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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-QSB

|x                                                                                  | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|---------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------
|                                                                                   |                                                                                  
|For the quarterly period ended March 31,  2003                                    
|                                                                                   |                                                                                  
|o                                                                                  | 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                                                                           |                                                                                  
|                                                                                   |                                                                                  
|(State or Other Jurisdiction of Incorporation or Organization)                     |                                                                                  
|                                                                                   |                                                                                  
|11150 W. Olympic Boulevard, Suite 1050 Los Angeles, CA 90064                      
|                                                                                  
|(Address of Principal Executive Offices)                                          
|                                                                                  
|(310) 914-9599                                                                    
|                                                                                  
|(Insurer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.

|oYes | oNo
|---- | ---

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: 33,705,00 shares of common stock, $0.001 per value per share, as of May 13, 2003.

Transition Small Business Disclosure Format (check one):

|oYes | oNo
|---- | ---

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Part I FINANCIAL INFORMATION

Item 1.
          Financial Statements.

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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

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ADVANCED ENGINE TECHNOLOGIES, INC. (A DEVELOPMENT STAGE COMPANY)BALANCE SHEETS March 31, 2003 (unaudited) and June 30, 2002

|                                                                                                                                                                                                       |  | March 31, 2003 |             | June 30, 2002 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ----------- | ------------- | -
|                                                                                                                                                                                                       |  |                |             |               |  
|                                                                                                                                                                                                       |  | (unaudited)    |             |               |  
|ASSETS                                                                                                                                                                                                 |  |                |             |               |  
|CURRENT ASSETS:                                                                                                                                                                                        |  |                |             |               |  
|Cash and equivalents                                                                                                                                                                                   |  | $              | 51,088      |               | $
|Other current assets                                                                                                                                                                                   |  |                | 57,123      |               |  
|                                                                                                                                                                                                       |  |                |             |               |  
|Total current assets                                                                                                                                                                                   |  |                | 108,211     |               |  
|                                                                                                                                                                                                       |  |                |             |               |  
|Property and equipment, net                                                                                                                                                                            |  |                | 81,008      |               |  
|Patents, net of accumulated amortization of $636,566 as of March 31, 2003 (unaudited) and $500,974 as of June 30, 2002                                                                                 |  |                | 1,046,862   |               |  
|Due from related party                                                                                                                                                                                 |  |                | 21,000      |               |  
|                                                                                                                                                                                                       |  |                |             |               |  
|Total assets                                                                                                                                                                                           |  | $              | 1,257,081   |               | $
|                                                                                                                                                                                                       |  |                |             |               |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                   |  |                |             |               |  
|CURRENT LIABILITIES:                                                                                                                                                                                   |  |                |             |               |  
|Accounts payable and accrued expenses                                                                                                                                                                  |  | $              | 96,025      |               | $
|                                                                                                                                                                                                       |  |                |             |               |  
|Total current liabilities                                                                                                                                                                              |  |                | 96,025      |               |  
|                                                                                                                                                                                                       |  |                |             |               |  
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                                          |  |                |             |               |  
|STOCKHOLDERS EQUITY                                                                                                                                                                                   |  |                |             |               |  
|Common stock-50,000,000 shares authorized, 33,680,000 issued and outstanding; $.001 par value as of March 31, 2003
(unaudited), 33,430,000 issued and outstanding; $.001 par value as of June 30, 2002 |  |                | 33,680      |               |  
|Additional paid-in capital                                                                                                                                                                             |  |                | 20,003,935  |               |  
|Committed common stock under grant agreement                                                                                                                                                           |  |                | 930,000     |               |  
|Committed common stock for services                                                                                                                                                                    |  |                | 18,604      |               |  
|Subscription receivable                                                                                                                                                                                |  |                | (7,750,000  | )             |  
|Shares receivable under stock repurchase agreement                                                                                                                                                     |  |                | (90,000     | )             |  
|Deferred costs under grant agreement                                                                                                                                                                   |  |                | (1,084,500  | )             |  
|Deficit accumulated during the development stage                                                                                                                                                       |  |                | (10,900,663 | )             |  
|                                                                                                                                                                                                       |  |                |             |               |  
|Total stockholders equity                                                                                                                                                                             |  |                | 1,161,056   |               |  
|                                                                                                                                                                                                       |  |                |             |               |  
|Total liabilities and stockholders equity                                                                                                                                                             |  | $              | 1,257,081   |               | $
|                                                                                                                                                                                                       |  |                |             |               |  

