UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                   FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
    1934 For the quarterly period ended September 30, 2003

[ ] Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from __________ to __________

Commission file number 0-25177

                       Advanced Engine Technologies, Inc.
         ---------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

                Colorado                               84-1358194
     (State or Other Jurisdiction of                (I.R.S. Employer
      Incorporation or Organization)               Identification No.)

          11150 W. Olympic Boulevard, Suite 1050, Los Angeles, CA 90064
                    (Address of Principal Executive Offices)
                                 (310) 914-9599
                (Issuer's Telephone Number, Including Area Code)
              (Former Name, Former Address and Former Fiscal Year,
                         if Changed Since Last Report)


                     APPLICABLE ONLY TO ISSUERS INVOLVED IN
                        BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS

         Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.

 Yes __   No __


                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 33,815,000 shares of common
stock, $0.001 par value per share, as of November 11, 2003.

         Transition Small Business Disclosure Format (check one):

 Yes __  No _X_

<PAGE>
                                     Part I
                              FINANCIAL INFORMATION

Item 1.     Financial Statements.





                                       2
<PAGE>
                       ADVANCED ENGINE TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)


                                    CONTENTS

                                                       Page
FINANCIAL STATEMENTS
Balance Sheets                                          4
Statements of Operations                                5
Statements of Cash Flows                                6
Notes to Financial Statements                         7 - 10






                                       3
<PAGE>
ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
September 30, 2003 (unaudited) and June 30, 2003

<TABLE>
<CAPTION>
                                                                                 September 30,     June 30,
                                                                                     2003            2003
                                                                                  (unaudited)
<S>                                                                              <C>             <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents                                                             $    169,144    $     58,962
Prepaid expenses                                                                       14,949          34,676
                                                                                 ------------    ------------
Total current assets                                                                  184,093          93,638
                                                                                 ------------    ------------
Due from related party                                                                 21,000          21,000
Property and equipment, net                                                           154,757          71,954
Patents, net of accumulated amortization of $733,075 as of September 30, 2003
(unaudited) and $658,016 as of June 30, 2003                                        1,014,722       1,044,097
                                                                                 ------------    ------------
Total assets                                                                     $  1,374,572    $  1,230,689
                                                                                 ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses                                            $    203,007    $    111,473
                                                                                 ------------    ------------
Total current liabilities                                                             203,007         111,473
                                                                                 ------------    ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock-50,000,000 shares authorized, 33,790,000 issued and outstanding;
$.001 par value as of September 30, 2003 (unaudited) and 33,680,000 issued and
outstanding;
$.001 par value as of June 30, 2003                                                    33,790          33,680
Additional paid-in capital                                                         20,869,825      20,003,935
Committed common stock under grant agreement                                                          948,603
Subscription receivable                                                            (7,090,000)     (7,465,000)
Shares receivable under stock repurchase agreement                                          -         (90,000)
Deferred costs under grant agreement                                                 (619,500)       (852,000)
Deficit accumulated during the development stage                                  (12,022,550)    (11,460,002)
                                                                                 ------------    ------------
Total stockholders' equity                                                          1,171,565       1,119,216
                                                                                 ------------    ------------
Total liabilities and stockholders' equity                                       $  1,374,572    $  1,230,689
                                                                                 ============    ============
</TABLE>

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

                                       4
<PAGE>
ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 2003 and 2002 (unaudited)
and for the Period From September 23, 1996 (Inception)
to September 30, 2003 (unaudited)

<TABLE>
<CAPTION>
                                                                    For the                     September 23,
                                                              Three Months Ended                   1996
                                                                  September 30,                 (Inception)
                                                                                                  Through
                                                            2003                2002         September 30, 2003
                                                        (unaudited)         (unaudited)          (unaudited)
<S>                                                    <C>                 <C>                  <C>
Expenses:
      Operating                                        $    206,792        $    251,824         $  4,662,244
      Research and development                              123,612             136,611            3,474,224
      Stock grant                                           232,500             232,500            4,030,500
      Write off of patent                                      --                  --                 23,332
                                                       ------------        ------------         ------------
Total expenses                                              562,904             620,935           12,190,300
                                                       ------------        ------------         ------------
Loss from operations                                       (562,904)           (620,935)         (12,190,300)
Other income
           Interest income                                      356                 386              167,750
                                                       ------------        ------------         ------------
Net loss                                               $   (562,548)       $   (620,549)        $(12,022,550)
                                                       ============        ============         ============

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

Weighted average number of common shares outstanding     33,719,574          33,503,333
                                                       ============        ============
</TABLE>

