<PAGE>


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                  FORM 10QSB/A

 x       QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
---
         SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
         PERIOD ENDED MARCH 31, 2000

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

         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
---
         SECURITIES EXCHANGE ACT OF 1934 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             (IRS Employer
          incorporation or organization)            Identification No.)

         11150 W. Olympic Blvd. Suite 1050 Los Angeles, Ca. 90064
         --------------------------------------------------------
     (Address of principal executive offices)           (Zip Code)

                                 (310) 914-9599
                 ----------------------------------------------
                (Issuer's telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yes  X   No
                                                               ---     ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. March 31, 2000 - 22,900,000 shares of
common stock.

Transitional Small Business Disclosure Form   Yes      No  x
                                                  ---     ---

<PAGE>

Part I.  Financial Information

Item 1.  Financial Statements


                       ADVANCED ENGINE TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                                FINANCIAL REPORT



<PAGE>

                       ADVANCED ENGINE TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                                    CONTENTS

                                                                            Page
                                                                            ----

ACCOUNTANTS' REPORT                                                           1
FINANCIAL STATEMENTS
       Balance Sheet                                                          2
       Statements of Operations                                             3-4
       Statement of Stockholders' Equity                                      5
       Statements of Cash Flows                                             6-7
       Notes to Financial Statements                                       8-12



<PAGE>

                               Accountants' Report

Advanced Engine Technologies, Inc.
(A Development Stage Company)


We have reviewed the accompanying balance sheet of Advanced Engine Technologies,
Inc. (a development stage company) as of March 31, 2000, and the related
statements of operations, changes in stockholders equity, and cash flows for the
quarter and nine months ended March 31, 2000 and 1999 and the period from
September 23, 1996 (inception) through March 31, 2000, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. All information included in
these financial statements is the representation of the management of Advanced
Engine Technologies, Inc.

A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying March 31, 2000 financial statements in order for
them to be in conformity with generally accepted accounting principles.

The financial statements have been revised for the matter discussed in Note 6.


/s/ Neff & Ricci LLP
-----------------------
Albuquerque, New Mexico
April 20, 2000, except
for Note 6, as to which
the date is October 12, 2001

                                       1

<PAGE>

ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
March 31, 2000
See Accountants' Report.

<TABLE>
<S>                                                                <C>
ASSETS

Current Assets

    Cash and cash equivalents                                      $ 1,668,231
    Prepaid expenses                                                     1,000
    Due from related party                                              19,664
                                                                   -----------
           Total current assets                                      1,688,895
                                                                   -----------
Fixed Assets
    Leasehold improvements                                              12,332
    Furniture                                                            7,523
    Computer equipment                                                  44,156
    Manufacturing equipment and tooling                                 71,626
    Less accumulated depreciation                                      (40,477)
                                                                   -----------
           Total fixed assets                                           95,160
                                                                   -----------
Other Assets
    Patent rights, net of accumulated
        amortization of $146,554                                     1,471,758
    Patent, copyrights and designs, net of
        accumulated amortization of $11,667                             32,083
                                                                   -----------
           Total other assets                                        1,503,841
                                                                   -----------
           Total assets                                            $ 3,287,896
                                                                   ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

Commitments And Contingencies

Stockholders' Equity
    Common stock-50,000,000 shares authorized,
    22,950,000 issued and outstanding; $.001 par value             $    22,950
    Additional paid-in capital                                       6,571,300
    Committed common stock under grant agreement                     3,720,000
    Deferred costs under grant agreement                            (3,874,500)
    Deficit accumulated during the development stage                (3,151,854)
                                                                   -----------
           Total stockholders' equity                                3,287,896
                                                                   -----------
Total liabilities and stockholders' equity                         $ 3,287,896
                                                                   ===========
</TABLE>

See Notes to Financial Statements.


                                       2

<PAGE>

ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Nine Months Ended March 31, 2000 and 1999
and the Period From September 23, 1996
(Inception) Through March 31, 2000
See Accountants' Report.

