleaning solution, which will be licensed to the
Company, to remove air pollutants from coal burning fuel gas and certain air
pollutants and contaminants from building air, as well as other industrial uses.
The proprietary cleaning solution, for which we have been granted trademark
protection under the name Klenz-Safe, is owned by a corporation whose sole
shareholders are Mr. Anthony Campo and Mr. Dwight Foster, the Chairman of the
Board and Chief Executive Officer of the Company, respectively. The Company
intends to continue research and development on the Klenz-Safe product during
the ensuing 12-month period. Funding will be provided through loans from the
Chairman of the Company, at his sole discretion. The Company does not intend to
continue its research and development efforts with respect to its rotary engine
during the next 12-month period, unless it is able to raise the funds necessary
to conduct such research, of which there can be no assurances.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. However, as of July 31, 2003, the
Company had not been able to commercially utilize its engine technology or
cleaning solution to generate revenues or cash flows from operating activities.
As a result, it has suffered recurring losses from operations from inception
that have generated the net stockholders' deficiency of $1,758,810 as of July
31, 2003 and have also generated significant working capital deficiencies from
time to time. Management does not expect the Company to generate any significant
revenues or positive operating cash flows during the twelve-month period
subsequent to July 31, 2003. The limited amount of liquid resources available at
July 31, 2003, and the inability to generate operating revenues and cash flows
raise substantial doubts about the Company's ability to continue as a going
concern.

The Company plans to continue research and development activities on at least a
limited basis through the twelve-month period subsequent to July 31, 2003.
However, management believes that, the net liquid assets available at July 31,
2003 will not be sufficient to enable the Company to meet its obligations and to
continue as a going concern during the ensuing twelve-month period even on this
limited basis without limiting research and development and other operating
activities more severely unless it obtains additional debt or equity financing
and/or government sponsored research grants.

<PAGE>

                                      F-13

                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             July 31, 2003 and 2002

NOTE 1 - ORGANIZATION AND BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

Management believes that continuation of the Company as a going concern during
the twelve-month period subsequent to July 31, 2003 and thereafter will depend
upon the Company's ability to obtain sufficient additional working capital to
fund research and development activities on its Klenz-Safe technology and the
general and administrative expenses to be incurred during the remaining
development period. Potential sources of such working capital include: the
private or public sale of common stock (the Company has historically depended
primarily on the sale of equity securities to finance its operations); the
exercise of a substantial portion of the 15,398,000 outstanding Class B warrants
prior to their proposed expiration on March 11, 2004, 14,898,000 of which are
exercisable at $0.15 per share and 500,000 of which are exercisable at $.225 per
share; and borrowing additional amounts from related parties or other sources.
However, there can be no assurances that such financing will be available. The
accompanying financial statements do not include any adjustments that might
result from the uncertainties related to the ability of the Company to continue
as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers highly liquid
temporary cash investments with an original maturity of three months or less to
be cash equivalents.

Depreciation

Depreciation of furniture and equipment is provided over the estimated useful
lives of the related assets using declining balance methods.

Estimates

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

Research and Development

Costs and expenses related to research and development are expensed as incurred.


<PAGE>
                                      F-14

                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             July 31, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Net Loss Per Common Share

Net loss per common share was computed on the basis of the weighted average
number of shares of common stock outstanding during each period. The effect of
assuming the exercise of outstanding warrants was antidilutive and, accordingly,
not included in the computation of net loss per share.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the bases of assets and liabilities for
financial and income tax reporting. The deferred tax assets and liabilities
represent the future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are recovered or
settled.

Deferred taxes also are recognized for operating losses that are available to
offset future federal income taxes. The Company accounts for investment tax
credits using the flow-through method, and thus reduces income tax expense in
the year the related assets are placed in service.