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

                                       5
<PAGE>
ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Three Months Ended September 30, 2003 and 2002 (unaudited)
and for the Period From September 23, 1996 (Inception)
to September 30, 2003 (unaudited)
<TABLE>
<CAPTION>
                                                                                 For the                September 23,
                                                                           Three Months Ended               1996
                                                                               September 30,             (Inception)
                                                                                                           Through
                                                                       2003                2002       September 30, 2003
                                                                    (unaudited)        (unaudited)        (unaudited)
<S>                                                               <C>                <C>                <C>
Cash Flow from operating activities:
           Net loss                                               $   (562,548)      $   (620,549)      $(12,022,550)
Adjustments to reconcile net loss to net cash used in operating
activities
           Stock grant expense                                         232,500            232,500          4,030,500
           Depreciation and amortization                                55,693             50,231            883,120
           Issuance of common stock for assets and services              4,674             51,367            788,897
           Committed common stock for services                                             15,178            551,995
           Stock options issued for services                              --                 --               23,332
           Write off of patents                                           --                 --
(Increase) decrease in
                 Due from related party                                   --                 --              (21,000)
                 Prepaid expenses                                       22,450             13,175            (12,226)
Increase in
           Accounts payable and accrued expenses                        91,536             13,919            203,019
                                                                  ------------       ------------       ------------
           Net cash flows used in operating activities                (155,695)          (244,179)        (5,574,923)
                                                                  ------------       ------------       ------------
Cash flows from investing activities:
           Acquisition of patents                                      (19,685)           (18,135)        (1,791,544)
           Purchase of property and equipment                          (89,438)            (3,627)          (284,389)
                                                                  ------------       ------------       ------------
           Net cash flows used in investing activities                (109,123)           (21,762)        (2,075,933)
                                                                  ------------       ------------       ------------
Cash flow from financing activities:
           Proceeds from note payable                                     --                 --              500,000
           Proceeds from stock subscription receivable                 375,000            400,000          2,910,000
           Repayment of notes payable                                     --                 --             (500,000)
           Repurchase of common stock                                     --               (5,000)           (90,000)
           Proceeds from issuance of common stock                         --                 --            5,000,000
                                                                  ------------       ------------       ------------
           Net cash flows provided by financing activities             375,000            395,000          7,820,000
                                                                  ------------       ------------       ------------
           Net increase in cash and equivalents                        110,182            129,059            169,144
           Cash and equivalents, at beginning of period                 58,962            270,730               --
                                                                  ------------       ------------       ------------
           Cash and equivalents, at end of period                 $    169,144       $    399,789       $    169,144
                                                                  ============       ============       ============
</TABLE>

Supplemental Schedule of Non-Cash Investing and Financing Activities
--------------------------------------------------------------------

During the three months ended September 30, 2003 and 2002 the Company:
o    Issued 200,000 and 200,000 (unaudited) shares, respectively, of common
     stock to the University of California Riverside Foundation which had been
     included in committed common stock under grant agreement as of June 30,
     2003 and 2002, respectively.
o    Retired 180,000 shares (unaudited) of common stock valued at $90,000
     (unaudited) from shares received under a stock redemption agreement.

During the period from September 23, 1996 (inception) through September 30, 2003
the Company:
o    Issued 1,000,000 shares (unaudited) of common stock valued at $4,650,000
     (unaudited) to the University of California Riverside Foundation in
     connection with a stock grant agreement. Of the $4,650,000 (unaudited), the
     $4,030,500 (unaudited) has been expensed on the statement of operations and
     $619,500 (unaudited) is included in deferred costs under grant agreement as
     of September 30, 2003.

o    Issued 21,080,000 (unaudited) shares of common stock for services and
     assets valued at $765,620 (unaudited)

o    Committed approximately 60,000 (unaudited) shares of common stock valued at
     $18,604 (unaudited) for services

o    Issued 2,800,000 (unaudited) stock options valued at $551,995 (unaudited)
     for services

o    Retired 180,000 shares (unaudited) of common stock valued at $90,000
     (unaudited) from shares received under a stock redemption agreement.

o    Issued 61,534 shares of common stock valued at $18,603 (unaudited) that was
     committed as of June 30, 2003.


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

                                       6
<PAGE>
Advanced Engine Technologies, Inc.
Notes to Financial Statements
September 30, 2003

NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

         Advanced Engine Technologies, Inc. (the "Company") was incorporated in
Colorado and commenced operations on September 23, 1996. The Company was formed
to develop and commercialize the OX2 internal combustion engine, a uniquely
designed engine. On October 18, 1996 the Company entered into an exclusive
sublicense agreement with OX2 Engine (Distribution) Limited, a company
incorporated under the laws of the Republic of Vanuatu ("OX2 LTD"), pursuant to
which the Company acquired the right to manufacture, distribute and market the
OX2 engine in the North American Free Trade Agreement countries (presently the
United States, Canada and Mexico). Pursuant to the terms of the sublicense
agreement, the Company issued 20,000,000 shares of its common stock to OX2 LTD
and agreed to pay a 15% royalty on the gross proceeds generated from actual
sales of the OX2 engine. In addition, the sublicense agreement provided that the
Company would issue an additional 19,000,000 shares of common stock to OX2 LTD
upon completion of certain emissions testing. In December 1998, the parties
agreed to rescind the obligation of the Company to issue these additional
19,000,000 shares of common stock to OX2 LTD.

         In May 1999, pursuant to a four-party agreement among the Company, OX2
LTD, OX2 Intellectual Property Inc. and Advanced Engine Technology PTY Ltd., the
Company acquired the worldwide patent rights for the OX2 engine for $1,500,000.
This agreement superseded and terminated the October 1996 sublicense agreement.
The Company has assumed responsibility for patent maintenance and for future
research and development on the OX2 engine.