<TABLE>
<CAPTION>
                                                                       9/23/96
                                                                     (Inception)
                                                                       Through
                                       2000             1999           3/31/00
                                    -------------------------------------------
<S>                                 <C>              <C>             <C>
Operating expenses                  $   572,561         312,122       1,471,006
Research and development expenses       476,863         525,000       1,001,863
Stock grant expense                     697,500               -         775,500
                                    -------------------------------------------
Loss from operations                 (1,746,924)       (837,122)     (3,248,369)
Interest income                          49,319           9,467          96,515
                                    -------------------------------------------
Net loss                            $(1,697,605)       (827,655)     (3,151,854)
                                    ===========================================
Basic net loss per share            $      (.07)           (.04)           (.15)
                                    ===========================================
Weighted average number of common
    shares outstanding               22,791,667      21,744,444      21,100,172
                                    ===========================================
</TABLE>

See Notes to Financial Statements.


                                       3

<PAGE>

ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS (CONTINUED)
Quarter Ended March 31, 2000 and 1999
See Accountants' Report.

<TABLE>
<CAPTION>
                                                 2000              1999
                                              ----------------------------
<S>                                           <C>               <C>
Operating expenses                            $  139,105           102,061
Research and development expenses                476,863                 -
Stock grant expense                              232,500                 -
                                              ----------------------------
Loss from operations                            (848,468)         (102,061)
Interest income                                   30,628             2,064
                                              ----------------------------
Net loss                                      $ (817,840)          (99,997)
                                              ============================
Basic net loss per share                      $     (.04)            (.005)
                                              ============================
Weighted average number of common
    shares outstanding                        22,925,000       21,925,000
                                              ============================
</TABLE>

See Notes to Financial Statements.


                                       4

<PAGE>

ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
Period From September 23, 1996 (Inception)
Through March 31, 2000
See Accountants' Report.


<TABLE>
<CAPTION>
                                                                     Committed                                 Deficit
                                                                       Common                   Deferred     Accumulated
                                   Common Stock       Additional       Stock                      Costs       During the
                               --------------------     Paid-in     Under Grant  Subscription  Under Grant   Development
                               Shares        Amount     Capital      Agreement    Receivable    Agreement       Stage       Total
                              -----------------------------------------------------------------------------------------------------
<S>                           <C>           <C>          <C>          <C>           <C>          <C>           <C>          <C>
Balance, September 23, 1996
    (Inception)                         -   $     -  $        -    $        -   $         -  $         -   $         -   $        -
Common stock issued to parent
    corporation for license
    rights                     20,000,000    20,000     (18,000)            -             -            -             -        2,000
Common stock issued for cash      499,200       499     498,701             -             -            -             -      499,200
Common stock issued for
    services                      600,000       600       5,400             -             -            -             -        6,000
Net loss                                -         -           -             -             -            -      (164,233)    (164,233)
                              -----------------------------------------------------------------------------------------------------

Balance, June 30, 1997         21,099,200    21,099     486,101             -             -            -      (164,233)     342,967
Common stock issued for cash      500,800       501     500,299             -             -            -             -      500,800
Net loss                                -         -           -             -             -            -      (309,635)    (309,635)
                              -----------------------------------------------------------------------------------------------------

Balance, June 30, 1998         21,600,000    21,600     986,400             -             -            -      (473,868)     534,132
Common stock committed under
    grant agreement                     -         -           -     4,650,000             -   (4,650,000)            -            -
Common stock issued for cash      325,000       325     568,428             -             -            -             -      568,750
Common stock issued for
    services                      400,000       400   1,999,600             -             -            -             -    2,000,000
Research and development
    expense recognized under
    grant agreement                     -         -           -             -             -       78,000             -       78,000
Net loss                                -         -           -             -             -            -      (980,381)    (980,381)
                              -----------------------------------------------------------------------------------------------------

Balance, June 30, 1999         22,325,000    22,325   3,554,425     4,650,000             -   (4,572,000)   (1,454,249)   2,200,501
Common stock issued under
    grant agreement               200,000       200     929,800      (930,000)            -            -             -            -
Common stock issued for cash      400,000       400   1,999,600             -             -            -             -    2,000,000
Common stock issued for
    services                       25,000        25      87,475             -             -            -             -       87,500
Research and development
    expense recognized under
    grant agreement                     -         -           -             -             -      697,500             -      697,500
Net loss                                -         -           -             -             -            -    (1,697,605)  (1,697,605)
                              -----------------------------------------------------------------------------------------------------
Balance, March 31, 2000        22,950,000   $22,950  $6,571,300    $3,720,000   $         -  $(3,874,500)  $(3,151,854) $ 3,287,896
                              =====================================================================================================
</TABLE>

                                      5

<PAGE>

ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Nine Months Ended March 31, 2000 and 1999
and the Period From September 23, 1996 (Inception)
Through March 31, 2000
See Accountants' Report.