NOTE 3 - FURNITURE AND EQUIPMENT

Furniture and equipment consists of the following:

<TABLE>
<CAPTION>

                                                                 July 31,                   Estimated
                                                     --------------------------------
                                                          2003               2002         Useful Lives
                                                     ---------------  ---------------   --------------

<S>                                                  <C>              <C>                        <C>
         Furniture                                   $         2,098  $         2,098            7 years
         Equipment                                           129,451          129,451            5 years
         Leasehold improvements                                3,947            3,947            3 years
         Patent                                              125,000          125,000           15 years
                                                     ---------------  ---------------
                                                             260,496          260,496
         Less accumulated depreciation                       210,492          202,160
                                                     ---------------  ---------------

                                                     $        50,004  $        58,336
                                                     ===============  ===============

</TABLE>


Depreciation expense totaled $8,332 and $8,333 for the years ended July 31, 2003
and 2002, respectively.



<PAGE>

                                      F-15

                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             July 31, 2003 and 2002

NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

                                                  July 31,
                                           2003               2002
                                      ---------------  ---------------

         Professional fees            $        18,832  $        24,919
         Other                                    -0-              521
                                      ---------------  ---------------
                                      $        18,832  $        25,440
                                      ===============  ===============

NOTE 5 - NOTES PAYABLE - STOCKHOLDER

Effective April 15, 1994, the Company issued a promissory note (the "First
Note"), to Mr. Anthony Campo, the Chairman of the Board, Executive Vice
President, Secretary and Treasurer of the Corporation, to evidence cash advances
of $79,300. The First Note provided for an interest rate of 6% on the unpaid
balance and was due in equal installments for one-half of the principal amount
on April 15, 1996 and the remaining one-half on April 20, 1997. The First Note
had warrants attached to purchase 1,666,667 shares of common stock at an excise
price of $0.06 per common share and expired on April 30, 1997. On November 15,
1994, the Company issued a second promissory note (the "Second Note"), to Mr.
Anthony Campo to evidence cash advances to the Company amounting to $100,000.
The Second Note provided for an interest rate of 6% on the unpaid balance and
was due in equal installments for one-half of the principal amount on April 15,
1997 and the remaining one-half on April 15, 1999. The Second Note had warrants
attached to purchase 7,930,000 shares of common stock at an excise price of
$0.01 per common share, which expired on April 30, 1999.

Effective March 24, 1995, the Company restructured the obligations under the
First note and the Second Note by issuing a new note payable to Mr. Campo in the
amount of $328,500. This restructured note (the "Third Note") provided for
interest at a rate of 6% per year on the outstanding principal balance in two
equal quarterly installments of principal beginning March 24, 1995 through April
30, 1999. This Third Note was issued with warrants attached to acquire
32,850,000 shares of common stock at the excise price of $0.01 per share, which
expired on April 30, 1999.

Effective October 20, 1995, the Company renegotiated the outstanding debt and
interest owed to Mr. Campo under the Third Note. The new note (the "Fourth
Note") bore interest at 7.5% per year and matured on July 1, 1999. The principal
amount of $568,000 plus interest was convertible into common shares of the
Company at $0.0075 per share. It was also agreed that any additional monies
loaned to the Company would bear interest at 7.5% per year.

Effective August 1, 1998, the Company consolidated the outstanding principal and
interest owed to Mr. Campo under the Fourth Note with additional cash advances
of $102,090 made by Mr. Campo, with accrued interest thereon at 7.5% per annum.
The new note in the amount of $807,280 bore interest at 7.5% per annum, matured
on August 31, 2000 and carried a conversion feature of one share for each
$0.0075 of debt converted. In March 2000, Mr. Campo agreed to limit the number
of shares for which he may convert the August 1, 1998 Note to 100,000,000
shares.

<PAGE>

                                      F-16

                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             July 31, 2003 and 2002

NOTE 5 - NOTES PAYABLE - STOCKHOLDER (continued)


Effective August 1, 2000, the Company consolidated the outstanding principal and
interest owed to Mr. Campo under the August 1, 1998 Note. The new note in the
amount of $1,193,294 bore interest at 7.5% per annum, matured on August 31, 2001
and carried a conversion feature of one share for each $0.0075 of debt
converted. As of July 31, 2001, the note balance increased to $1,246,619 as
additional funds were loaned to the Company by Mr. Campo.