         On October 15, 2001, the Company entered into an agreement with OX2 LTD
and the inventor of the OX2 engine to provide research and development products
and services related to the OX2 engine (the "R and D Agreement"). OX2 LTD is
wholly-owned by the inventor of the OX2 engine. Research and development
activities include continued maintenance of the first and second performing test
engines as well as design and development of three additional OX2 test engines.
The agreement also calls for the design and manufacturing of new and advanced
components for the test engines. In addition, the Company has contracted with
the inventor of the OX2 engine to provide consulting services for the sum of
eighty thousand dollars ($80,000) per annum. For the three months ended
September 30, 2003 and from September 23, 1996 (Inception) through September 30,
2003, the Company paid $20,000, and $160,000, respectively, in connection with
consulting services under this agreement.

           As of September 30, 2003, the Company's operations consisted of
engineering, testing, marketing and development of the OX2 combustion engine for
commercial applications and raising any necessary capital investments.
Management does not expect to generate significant sales revenue during the year
ending June 30, 2004. Accordingly, planned principal operations have not
commenced.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Unaudited Financial Information
---------------------------------------

         The unaudited financial information furnished herein reflects all
adjustments, consisting only of normal recurring adjustments, which in the
opinion of management, are necessary to fairly state the Company's financial
position, the results of operations, and cash flows for the periods presented.
The results of operations for the three months ended September 30, 2003 are not
necessarily indicative of results for the entire fiscal year ending June 30,
2004.

         The information with respect to the three months ended September 30,
2003 and 2002 is unaudited.

                                       7
<PAGE>
Advanced Engine Technologies, Inc.
Notes to Financial Statements
September 30, 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Development Stage Enterprise
----------------------------

         The Company is a development stage company as defined in Statement of
Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by
Development Stage Enterprises". All losses accumulated since inception have been
considered as part of the Company's development stage activities.

Comprehensive Income
--------------------

         The Company utilizes SFAS No. 130, "Reporting Comprehensive Income".
This statement establishes standards for reporting comprehensive income and its
components in a financial statement. Comprehensive income as defined includes
all changes in equity (net assets) during a period from non-owner sources.
Examples of items to be included in comprehensive income, which are excluded
from net income, include foreign currency translation adjustments and unrealized
gains and losses on available-for-sale securities. Comprehensive income is not
presented in the Company's financial statements since the Company did not have
any of the items of comprehensive income in any period presented.

Cash and Cash Equivalents
-------------------------

         For purposes of the statements of cash flows, the Company considers all
highly liquid investments purchased with original maturity of three months or
less to be cash equivalents.

Property and Equipment
----------------------

         Property and equipment are stated at cost. Depreciation is provided on
a straight-line basis over an estimated useful life of three to 10 years.

Patent Rights
-------------

         Patent rights are amortized on a straight-line basis over the remaining
estimated useful life of five to ten years. The Company continually reviews its
patent rights to assess recoverability from estimated future net cash flows. To
date, these reviews have not resulted in a reduction of these assets.

         For the three months ended September 30, 2003 and 2002, the Company had
patent additions of $19,685 (unaudited) and $18,135 (unaudited), respectively.
Amortization expense of the patents aggregated to $49,050 (unaudited) and
$44,304 (unaudited) for the three months ended September 30, 2003 and 2002,
respectively.

Impairment of Long-lived Assets
-------------------------------

         The Company reviews long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. If the sum of the expected future cash flows (undiscounted and
without interest charges) is less than the carrying amount of the asset, the
Company would recognize an impairment loss based on the estimated fair value of
the asset.

Concentration of Credit Risk
----------------------------

         At September 30, 2003, a subscription receivable in the amount of
$7,090,000 (unaudited) is due from one party.

                                       8
<PAGE>
Advanced Engine Technologies, Inc.
Notes to Financial Statements
September 30, 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock-Based Compensation
------------------------

         SFAS No. 123, "Accounting for Stock-based Compensation", establishes
and encourages the use of the fair value based method of accounting for
stock-based compensation arrangements under which compensation cost is
determined using the fair value of stock based compensation determined as of the
date of grant and is recognized over the periods in which the related services
are rendered. The statement also permits companies to elect to continue using
the current implicit value accounting method specified in Accounting Principles
Bulletin ("APB") Opinion No. 25, "Accounting for Stock issued to Employees", to
account for stock-based compensation issued to employees.

 The Company has elected to use the intrinsic value based method and has
disclosed the pro forma effect of using the fair value based method to account
for its stock-based compensation.

Income Taxes
------------

         The Company uses the asset and liability method of accounting for
income taxes. The asset and liability method accounts for deferred income taxes
by applying enacted statutory rates in effect for periods in which the
difference between the book value and the tax bases of assets and liabilities
are scheduled to reverse. The resulting deferred tax asset or liability is
adjusted to reflect changes in tax laws or rates. Because the Company has
incurred losses from operations, no benefit is realized for the tax effect of
the net operating loss carry forward and software development costs capitalized
for tax purposes due to the uncertainty of its realization.