<TABLE>
<CAPTION>
                                                                                      9/23/96
                                                                                    (Inception)
                                                                                      Through
                                                     2000             1999            3/31/00
                                                 ---------------------------------------------
<S>                                              <C>                <C>             <C>
Reconciliation of net losses to net
   cash provided by operations:
        Net loss                                 $ (1,697,605)      (827,655)       (3,151,854)
        Stock grant expense                           697,500              -           775,500
        Depreciation and amortization                 149,061          7,693           198,698
        Issuance of common stock for
           assets and services                         87,500        525,000           664,250
Changes in current assets and liabilities:
        Prepaid expenses                                7,216        (10,500)           (1,000)
        Accounts payable                               (2,881)       (31,283)                -
        Due from related party                        (19,664)             -           (19,664)
                                                 ---------------------------------------------
           Net cash flows used by
               operating activities                  (778,873)     (336,745)       (1,534,070)
                                                 ---------------------------------------------
Cash flows from investing activities:
        Equipment purchases                           (18,099)       (26,951)         (135,638)
        Intangible asset purchases                    (96,592)             -        (1,662,061)
                                                 ---------------------------------------------
           Net cash flows used by
               investing activities                  (114,691)       (26,951)       (1,797,699)
                                                 ---------------------------------------------
Cash flows from financing activities:
        Issuance of common stock                    2,000,000              -         5,000,000
        Loan proceeds                                       -              -            50,000
        Loan payments                                       -              -           (50,000)
                                                 ---------------------------------------------
           Net cash flows provided by
               financing activities                 2,000,000              -         5,000,000
                                                 ---------------------------------------------
Net increase (decrease) in cash and
   equivalents                                      1,106,436       (363,696)        1,668,231
Cash and equivalents at beginning of
   period                                             561,795        545,435                 -
                                                 ---------------------------------------------
Cash and equivalents at end of period            $  1,668,231      $ 181,739       $ 1,668,231
                                                 =============================================
</TABLE>

See Notes to Financial Statements.


                                       6

<PAGE>

ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (CONTINUED)
Quarter Ended March 31, 2000 and 1999
See Accountants' Report.

<TABLE>
<CAPTION>
                                                        2000          1999
                                                   --------------------------
<S>                                                <C>               <C>
Reconciliation of net losses to
    net cash provided by operations:
        Net loss                                   $  (817,840)       (99,997)
        Stock grant expense                            232,500              -
        Depreciation and amortization                   49,687          4,625
        Issuance of common stock for
           assets and services                          87,500              -
Changes in current assets and liabilities:
    Prepaid insurance                                   (1,000)         4,500
    Due from related party                             (19,664)             -
                                                   --------------------------
           Net cash flows applied to
               operating activities                   (468,817)       (90,872)
                                                   --------------------------
Cash flows from investing activities:
        Equipment purchases                            (12,332)       (13,230)
                                                   --------------------------
Net decrease in cash                                  (481,149)      (104,102)
Cash at beginning of period                          2,149,380        285,841
                                                   --------------------------
Cash at end of period                              $ 1,668,231        181,739
                                                   ==========================
</TABLE>

See Notes to Financial Statements.


                                        7

<PAGE>

ADVANCED ENGINE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
See Accountants' Report.