Effective August 1, 2001, the Company consolidated the outstanding principal and
interest owed to Mr. Campo under the August 1, 2000 Note. The new note in the
amount of $1,337,552 bore interest at 7.5% per annum, matured on August 31, 2002
and carried a conversion feature of one share for each $0.0075 of debt
converted. As of July 31, 2002, the note balance decreased to $1,330,321.
Additional funds were loaned to the Company by Mr. Campo in the amount of
$67,769 but he converted $75,000 of debt into equity.

Effective August 1, 2002, the Company consolidated the outstanding principal and
interest owed to Mr. Campo under the August 1, 2001 Note. The new note in the
amount of $1,430,148 bore interest at 7.5% per annum, matured on August 31, 2003
and carried a conversion feature of one share for each $0.0075 of debt
converted. As of July 31, 2003, the note balance increased to $1,541,909 as
additional funds were loaned to the Company by Mr. Campo.

The Company has defaulted on its principal payment due August 1, 2003 and its
quarterly interest payments due on November 1, 2000, February 1, 2001, May 1,
2001, August 1, 2002, November 1, 2002, February 1, 2003, and May 1, 2003. As of
July 31, 2003, a total of $110,197 in unpaid interest is owed to Mr. Campo under
the August 1, 2002 note. Since the Company does not have any revenues, it is
doubtful that the Company will be able to pay any interest or principal amounts
due under the August 1, 2002 note until such time as it has operating revenues
or raises funds from an independent source, both of which events may not occur
at any time. In addition to the right of converting amounts due under the note
into common stock, as described above, Mr. Campo has the right at any time to
declare amounts due under such note immediately due and payable. It is not
anticipated that any amounts under the note will be repaid within the next year.

Accordingly, the balances of the restructured obligations were classified as
long-term debt at July 31, 2003 and 2002.

Subsequent to the fiscal year-end and effective August 1, 2003, the Company
consolidated the outstanding principal and interest owed to Mr. Campo under the
August 1, 2002 Note. The new note in the amount of $1,652,106 bears interest at
7.5% per annum and matures on August 1, 2004. This note also carries the
conversion feature of one share for each $0.0075 of debt converted, limited to
90,000,000 shares.



<PAGE>


                                      F-17

                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             July 31, 2003 and 2002


NOTE 6 - STOCKHOLDERS' EQUITY AND INITIAL PUBLIC OFFERING

In October 1987, the Company issued 49,000,000 shares of common stock to Jerome
Murray and 5,989 shares of common stock to another officer in consideration for
$4,900 and $100, respectively. Payments for the shares were received in November
1989.

In an initial public offering of the Company's common stock on February 26,
1988, the Company sold 15,000,000 units at a price of $0.05 per unit. Each unit
consisted of one share of common stock, one Class A redeemable common stock
purchase warrant and one Class B redeemable common stock purchase warrant.
Proceeds, net of $220,900 of underwriting discounts and other registration
costs, amounted to $529,100. Concurrent with the public offering, the Company
issued warrants (the "underwriter's warrants") to the underwriter for nominal
consideration to purchase 1,500,000 units consisting of 1,500,000 shares of
common stock and certain other warrants to purchase additional shares (the other
warrants were not exercised and expired prior to July 31, 1991). The
underwriter's warrants were exercisable through February 1993 at an exercise
price of $0.075 per unit. In February 1993, the Company received $37,500 from
the exercise of 500,000 underwriter warrants pursuant to which, the Company
issued 500,000 shares of common stock and 500,000 Class B stock purchase
warrants, whose exercise price is 150% of the Class B warrants, or $0.225 per
share, and expire on the same date as the Class B warrants.

The Class A warrants were exercisable through October 25, 1992 (as last extended
on June 25, 1991) at an exercise price of $0.10 per share. Effective for the
sixty day period from June 16, 1989, the Company reduced the exercise price of
the Class A warrants to $0.045 per share. The Class B warrants were exercisable
through March 11, 2001 at an exercise price of $0.15 per share. There were
3,779,425, 3,152,472, 409,000 and 21,000 Class A warrants exercised in fiscal
year ends 1992, 1991, 1990 and 1989, respectively, at $.10 per share and
5,201,205 and 312,588 Class A warrants exercised in 1990 and 1989, respectively
at $.045 per share. The remaining 2,124,310 Class A warrants expired in 1991.
There were 13,000, 64,000 and 25,000 Class B warrants exercised in 1993, 1991
and 1990, respectively, at $0.15 per share and 500,000 underwriter's warrants
exercised in 1993 at $0.075 per share. Proceeds, net of solicitation costs, from
exercises of Class A, Class B and underwriter's warrants were credited to
stockholders' equity.