 Loss per Share
 --------------

         Basic loss per share is computed by dividing loss available to common
stockholders by the weighted-average number of common shares outstanding.
Diluted loss per share is computed similar to basic loss per share except that
the denominator is increased to include the number of additional common shares
that would have been outstanding if the potential common shares had been issued
and if the additional common shares were dilative. The following potential
common shares have been excluded from the computation of diluted earnings per
share as of September 30, 2003 and 2002 due to being anti-dilutive:

                                       2003              2002
                                   -------------     -------------
                                   (unaudited)        (unaudited)
             Stock Options           7,675,000         7,675,000
                                     ========          ========

Because the Company has incurred net losses, basic and diluted loss per share
are the same.

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, as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

                                       9
<PAGE>
NOTE 3--PROPERTY AND EQUIPMENT (unaudited)

Property and equipment at September 30, 2003(unaudited) and June 30, 2003
consisted of the following:



                                     September 30,    June 30,
                                         2003           2003
                                     (unaudited)
Automobile                            $ 10,000       $ 10,000
Furniture                                7,523          7,523
Software                                24,906         24,906
Computer equipment                      49,576         49,576
Manufacturing equipment and tooling    192,380        102,943
                                      --------       --------

                                       284,385        194,948
Less: accumulated depreciation        (129,628)      (122,994)
                                      --------       --------

Total                                 $154,757       $ 71,954
                                      ========       ========

Depreciation expense was $6,643 (unaudited)and $5,927 (unaudited) for the three
months ended September 30, 2003 and 2002, respectively.


NOTE 4 - SHAREHOLDERS' EQUITY

Stock Grant Agreement
---------------------

         In June 1999, the Company agreed to issue 1,000,000 shares of
restricted common stock to the University of California Riverside Foundation in
five annual installments of 200,000 shares each. The donated stock is to provide
an endowment for research funds for the College of Engineering Center for
Collaborative Research on the development of advanced engine technologies. For
financial statement presentation purposes, the stock under the grant agreement
is treated as committed stock until its issuance. The first, second, third,
fourth and fifth installments were issued in July 1999, July 2000, September
2001, September 2002 and August 2003, respectively.

         Expense in the grant is being recognized ratably over a five-year
period based upon an estimated fair value at the date of the grant of $4.65 per
share. This estimate of its fair value is based upon the tracking price of the
stock on the grant date of $7.75 per share, less a 40% discount because the
stock was restricted, the Company's stock had a very low trading volume at the
time of the grant agreement, and the Company was still in the development stage.
During the period from September 23, 1996 (inception) to September 30, 2003, the
Company recognized total expense on the stock grant of $4,030,500 (unaudited),
including $232,500 (unaudited) for the three months ended September 30, 2003 and
2002, respectively.

         In connection with the R & D Agreement described in Note 1, the Company
had the option to repurchase from Steven Charles Manthey, the Inventor, or his
affiliates, 240,000 shares of common stock of the Company at $2.00 per share.
The Company has allocated its $2.00 per share repurchase price as follows: $.50
per share for redemption of common shares and $1.50 per share as research and
development expense. The $.50 common share redemption price is based on the fair
market value of the common shares as of the date of the R & D Agreement. As of
September 30, 2003, the Company had repurchased 180,000 (unaudited) shares of
common stock under the R & D Agreement. The Company did not redeem any shares
for the three months ended September 30, 2003. On August 12, 2003 stock
certificates representing the 180,000 (unaudited) repurchased shares were
retired.

         In September 2003, the company issued 90,000 shares to its directors
for services rendered and to be rendered. Of these 90,000 shares, 61,534 shares
or $18,603 were issued from committed common stock. The Company recorded
compensation expense of $4,674 (unaudited) for the three months ended September
30, 2003 and prepaid compensation of $2,723 (unaudited) as of September 30,
2003.


NOTE 5 - RELATED PARTY TRANSACTIONS

         The Company incurred research and development costs and rent expense to
companies owned by its current President and director in the amount of $83,204
(unaudited) for the three months ended September 30, 2003.

         At September 30, 2003, the Company had an outstanding receivable from
its Secretary of $21,000 (unaudited) for reimbursement of remodeling costs on
office space that the Company and its Secretary share.

         The Company shares office space with a legal corporation that is legal
counsel to the Company of which its Secretary is a principal. The Company
incurred legal fees, rent and other reimbursement costs of $18,076 (unaudited)
for the three months ended September 30, 2003.

         For the three months ended September 30, 2003 the Company paid a
director $20,000 (unaudited), respectively, in connection with consulting
services (see Note 1).

         See Note 1, for related party transactions in connection with a
sublicense agreement and a patent and license agreement.

         See Note 4, for related party transactions in connection with the
issuances of common stock to directors for services rendered.

                                       10
<PAGE>
Item 2.     Management's Discussion and Analysis or Plan of Operation.

Cautionary Statement
--------------------

         You should read the following discussion and analysis in conjunction
with the Financial Statements and related notes thereto contained elsewhere in
this Form 10-QSB ("Report"). The information in this Report is not a complete
description of our business or the risks associated with an investment in our
common stock. We urge you to carefully review and consider the various
disclosures made by us in this Report and in our other reports filed with the
SEC, including our Annual Report on Securities and Exchange Commission ("SEC")
Form 10-KSB for the year ended June 30, 2003.