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

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ADVANCED ENGINE TECHNOLOGIES, INC. (A DEVELOPMENT STAGE COMPANY)STATEMENTS OF OPERATIONS For the Three and Nine Months Ended March 31, 2003 and 2002 (unaudited)  and for the Period From September 23, 1996 (Inception)  to March 31, 2003 (unaudited)

|                                                     |  | For the Three Months Ended March 31, |            | For the Nine Months Ended March 31, |   | September 23, 1996 (inception) Through March 31, 2003 |  
|---------------------------------------------------- |  | ------------------------------------ | ---------- | ----------------------------------- | - | ----------------------------------------------------- | -
|                                                     |  |                                      |            |                                     |   |                                                      
|                                                     |  | 2003                                 |            | 2002                                |   | 2003                                                  |  
|                                                     |  |                                      |            |                                     |   |                                                       |  
|                                                     |  | (unaudited)                          |            | (unaudited)                         |   | (unaudited)                                           |  
|Expenses:                                            |  |                                      |            |                                     |   |                                                       |  
|Operating                                            |  | $                                    | 191,904    |                                     | $ | 199,233                                               |  
|Research and development                             |  |                                      | 116,638    |                                     |   | 172,212                                               |  
|Stock grant                                          |  |                                      | 232,500    |                                     |   | 232,500                                               |  
|Write-off of patent                                  |  |                                      |           |                                     |   |                                                      |  
|                                                     |  |                                      |            |                                     |   |                                                       |  
|Total expenses                                       |  |                                      | 541,042    |                                     |   | 603,945                                               |  
|                                                     |  |                                      |            |                                     |   |                                                       |  
|Loss from operations                                 |  |                                      | (541,042   | )                                   |   | (603,945                                              | )
|Interest income                                      |  |                                      | 191        |                                     |   | 592                                                   |  
|                                                     |  |                                      |            |                                     |   |                                                       |  
|Net loss                                             |  | $                                    | (540,851   | )                                   | $ | (603,353                                              | )
|                                                     |  |                                      |            |                                     |   |                                                       |  
|Basic and diluted net loss per share                 |  | $                                    | (0.02      | )                                   | $ | (0.02                                                 | )
|                                                     |  |                                      |            |                                     |   |                                                       |  
|Weighted average number of common shares outstanding |  |                                      | 33,680,000 |                                     |   | 33,430,000                                            |  
|                                                     |  |                                      |            |                                     |   |                                                       |  

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

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ADVANCED ENGINE TECHNOLOGIES, INC. (A DEVELOPMENT STAGE COMPANY)STATEMENTS OF CASH FLOWS For the Nine Months Ended March 31, 2003 and 2002 (unaudited)  and for the Period From September 23, 1996 (Inception)  to March 31, 2003 (unaudited)

|                                                                           |  | For the Nine Months Ended March 31, |            | September 23, 1996 (inception) Through March 31, 2003 |  
|-------------------------------------------------------------------------- |  | ----------------------------------- | ---------- | ----------------------------------------------------- | -
|                                                                           |  |                                     |            |                                                      
|                                                                           |  | 2003                                |            | 2002                                                  |  
|                                                                           |  |                                     |            |                                                       |  
|                                                                           |  | (unaudited)                         |            | (unaudited)                                           |  
|Cash flow from operating activities:                                       |  |                                     |            |                                                       |  
|Net loss                                                                   |  | $                                   | (1,768,682 | )                                                     | $
|Adjustments to reconcile net loss to net cash used in operating activities |  |                                     |            |                                                       |  
|Stock grant expense                                                        |  |                                     | 697,500    |                                                       |  
|Depreciation and amortization                                              |  |                                     | 154,738    |                                                       |  
|Issuance of common stock for assets and services                           |  |                                     | 51,367     |                                                       |  
|Committed common stock for services                                        |  |                                     | 18,604     |                                                       |  
|Stock options issued for services                                          |  |                                     |           |                                                       |  
|Write off of patents                                                       |  |                                     |           |                                                       |  
|(Increase) decrease in                                                     |  |                                     |            |                                                       |  
|Due from related party                                                     |  |                                     |           |                                                       |  
|Prepaid expenses                                                           |  |                                     | (35,465    | )                                                     |  
|Increase in                                                                |  |                                     |            |                                                       |  
|Accounts payable and accrued expenses                                      |  |                                     | 18,107     |                                                       |  
|                                                                           |  |                                     |            |                                                       |  
|Net cash flows used in operating activities                                |  |                                     | (863,831   | )                                                     |  
|                                                                           |  |                                     |            |                                                       |  
|Cash flows from investing activities:                                      |  |                                     |            |                                                       |  
|Acquisition of patents                                                     |  |                                     | (49,657    | )                                                     |  
|Purchase of property and equipment                                         |  |                                     | (51,154    | )                                                     |  
|                                                                           |  |                                     |            |                                                       |  
|Net cash flows used in investing activities                                |  |                                     | (100,811   | )                                                     |  
|                                                                           |  |                                     |            |                                                       |  
|Cash flow from financing activities:                                       |  |                                     |            |                                                       |  
|Proceeds from note payable                                                 |  |                                     |           |                                                       |  
|Proceeds from stock subscription receivable                                |  |                                     | 750,000    |                                                       |  
|Repayment of notes payable                                                 |  |                                     |           |                                                       |  
|Repurchase of common stock                                                 |  |                                     | (5,000     | )                                                     |  
|Proceeds from issuance of common stock                                     |  |                                     |           |                                                       |  
|                                                                           |  |                                     |            |                                                       |  
|Net cash flows provided by financing activities                            |  |                                     | 745,000    |                                                       |  
|                                                                           |  |                                     |            |                                                       |  
|Net increase (decrease) in cash and equivalents                            |  |                                     | (219,642   | )                                                     |  
|Cash and equivalents, at beginning of period                               |  |                                     | 270,730    |                                                       |  
|                                                                           |  |                                     |            |                                                       |  
|Cash and equivalents, at end of period                                     |  | $                                   | 51,088     |                                                       | $
|                                                                           |  |                                     |            |                                                       |  