As a result of the exercises and expiration of warrants, the Company has no
Class A warrants, 14,898,000 Class B warrants, and 500,000 underwriter's B
warrants outstanding as of July 31, 2000. The Class B warrants are redeemable at
any time at the option of the Company at a price of $0.0001 per warrant. Holders
of the Class B warrants have certain rights with respect to the registration of
those warrants under the Securities Act of 1933.

During 1991, the Company offered for purchase to qualified investors a minimum
total of 1,000,000 and a maximum total of 5,000,000 shares of common stock at
$0.08 per share and received $245,200 from the sale of 3,065,000 shares prior to
the closing of the offering on March 31, 1991. The Company issued an additional
232,000 shares as commissions in connection with certain of the sales for a
total of 3,297,000 shares issued.


<PAGE>


                                      F-18

                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             July 31, 2003 and 2002



NOTE 7 - INCOME TAXES

At July 31, 2003, the Company had net operating loss carry forwards of
approximately $3,750,000 available to reduce future Federal taxable income, and
tax credits of approximately $59,991 available to offset future Federal income
tax, that expire from 2004 through 2008.

Deferred income taxes are recognized for differences between the bases of assets
and liabilities for financial statement and income tax purposes. The utilization
of these tax attributes is contingent upon the Company's ability to generate
future taxable income and tax before the tax attributes expire as well as
Internal Revenue Code limitations. As a result, a valuation allowance equal to
the full extent of the deferred tax asset has been established. The change in
the deferred tax asset (as well as the valuation account) was approximately
$5,000 for the fiscal year ended July 31, 2003.

NOTE 8 - SUBSEQUENT EVENT

Subsequent to the end of the year the Company has entered into a Technology
Assignment Agreement to assign all rights for the production of photo galvanic
hydrogen technology ("PHG Technology"). The PHG Technology would produce
hydrogen from sunlight to be used as fuel to meet stationary mobile electronic
power requirements. Due to the Company's limited working capital, consideration
for these rights are a right of first refusal to perform all consulting services
derived from contracts or grants entered between the Company and third parties
relating to the development of the PHG Technology. The Company also agreed to
reimburse the Inventors up to $5,000 for their out-of-pocket expenses incurred
for materials and supplies to build the PHG Technology. Pursuant to the
Technology Assignment Agreement, the investors executed an Assignment of
Invention and Patent Right agreement, under which the Investors assigned their
patent rights in the PHG Technology to the Company. By separate agreement the
Inventors have agreed to assist the Company in obtaining the patent and grants
for research and development of the PHG Technology. In exchange for these
services the Inventors will receive 100,000 shares of common stock upon the
grant of the patent and 100,000 shares of common stock upon grants or contracts
resulting in at least $250,000 of revenue.

NOTE 9 - RECLASSIFICATIONS

Certain accounts in the prior year financial statements have been reclassified
for comparative purposes to conform to the presentation in the current year
financial statements.


Hauppauge, NY
October 16, 2003


<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.


                                    MURRAY UNITED DEVELOPMENT CORPORATION
                                    -------------------------------------
                                    (Registrant)


                                    By:  /s/ DWIGHT FOSTER
                                    ----------------------
                                    Dwight Foster
                                    Chief Executive Officer

                                    Dated: October 27, 2003


                                    By:  /s/ ANTHONY S. CAMPO
                                    -------------------------
                                    Anthony S. Campo
                                    Executive Vice President Secretary
                                    and Treasurer
                                    (Chief Financial Officer)

                                    Dated: October 27, 2003


         Pursuant to the requirements of Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

                                     /s/ ANTHONY CAMPO
                                    -----------------------
                                    Anthony S. Campo,
                                    Chairman of the Board

                                     /s/ DWIGHT FOSTER
                                    -----------------------
                                    Dwight Foster, Director


                                     /s/ FRANK PECORELLA
                                    -----------------------
                                    Frank Pecorella, Director


                                    Dated:  October 27, 2003




                                       41
<PAGE>


<TABLE>
<CAPTION>

                                List of Exhibits


Exhibit No.             Exhibit                                                   Page No.