         The section entitled "Risk Factors" set forth in this Report and
similar discussions in our Annual Report on Form 10-KSB for the year ended June
30, 2003 and in our other SEC filings, discuss some of the important risk
factors that may affect our business, results of operations and financial
condition. You should carefully consider those risks, in addition to the other
information in this Report and in our other filings with the SEC, before
deciding to invest in our company or to maintain or increase your investment.

         This Report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may," "will,"
"should," "except," "plan," "anticipate," "believe," "estimate," "predict,"
"potential" or "continue," the negative of such terms or other comparable
terminology. These statements are only predictions. These statements are not
guarantees of future performance and are subject to certain risks, uncertainties
and assumptions that are difficult to predict.

         Therefore, our actual results could differ materially and adversely
from those expressed in any forward-looking statements as a result of various
factors. Moreover, neither we nor any other person assumes responsibility for
the accuracy and completeness of the forward-looking statements. We are under no
duty to update any of the forward-looking statements after the date of this
Report to conform such statements to actual results or to changes in our
expectations.

Overview
--------

         Advanced Engine Technologies, Inc. ("we ", "us "or the "Company") was
formed to develop and commercialize the OX2 internal combustion engine, a
uniquely designed engine. Our focus is on the development and commercial
introduction of the OX2 engine and the subsequent licensing of the OX2 engine
technology to approved manufacturers.

         We have been granted U.S. and Australian patents for an Axial Piston
Rotary Engine. In addition, we have patent registrations in countries throughout
the world which have either been granted or are pending.

Plan of Operation
-----------------

         We plan to continue the research and development of our OX2 engine
prototype during the 2004 fiscal year. On October 15, 2001 we entered into an
agreement with OX2 Engine Development PTY, LTD, an Australian Company ("OX2
LTD"), and Steven Charles Manthey, the inventor of the OX2 engine, to provide
research and development products and services related to the OX2 engine. OX2
LTD is wholly-owned by Mr. Manthey. The agreement was amended in January 2002
and April 2002. Research and development activities under the agreement include
continued maintenance of the first and second OX2 Engine Prototypes as well as
design and development of three additional OX2 Engine Prototypes. In
consideration for the services provided by Mr. Manthey and OX2 under the
agreement, we will repurchase from Mr. Manthey, or his affiliates, 240,000
shares of Common Stock, at $2 per share. We have allocated the $2 per share
repurchase price as follows: $.50 per share for the redemption of shares of
Common Stock and $1.50 per share as research and development expense. The $.50
common share redemption price is based on the fair market value of the Common
Stock as of the agreement date. In addition, Mr. Manthey provides consulting
services under the agreement for the sum of $80,000 per annum. As of September
30, 2003, we have repurchased 180,000 shares of common stock for $360,000 under
this agreement. No stock under this agreement was repurchased for the three
months ended September 30, 2003. For the three months ended September 30, 2003
we paid $20,000 in connection with consulting service under this agreement.

         We have an agreement with the University of California, Riverside
("UCR"), which provides that it will continue to provide engine testing and
related services to the Company, with particular emphasis on testing related to
emissions. These services are being provided under the guidance of Dr. Joseph
Norbeck (of the CE-CERT program at UCR) and Dr. Roberta Nichols, one of our
consultants. We are also conducting research and development and testing
activities in Gardena, California.

         We have spent $123,612 and $136,611, respectively, for the three months
ended September 30, 2003 and 2002 on research and development for the OX2
engine. For the period from September 23, 1996 (Inception) through September 30,
2003 we have spent $3,474,224 on research and development activities.

                                       11
<PAGE>
         Assuming the successful completion of all necessary research and
development work, and assuming the tests of our OX2 Engine Prototypes (existing
and future) are successful, we will attempt to introduce the OX2 engine into the
market. Such marketing activities may include demonstrations to manufacturers of
products using internal combustion engines and the addition of joint venture
and/or strategic partners to assist in the marketing, development and commercial
application of the OX2 engine.

         In the short term, our plans are to develop the OX2 engine for
commercial stationary generator applications, and in the longer term, we plan to
develop the engine for commercial, marine, aircraft and/or automotive
applications.

         We expect that our cash flow requirements to fund general operations in
the fiscal year ending June 30, 2004 will total approximately $1,500,000,
including outside consulting fees and expenditures for equipment. We expect to
fund these costs with our cash or cash equivalent reserves, which were $169,144
as of September 30, 2003. The Company also has available a $7,090,000 stock
subscription receivable from the R.E. & M. Petersen Trust DTD 1/17/83 (the
"Petersen Trust") which may be drawn upon at the discretion of the Board of
Directors. The Petersen Trust has executed a promissory note and security
agreement for the sole purpose of paying down the stock subscription receivable
balance. The Board of Directors, at its discretion, may draw down upon the
secured promissory note at any time to further the research, development and/or
commercial application of the Company's engine(s). Our cost estimates do not
include provisions for any contingencies or unexpected expenses that may arise
or any unanticipated increases in costs.