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

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Advanced Engine Technologies, Inc. Notes to Financial Statements March 31, 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 and nine months ended March 31, 2003 and from
September 23, 1996 (Inception) through March 31, 2003 the Company paid $20,000, $60,000 and $120,000, respectively, in connection with consulting services under this agreement.

As of March 31, 2003 the Companys operations consisted of marketing, testing and developing 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, 2003.  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 and nine months ended March 31, 2003 are not necessarily
indicative of results for the entire fiscal year ending June 30, 2003.

The information with respect to the three and nine months ended
March 31, 2003 and 2002 is unaudited.

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Advanced Engine Technologies, Inc. Notes to Financial Statements March 31, 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.

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.

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.

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Advanced Engine Technologies, Inc. Notes to Financial Statements March 31, 2003

NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)

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.  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.

NOTE 3 - 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 and fourth installments were issued in July 1999, July 2000, September 2001 and September 2002, 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 March 31, 2003, the Company recognized total expense on the stock grant of $3,565,500, including $232,500 and $697,500 for the three and nine months ended March 31, 2003 and 2002, respectively.

NOTE 4 - 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 $86,624 and $269,265 (unaudited), for the three and nine months ended March 31, 2003, respectively.

At March 31, 2003, the Company had an outstanding receivable from its Secretary of $21,000 for reimbursement of remodeling costs on office space that the Company and
its Secretary share.

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Advanced Engine Technologies, Inc. Notes to Financial Statements March 31, 2003

NOTE 4 - RELATED PARTY
TRANSACTIONS (Continued)

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 $22,652 and $73,669, respectively, for the three and nine months ended March 31, 2003.

For the three and nine months ended March 31, 2003 the Company paid a director $20,000 and $60,000, respectively, in connection with consulting services (see Note
1).  In addition, for the nine months ended March 31, 2003, the Company paid $20,000 to a company wholly-owned by such director for the repurchase of 10,000 shares of common stock from the director in connection with the R&D agreement (See
Note 1).

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

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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, 2002 and our Quarterly Report on SEC Form 10-QSB for the quarter ended December 31, 2002.

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, 2002, our Quarterly Report on Form 10-QSB for the quarter ended December 31, 2002 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 incorporated in Colorado and commenced operations on September
23, 1996. We were 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 four OX2 engine prototypes (OX2 Engine Prototypes) during the 2003 fiscal year.  On October
15, 2001, we entered into an agreement with OX2 Engine (Distribution) Limited (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.  The agreement also calls for the design and manufacturing of new and advanced

-
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components for the OX2 Engine Prototypes.  In consideration for the services provided by Mr. Manthey and OX2 LTD under the agreement we will repurchase from Mr. Manthey,
or his affiliates, 240,000 shares of our common stock, par value $0.001 per share (Common Stock), at $2.00 per share.  We have allocated its $2.00 per share repurchase price as $0.50 per share for the redemption of common shares and
$1.50 per share as research and development expense.  The $0.50 common share redemption price is based on the fair market value of the common shares as of the agreement date.  In addition, Mr. Manthey provides consulting services under the
agreement for the sum of eighty thousand dollars ($80,000) per annum.  As of March 31, 2003, we have repurchased 180,000 shares of our Common Stock for $360,000 under this agreement.  For the three and nine months ended March 31, 2003, we
paid $20,000 and $60,000, respectively, in connection with consulting services 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 $116,638 and $378,107, respectively, for the three and nine months ended March 31, 2003 and $172,212 and $418,406, respectively, for the
three and nine months ended March 31, 2002, on research and development for the OX2 engine.  For the period from September 23, 1996 (Inception) through March 31, 2003 we have spent $3,214,961 on research and development activities.