NOTE 1.   NATURE OF BUSINESS

Advanced Engine Technologies, Inc. (the Company) was incorporated under the laws
of Colorado and began operations on September 23, 1996. The Company was formed
to acquire the rights to manufacture, distribute and market an OX2 Engine
(Distribution) Ltd. (OX2) combustion engine throughout the United States, Canada
and Mexico. On October 18, 1996 the Company entered into a contract with OX2
Engine (Distribution) Ltd., a company incorporated in the laws of the Republic
of Vanuatu, whereby the Company acquired the rights to manufacture, distribute
and market the OX2 combustion engine. Performance under this contract required
the Company to forthwith issue 20,000,000 shares of its common stock plus an
additional 19,000,000 upon the completion of certain emission tests (see Note
3). In addition, OX2 was given the right to appoint two of the Company's
directors. In December 1998, both parties agreed to cancel the requirement to
issue the additional 19,000,000 shares. As of June 30, 1998, OX2 owned
approximately 62 percent of the Company's outstanding shares.

During the year ended June 30, 1999, OX2 sold, transferred, assigned and/or
otherwise conveyed its stock to various individuals, companies, and other legal
entities, none of which individually has a controlling interest. Certain of
these legal entities have common ownership and, as a group, may have a
controlling interest in the Company.

In May of 1999, the Company acquired the worldwide patent rights for the OX2
engine pursuant to a written agreement with OX2, OX2 (Intellectual Property) and
Advanced Engine Technology (PTY). The Company has assumed responsibility for
worldwide patent maintenance and enforcement.

As of March 31, 2000, the Company's operations consisted of marketing, testing,
and developing the OX2 combustion engine for commercial applications, and
raising any necessary capital investment. Management does not expect to generate
significant sales revenue until fiscal year 2001. Accordingly, planned principal
operations have not commenced and the Company is a development stage enterprise.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents. Cash and cash equivalents include all cash balances
and highly liquid debt instruments with an original maturity of three months or
less. The Company's cash is deposited in financial institutions and is insured
only up to $100,000 by the Federal Deposit Insurance Corporation. Cash
equivalents consist of commercial paper.


                                        8

<PAGE>

ADVANCED ENGINE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
See Accountants' Report.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (CONTINUED)

Fixed Assets. Fixed assets are stated at cost. Depreciation expense is
calculated using the straight-line method over the estimated useful lives of the
assets, which range from 5 to 10 years.

Other Assets. Patent rights are amortized on a straight-line basis over the
remaining estimated useful life of 10 years. The patents, copyrights and designs
are amortized on a straight-line basis over the remaining estimated useful life
of 5 years. The Company continually reviews other assets to assess
recoverability from estimated future net cash flows. To date, these reviews have
not resulted in a reduction of other assets.

Income Taxes. The Company accounts for its income taxes using the liability
method. Under this method, deferred tax liabilities and assets are determined
based on the difference between the financial statement carrying amounts and tax
basis of assets and liabilities using enacted tax rates in effect in the years
in which the differences are expected to reverse. The Company has provided a
valuation allowance to offset the benefit of any net operating loss
carryforwards or deductible temporary differences.

Research and Development Costs. Research and development costs are expensed as
incurred.

Advertising Costs. The Company expenses advertising costs as incurred.
Advertising costs amounted to $12,957 and $1,426 for the quarter ended March 31,
2000 and 1999, respectively, and $80,660 and $1,760 for the nine months ended
March 31, 2000 and 1999, respectively, and $170,910 from September 23, 1996
(inception) to March 31, 2000.

Loss Per Share. Loss per share is computed on the basis of the weighted average
number of common shares outstanding during the year and did not include the
effect of common stock equivalents as their effect would be antidilutive. The
numerator for the computation is the net loss and the denominator is the
weighted average shares of common stock outstanding.

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


                                        9

<PAGE>

ADVANCED ENGINE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
See Accountants' Report.

NOTE 3. RELATED PARTY TRANSACTIONS

The Company paid consulting fees to its former President, who is also a
shareholder and director, in the amount of $280,923 from September 23, 1996
(inception) to March 31, 2000 including $29,945 and $22,860 for the quarter
ended March 31, 2000 and 1999, respectively, and $69,720 and $64,390 for the
nine months ended March 31, 2000 and 1999, respectively.

The Company paid administrative fees and reimbursed expenses to a company that
is owned by one of its shareholders in the amount of $251,507 from September 23,
1996 (inception) to March 31, 2000 including $10,871 and $3,333 for the quarter
ended March 31, 2000 and 1999, respectively, and $35,820 and $13,500 for the
nine months ended March 31, 2000 and 1999, respectively.