         Our net loss since inception (September 23, 1996) is $12,022,550. Our
net loss for the three months ended September 30, 2003 is $562,548.

         Currently, there are no signed contracts that will produce revenue, and
we can provide no assurance that management will be successful in negotiating
any such contracts.

Critical Accounting Policies

         We believe that our accounting policy for long-lived assets, including
patents, is a critical accounting policy that significantly impacts our
financial statements. Our accounting policy of long-lived assets, including
patents, is as follows:

         We assess the fair value and recoverability of our long-lived assets,
including patents, whenever events and circumstances indicate the carrying value
of an asset may not be recoverable from estimated future cash flows expected to
result from its use and eventual disposition. In doing so, we make assumptions
and estimates regarding future cash flows and other factors to make our
determination. The fair value of our long-lived assets and patents is dependent
upon the forecasted performance of our business, changes in the automotive
industries, and the overall economic environment. When we determine that the
carrying value of our long-lived assets may not be recoverable, we measure any
impairment based upon the excess of the carrying value that exceeds the
estimated fair value of the assets. As a result of these reviews, we have not
yet recognized any impairment losses as of September 30, 2003.

Risk Factors

         You should carefully consider the following risks and the other
information contained in this Report and in our other filings with the
Securities and Exchange Commission before you decide to invest in us or to
maintain or increase your investment. The risks and uncertainties described
below are not the only ones facing us. Additional risks and uncertainties may
also adversely impact and impair our business. If any of the following risks
actually occur, our business, results of operations or financial condition would
likely suffer. In such case, the trading price of our Common Stock could
decline, and you may lose all or part of your investment.

o   There can be no assurance that we will be able to develop successfully the
OX2 engine. No OX2 engines have been developed or manufactured for commercial
production use, and no assurance can be given that the OX2 engine will be
successfully developed or manufactured in a commercial application. Testing and
development on the engine are still in progress. Until further testing and
research and development have been completed, we will not have a finished
product for introduction into the market. We do not have an estimated completion
date for such testing and research and development. Furthermore, we cannot
provide any assurance that we will be successful in the ultimate development of
the OX2 engine for commercial applications.

o   A market for our OX2 engine may take longer to develop than anticipated or
may never develop, which would adversely affect our revenues and profitability.
Our OX2 engine represents an innovation in the industry for internal combustion
engines. The size and nature of the internal combustion engine industry makes
the introduction of changes to industry standards a complex promotional and
marketing exercise. We cannot ensure that our targeted customers will purchase
our engine. If the market for our engines fails to develop, or develops more
slowly that anticipated, we may not be able to meet our expenses and may not
achieve profitable results. In addition, we cannot provide any assurance that we
will be successful with our marketing efforts or the development of future joint
ventures or strategic partnerships.

                                       12
<PAGE>
o   Our cash or cash equivalents reserves may not be adequate to cover our costs
of operations. To date, we have covered our operating losses by privately
placing securities. We expect to fund our general operations and marketing
activities for 2004 with our current cash and cash equivalents reserves, which
were obtained from the sale of securities and were $169,144 as of September 30,
2003. We also have a $7,090,000 stock subscription receivable from the R.E.&M.
Petersen Living Trust DTD 1/17/83 (the "Petersen Trust"), which may be drawn
upon at the discretion of our Board of Directors. The Petersen Trust has
executed a promissory note and security agreement for the sole purpose of paying
down the stock subscription receivable balance. However, our cost estimates do
not include provisions for any contingencies, unexpected expenses or increases
in costs that may arise. If our cash and cash equivalent reserves are exhausted,
we plan to request payments on the subscription receivable as funds are required
for operations.

o   We may not be able to raise the capital we need. It is likely that we will
need to raise additional capital at some point in the future. If additional
funds are raised through the issuance of equity, our shareholders' ownership
will be diluted. There can be no assurance that additional financing will be
available on terms favorable to us or at all. If funds are not available or are
not available on terms acceptable to us, we may not be able to continue the
development of our product, respond to our competitors or continue our business.

o   Our business depends on the protection of our intellectual property and may
suffer if we are unable to protect adequately our intellectual property.
Currently, we have been granted one U.S. Patent and one Australian Patent for an
Axial Piston Rotary Engine. We have registered these patents in many countries
and have patent registrations pending in many other countries throughout the
world. We believe that our ability to establish and maintain our position in the
market depends on these patents. We cannot provide any assurance that our
patents will not be invalidated, circumvented or challenged, that the rights
granted under the patents will give us competitive advantages or that our patent
registration applications will be granted. In the future, we may also have to
enforce our patents and other intellectual property rights through litigation.
Any such enforcement could also result in substantial costs and could materially
affect our financial condition and our business.

o   If we are found to infringe on the intellectual property rights of others,
we may not be able to continue the development and production of the OX2 engine,
or we may have to enter into costly license or settlement agreements to be able
to continue development and/or production. Third parties may allege infringement
by us with respect to past, current or future intellectual property rights. Any
claim of infringement, regardless of merit, could be costly and time-consuming
and could require us to develop non-infringing technology or enter into royalty,
licensing or settlement agreements. These agreements could be on terms
unfavorable or unacceptable to us and could significantly harm the development
of our products and, ultimately, our business.