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, 2003 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 $51,088 as of March 31, 2003.  The Company also has available a $7,750,000 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 $10,900,663.  Our net loss for the three and nine months ended March 31, 2003 is $540,851 and $1,768,682,
respectively.

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.

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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 various 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 for the nine months ended March 31, 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.

          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.

          A
market for our OX2 engine may take longer to develop than anticipated or may never develop, which would adversely affect 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.

          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 2003 with
our current cash and cash equivalents reserves, which were obtained from the sale of securities and were $51,088 as of March 31, 2003.  We also have an $7,750,000 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

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equivalent reserves are exhausted, we plan to request payments on the subscription receivable as funds are required for operations.

          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.

          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.

          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 to 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, time-consuming and require us to develop no 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.  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.

          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 develop, 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.

          We have a history of losses.  We have a history of operating losses and an accumulated deficit, as of March 31, 2003, of $10,900,663.  Our
ability to generate revenues and profits is subject to the risks and uncertainties encountered by development stage companies.

          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.

          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.

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          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.

          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 March 31, 2003 approximately 88% of our outstanding Common Stock is 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.

          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 shareholders ability to sell their shares may be adversely affected.

Item 3.
          Controls and Procedures.

Within the 90 days prior to the date of filing
this Quarterly Report of Form 10-QSB, the Company carried out an evaluation, under the supervision and with the participation of the Companys management, including its President (principal executive officer) and its Treasurer (chief financial
officer), of the effectiveness of the design and operation of the Companys disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.  Based upon that evaluation, the Companys President (principal executive officer)
and its Treasurer (chief financial officer) concluded that the Companys disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company required to be included in the
Companys periodic SEC filings.  Subsequent to the date of that evaluation, there have been no significant changes in the Companys internal controls or in other factors that could significantly affect internal controls, nor were any
corrective actions required with regard to significant deficiencies and material weaknesses.

PART II OTHER INFORMATION

Item 1.          Legal Proceedings.

None.

Item
2.          Changes in Securities and Use of Proceeds.

None.

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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                                                                                                                       
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------
|       |  |                                                                                                                                   
|99.1   |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  President
|       |  |                                                                                                                                   
|99.2   |  | 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.

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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: May 15, 2003  | By: | /s/ Carroll Shelby                         
|                    |     |                                            
|                    |     | Carroll Shelby, President and Director     
|                    |     |                                            
|Date: May  15, 2003 | By: | /s/ Alexandria Phillips                    
|                    |     |                                            
|                    |     | Alexandria Phillips, Treasurer and Director

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CERTIFICATION

I, Carroll Shelby, certify
that:

1.          I have reviewed this quarterly report on Form 10-QSB of Advanced
Engine Technologies, Inc.;

2.          Based on my knowledge, this quarterly report
does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered
by this quarterly report;

3.          Based on my knowledge, the financial statements,
and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly
report;

4.          The registrants other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)          designed such disclosure controls and procedures to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)          evaluated the effectiveness of the registrants disclosure controls and procedures as of a date
within 90 days prior to the filing date of this quarterly report (the Evaluation Date); and

c)          presented in this quarterly report our conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation Date;

5.          The
registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent
function):

a)          all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and

b)          any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal controls; and

6.          The registrants other certifying officer and I have indicated in this quarterly report whether or
not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

|Date: May 15, 2003 | /s/ Carroll Shelby       
|------------------ | -------------------------
|                   |                          
|                   | Carroll Shelby, President

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CERTIFICATION

I, Alexandria Phillips,
certify that:

1.          I have reviewed this quarterly report on Form 10-QSB of
Advanced Engine Technologies, Inc.;

2.          Based on my knowledge, this quarterly
report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this quarterly report;

3.          Based on my knowledge, the financial
statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
quarterly report.

4.          The registrants other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)          designed such disclosure controls and procedures to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)          evaluated the effectiveness of the registrants disclosure controls and procedures as of a date
within 90 days prior to the filing date of this quarterly report (the Evaluation Date); and

c)          presented in this quarterly report our conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation Date;

5.          The
registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent
function):

a)          all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and

b)          any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal controls; and

6.          The registrants other certifying officer and I have indicated in this quarterly report whether or
not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

|Date: May 15, 2003 | /s/ Alexandria Phillips       
|------------------ | ------------------------------
|                   |                               
|                   | Alexandria Phillips, Treasurer

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