In October 1996, the Company issued 600,000 shares of its common stock to one of
its founders in exchange for his services in organizing the Company. The
transaction was recorded at the estimated fair market value of the services
provided ($6,000), as this was more readily determinable than the fair market
value of the stock.

Also in October 1996, the Company entered into a contract with OX2 whereby the
Company acquired the rights to manufacture, distribute and market the OX2
combustion engine in the United States, Canada and Mexico for the life of the
world-wide patent. As part of this contract, the Company issued 20,000,000
shares of its common stock and was to issue an additional 19,000,000 upon the
completion of emission tests. In December 1998, both parties agreed to rescind
and terminate the requirement to issue the additional 19,000,000 shares. The
Company was also to pay a royalty of 15 percent of the gross proceeds of its
revenue. In addition, OX2 had the right to appoint two of the Company's
directors. As of March 31, 2000, OX2 had appointed one director who was also the
Company's President, until December 1999 when he resigned. In May 1999, the
Company acquired the worldwide patent and manufacturing rights to the OX2 engine
in a four party agreement between the Company, OX2, OX2 (Intellectual Property)
and Advanced Engine Technology (PTY). The Company has assumed responsibility for
worldwide patent maintenance and enforcement.

The Company has an outstanding receivable from one of its board members. The
receivable at March 31, 2000 is $19,664.


                                       10

<PAGE>

ADVANCED ENGINE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
See Accountants' Report.

NOTE 4. INCOME TAXES

At March 31, 2000 the Company had deferred tax assets amounting to approximately
$1,218,000. The deferred tax assets consist primarily of the tax benefit of net
operating loss carryforwards and are fully offset by a valuation allowance of
the same amount.

The net change in the valuation allowance for deferred tax assets was an
increase of approximately $352,000 and $30,000 for the quarters ending March 31,
2000 and 1999, respectively. The net change is due primarily to the increase in
net operating loss carryforwards.

At March 31, 2000, the Company had net operating loss carryforwards of
approximately $3,045,000 available to offset future state and federal taxable
income. These carryforwards will expire in 2017 to 2019 for federal tax purposes
and 2002 to 2004 for state tax purposes.

NOTE 5. COMMON STOCK

The Company offered one million shares of its common stock at the price of one
dollar per share in an offering memorandum pursuant to Rule 504 of Regulation D
of the Securities Act of 1933. The Company sold 499,200 shares as of June 30,
1997, and 500,800 during fiscal year 1998. As of June 30, 1997, the Company had
stock subscribed in the amount of $74,000 that was recorded as a receivable and
subsequently received in fiscal year 1998.

On August 6, 1998, the Company entered into a joint venture agreement with
Carroll Shelby under which the Company was to issue 300,000 shares of restricted
common stock in exchange for services related to the future production of a
street vehicle that utilizes the OX2 combustion engine. These shares were issued
in November 1998. They were valued at $525,000 and expensed as research and
development costs. In addition, the Company will issue an additional 250,000
shares upon completion of the vehicle utilizing the OX2 combustion engine.
Subsequent to this transaction, Carroll Shelby was appointed to the Board of
Directors.

In November 1998, the Company issued 25,000 shares of restricted stock to
purchase patents, copyrights, designs and prototypes to be used with the
Company's technology. This transaction was valued at $43,750 and recorded as an
intangible asset.


                                       11

<PAGE>

ADVANCED ENGINE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
See Accountants' Report.

NOTE 5. COMMON STOCK (CONTINUED)

In April 1999, the Company issued 400,000 shares of common stock for $2,000,000
in a private placement. During the quarter ended September 30, 1999, the Company
issued an additional 400,000 shares of common stock to the same party for
$2,000,000 in a private placement.

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 and second
installments were issued in July 1999 and 2000, respectively.

Expense on 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, Company's stock had a very low trading volume at the time of the
grant agreement, and the Company was still in a development stage. During the
period from September 23, 1996 (inception) to March 31, 2000, the Company
recognized total expense on the stock grant of $775,500, including $697,500 for
the nine months ended March 31, 2000 and $232,500 for the three months ended
March 31, 2000.