<C>                                                                                   <C>
(3)  (a)  Articles of Incorporation and Bylaws                                        (1)

     (b)  Amended and Restated Bylaws                                                 (2)


(10)     Material contracts

     (a)  Promissory Note dated August 1, 1998 from the Company to Mr. Anthony
          S. Campo.                                                                   (3)

     (b)  Amendment dated March 15, 2000 to Company's Promissory Note dated
          August 1, 1998.                                                             (2)

     (c)  Promissory Note dated August 1, 2000 from the Company to Mr. Anthony
          Campo.                                                                      (3)

     (d)  Promissory Note dated August 1, 2001 from the Company to Mr. Anthony
          Campo.                                                                      (4)

     (e)  Option Agreement between the Company and Dwight Foster covering grant
          of option on April 11, 2002.                                                (5)

     (f)  Consulting Agreement dated as of April 11, 2002 between the Company
          and Robert Van Dine.                                                        (5)

     (g)  Consulting Agreement dated as of April 11, 2002 between the Company
          and Newell Dimen.                                                           (5)

     (h)  Assignment dated March 13, 2002 from Robert Van Dine to the Company
          covering Robert Van Dine's rights under provisional patent application
          no. 60/313,087 relating to process of employing proprietary cleaning
          solution to the treatment of flue gases.                                    (5)

     (i)  Technology Development Consulting Agreement dated as of June 1, 2002
          between the Company and George H. Johnson and William L. Johnson            (6)

     (j)  Technology Assignment Agreement dated as of October 2, 2003 between
          the Company and George H. Johnson and William L. Johnson                    (6)

</TABLE>

                                       42
<PAGE>

<TABLE>


<S>                                                                                  <C>
     (k)  Assignment of Invention & Patent Rights dated  October 2, 2003 from         (6)
          George H. Johnson and William L. Johnson to the Company

     (l)  Consulting Agreement dated as of October 2, 2003  between the
          Company and William L. Johnson                                              (6)

     (m)  Consulting Agreement dated as of October 2, 2003  between the
          Company and George H. Johnson                                               (6)

     (n)  Promissory Note dated August 1, 2003 from the Company to Mr. Anthony
          Campo

(23) (a)  Consent of Albrecht, Viggiano, Zureck & Company, P.C.


(31) (a)  Certification of Chief Executive Officer in accordance with 18 U.S.C.
          Section 1350, as adopted by Section 302 of the Sarbanes-Oxley Act of
          2002

     (b)  Certification of Principal Financial Officer in accordance with 18
          U.S.C. Section 1350, as adopted by Section 302 of the Sarbanes-Oxley
          Act of 2002


(32) (a)  Certification of Chief Executive Officer in accordance with 18 U.S.C.
          Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of
          2002

     (b)  Certification of Principal Financial Officer in accordance with 18
          U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley
          Act of 2002


     (1)  Filed with the registrant's Registration Statement on Form S-18 dated
          December 9, 1987 (Registration No. 33-19048-NY) and Amendment Nos. 2
          and 3 thereto dated February 17, 1988 and February 22, 1988,
          respectively, and incorporated herein by reference.
</TABLE>


                                       43
<PAGE>

     (2)  Filed with the registrant's Registration Statement on Form SB-2 dated
          April 20, 2000 (amending its Form S-18 Registration Statement) and
          incorporated herein by reference.


     (3)  Filed with the registrant's Annual Report on Form 10-KSB for the year
          ended July 31, 1998 and incorporated herein by reference.


     (4)  Filed with the registrant's Annual Report on Form 10-KSB for the year
          ended July 31, 2000 and incorporated herein by reference.


     (5)  Filed with the registrant's Quarterly Report on Form 10-QSB for the
          quarter ended April 30, 2002 and incorporated herein by reference.


     (6)  Filed with the registrant's Report on Form 8-K dated October 2, 2003
          and incorporated herein by reference.




                                       44