o   Our business is dependent on our relationships with other parties. Research
and development and testing of our engine is presently being carried out
internally and in conjunction with Steven Charles Manthey, the inventor of the
OX2 engine, and his companies. In addition, we have agreements with Carroll
Shelby and his companies to assist in the further development, testing and
promotion of our engine. Completion of such research, development and testing is
essential to the success of our business. Until such research, development, and
testing have been completed, we will not have a finished product to introduce to
the market. Thus, if we are unable to maintain our relationships with Steven
Charles Manthey and/or Carroll Shelby and their companies, our business may be
adversely affected.

o   We have a history of losses. We have a history of operating losses and an
accumulated deficit, as of September 30, 2003, of $12,022,550. Our ability to
generate revenues and profits is subject to the risks and uncertainties
encountered by development stage companies.

o   Our future revenues and profitability are unpredictable. We currently have
no signed contracts that will produce revenue, and we do not have an estimate as
to when we will be entering into such contracts. Furthermore, we cannot provide
any assurance that management will be successful in negotiating such contracts.

o   Rapid technological changes could adversely affect our business. The market
for internal combustion engines is characterized by rapidly changing technology,
evolving industry standards and changing customer demands. Thus, if we are
unable to adapt to rapidly changing technologies and to adapt our product to
evolving industry standards, our business will be adversely affected.

o   Our Common Stock is not widely traded, which may result in illiquidity and
increased volatility. Our Common Stock is not widely traded, and, as a result,
the prices quoted for our stock may not reflect its fair market value. Because
of the low volume of trading in our Common Stock, our shareholders may find it
difficult to sell their shares.

o   Our principal shareholders can exercise significant control over us and
could limit the ability of our other shareholders to influence the outcome of
transactions requiring a shareholder vote. As of September 30, 2003
approximately 90% of our outstanding Common Stock was owned by our executive
officers, directors and principal shareholders. These shareholders will have the
ability to exercise influence over all matters requiring approval by our
shareholders, including the election of directors and approval of significant
corporate transactions.

                                       13
<PAGE>
o   Our Common Stock is currently quoted on the OTC Bulletin Board, which will
likely be replaced by the Bulletin Board Exchange in late 2003. Our Common Stock
is currently quoted on the OTC Bulletin Board under the symbol: AENG. The NASDAQ
Stock Market, Inc. ("NASDAQ") has announced the proposed launch of the Bulletin
Board Exchange (the "BBX"), pending approval from the Securities and Exchange
Commission, in the fourth quarter of 2003. The BBX is designed to replace the
OTC Bulletin Board.

The NASD will terminate the OTC Bulletin Board six months after the launch of
the BBX. We are evaluating the criteria to be listed on the BBX.

The BBX will be a listed marketplace, with qualitative listing standards but no
minimum share price, income or asset requirements, therefore allowing entrance
to a wide array of listings. In the event that we elect not to apply for listing
on the BBX or in the event that we are not able to meet the listing requirements
of the BBX, our Common Stock will continue to be quoted on the OTC Bulletin
Board for only six months after the launch of the BBX and thereafter, our Common
Stock will only be quoted in the "Pink Sheets." As a result, our shareholders'
ability to sell their shares may be adversely affected.


Item 3.     Controls and Procedures.

         Management, including the Company's principal executive officer and
principal financial officer, has evaluated, as of the end of the period covered
by this report, the effectiveness of the design and operation of the Company's
disclosure controls and procedures with respect to the information generated for
use in this report. Based upon, and as of the date of that evaluation, the
principal executive officer and principal financial officer concluded that the
disclosure controls and procedures were effective to provide reasonable
assurances that information required to be disclosed in the reports filed or
submitted under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission.

         In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance of
achieving the desired control objectives and management necessarily was required
to apply its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. Based upon the above evaluation, management believes
that its controls do provide such reasonable assurances.

         There have been no changes in the Company's internal control over
financial reporting that occurred during the Company's last fiscal quarter that
have materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

                                       14
<PAGE>
                                     PART II
                                OTHER INFORMATION

Item 1.    Legal Proceedings.

None.

Item 2.    Changes in Securities and Use of Proceeds.

None.

Item 3.     Defaults Upon Senior Securities.

None.

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

None.

Item 5.      Other Information.

None.

Item 6.     Exhibits and Reports on 8-K.