In January 2000 the Company issued 25,000 shares of common stock in exchange for
services related to the performance testing of the OX2 engine. This transaction
was valued at $87,500 and was charged to expense.

NOTE 6. RESTATEMENT OF THE MARCH 31, 2000 FINANCIAL STATEMENTS

The financial statements for the three and nine months ended March 31, 2000 have
been restated from the originally filed financial statements to reflect greater
expense recognition in those years in connection with the June 1999 stock grant
agreement with the University of Riverside Foundation. (See Note 5 for a
description of the agreement and the accounting related to the agreement.)
Specifically, upon re-evaluation of the agreement, current management has
concluded that the fair value of the committed common stock on the date of the
agreement was $4,650,000, and not $1,500,000 as originally valued. This increase
in the fair value of the committed common stock on the date of the grant
agreement impacts the expense recognition on the stock grant agreement because
the expense which is recognized over a five-year period is based upon the fair
value of the committed common stock on the date of the stock grant agreement.
Originally, the financial statements for the nine months ended March 31, 2000
reflected $300,000 of operating expense associated with this grant. As a result
of the foregoing, the financial statements for the three and nine months ended
March 31, 2000 have been restated to reflect a stock grant expense of $232,500
and $697,500, respectively. Also, the originally filed March 31, 2000 financial
statements classified the expense on the stock grant as operating expense;
whereas, the restated financial statements present the expense as "stock grant
expense." Additionally, there have been certain presentation changes in the
statement of shareholders' equity to reflect committed common stock and deferred
costs related to the stock grant agreement.

                                       12

<PAGE>

Item 2.   Management's Discussion and Analysis or Plan of Operation

      The Company plans to continue the development of prototypes and marketing
during the 2000 fiscal year. Activities will include development and testing of
prototypes in coordination with the College of Engineering Center for
Environmental Research and Technology at the University of California at
Riverside with continual work with joint venture partners to develop an engine
for stationary generators, automobiles, marine and other commercial uses. While
prototypes of the OX2 engine exist, there can be no assurance the Company will
be successful with its marketing efforts, the development of its joint ventures
or in the ultimate development of the engine for commercial applications.

      The Company's cash flow requirements to fund these activities and the
general operations of the Company total approximately $1,000,000 and include
approximately $200,000 for consulting and $300,000 for equipment among other
costs. The Company expects to fund these costs with its current cash reserves of
approximately $1,670,000, which came from private placements. The Company's cost
estimates do not include provisions for any contingencies or unexpected expenses
that may arise or any unanticipated increases in costs. As a result, the
Company's cash reserves may not be adequate to cover the actual costs of
operations in the 2000 fiscal year.

      The Companies' net loss since inception (September 23, 1996) is
$3,151,854.

      There are currently no signed contracts that will produce revenue and
there can be no assurance that management will be successful in negotiating
these contracts.

      The Company's goal is to arrange for and/or conduct the research and
development necessary to bring the product to commercial production. The Company
expects to arrange for, carry out and/or fund all necessary, relevant research
and development activities.

      In June 1999, the Company agreed to issue 1,000,000 shares of its common
stock to the University of California Riverside Foundation. The stock is to be
issued in five annual installments of 200,000 shares each. The first installment
was issued in July of 1999. The donated stock is to provide an endowment for
research funds for the College of Engineering-Center for Environmental Research
and Technology.

     The Company does not currently have any employees other than its officers
although employees may be added depending on the future of the enterprise.


Part II.  Other Information

Item 1.   Legal Proceedings

          None


                                       13

<PAGE>

Item 2.   Changes in Securities

          None

Item 3.   Default 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 Form 8-K

          a)  Exhibits:

              Exhibit 27 - Financial Data Schedule

          b)  Reports on Form 8-K: None


                                       14

<PAGE>

                                   SIGNATURES

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

                       ADVANCED ENGINE TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
                                  (Registrant)

By:                            /s/ Carroll Shelby
         -----------------------------------------------------------------------
                       Carroll Shelby, President and Director

Date:                           October 15, 2001
         -----------------------------------------------------------------------


By:                         /s/ Alexandria Phillips
         -----------------------------------------------------------------------
                   Alexandria Phillips, Treasurer and Director

Date:                           October 15, 2001
         -----------------------------------------------------------------------