Exhibits
--------
Number  Description

  3.1   Certificate of Incorporation of the Registrant (incorporated by
        reference to Exhibit 3.1 to the Registrant's Registration Statement on
        Form 10-SB12G, filed on December 17, 1998).
  3.2   Form of Amended and Restated By-Laws of the Registrant (this is a
        compilation of the Registrant's By-Laws reflecting amendments made on
        December 7, 1999 and November 16, 2000) (incorporated by reference to
        Exhibit 3.2 to the Registrant's Report on Form 10-KSB for the fiscal
        year ended June 30, 2001).
 10.1   Cancellation of the issuance of 19,000,000 shares of the Registrant's
        Common Stock (incorporated by reference to Exhibit 10.2 to the
        Registrant's Report on Form 10-KSB for the fiscal year ended June 30,
        1999).
 10.2   Deed of Agreement Concerning the Patents, Licensing and Research and
        Development in Relation to the OX2 Engine, by and among the Registrant,
        Advanced Engine Technology Pty. Ltd. AN 063 092 759, OX2 Intellectual
        Property Inc., and OX2 Engine (Distribution) Limited, dated as of May
        12, 1999 (incorporated by reference to Exhibit 10.2 to the Registrant's
        Report on Form 10-KSB for the fiscal year ended June 30, 1999).
 10.3   Joint Venture Agreement by and between the Registrant and Carroll
        Shelby, dated as of July 15, 1998 (incorporated by reference to Exhibit
        10.1 to the Registrant's Registration Statement on Form 10-SB12G, filed
        on December 17, 1998).
 10.4   Agreement by and between the Registrant and Steven Charles Manthey,
        dated as of May 23, 2000 (incorporated by reference to Exhibit 10.4 to
        the Registrant's Report on Form 10-KSB for the fiscal year ended June
        30, 2000).
 10.5   Release Agreement by and among the Registrant, Advanced Engine
        Technology Pty. Ltd. and Steven Charles Manthey, dated as of May 23,
        2000 (incorporated by reference to Exhibit 10.5 to the Registrant's
        Report on Form 10-KSB for the fiscal year ended June 30, 2000).
 10.6   Agreement for Performance of Technology Development Services by
        Independent Contractors by and among the Registrant, Steven Charles
        Manthey and OX2 Engine Development PTY Limited, dated as of October 15,
        2001 (incorporated by reference to Exhibit 10.6 to the Registrant's
        Report on Form 10-KSB for the fiscal year ended June 30, 2002).
10.7    First Amendment to Agreement for Performance of Technology Development
        Services by Independent Contractors by and among the Registrant, Steven
        Charles Manthey and OX2 Engine Development PTY Limited, dated as of
        January 24, 2002 (incorporated by reference to Exhibit 10.7 to the
        Registrant's Report on Form 10-KSB for the fiscal year ended June 30,
        2002).
10.8    Second Amendment to Agreement for Performance of Technology Development
        Services by Independent Contractors by and among the Registrant, Steven
        Charles Manthey and OX2 Engine Development PTY Limited, dated as of
        April 2002 (incorporated by reference to Exhibit 10.8 to the
        Registrant's Report on Form 10-KSB for the fiscal year ended June 30,
        2002).
10.9    Share Subscription Agreement by and between the Registrant and the R.E.
        & M. Petersen Living Trust DTD 1/17/83 (incorporated by reference to
        Exhibit 10.6 to the Registrant's Report on Form 10-QSB filed on November
        14, 2000).
10.10   Promissory Note of The Robert E. and Margaret M. Petersen Trust in favor
        of the Registrant, dated September 1, 2001 (incorporated by reference to
        Exhibit 10.10 to the Registrant's Report on Form 10-KSB for the fiscal
        year ended June 30, 2002).

                                       15
<PAGE>
10.11   Security Agreement of The Robert E. and Margaret M. Petersen Trust in
        favor of the Registrant (incorporated by reference to Exhibit 10.11 to
        the Registrant's Report on Form 10-KSB for the fiscal year ended June
        30, 2002).
10.12   Registrant's 2000 Stock Incentive Plan (incorporated by reference to
        Exhibit 4.1 to the Registrant's Report on Form 10-KSB for the fiscal
        year ended June 30, 2000).
10.13   Form of Stock Option Agreement (incorporated by reference to Exhibit
        10.13 to the Registrant's Report on Form 10-KSB for the fiscal year
        ended June 30, 2002).
10.14   First Amendment to the Registrant's 2000 Stock Incentive Plan
        (incorporated by reference to Exhibit 10.8 to the Registrant's Report on
        Form 10-KSB for the fiscal year ended June 30, 2001).
10.15   Second Amendment to the Registrant's 2000 Stock Incentive Plan
        (incorporated by reference to Exhibit 10.9 to the Registrant's Report on
        Form 10-KSB for the fiscal year ended June 30, 2001).
10.16   Memorandum of Understanding, Charitable Gift Agreement, by and among the
        Registrant, the UC Riverside Foundation and the Regents of the
        University of California, dated as of June 7, 1999 (incorporated by
        reference to Exhibit 10.10 to the Registrant's Report on Form 10-KSB for
        the fiscal year ended June 30, 2001).
31.1    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
        2002--President.
31.2    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
        2002--Treasurer
32.1    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
        Section 906 of the Sarbanes-Oxley Act of 2002--President.
32.2    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
        Section 906 of the Sarbanes-Oxley Act of 2002--Treasurer.


Reports of Form 8-K
-------------------

None.


                                       16
<PAGE>
                                   SIGNATURES

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

                                        ADVANCED ENGINE TECHNOLOGIES, INC.
                                                   (Registrant)
Date: November 14, 2003         By:             /s/ Carroll Shelby
                                       Carroll Shelby, President and Director

Date: November 14, 2003         By:          /s/ Alexandria Phillips
                                    Alexandria Phillips, Treasurer and Director


                                       17