U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   -----------

                                   FORM 10-KSB

(Mark One)

   X     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
         OF 1934

         For the fiscal year ended                June 30, 2000
                                   --------------------------------------------
                                       OR

         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934.

For the transition period from                      to
                                ------------------        ---------------------

                Commission file number                    0-25177
                                                       ------------------------

                       ADVANCED ENGINE TECHNOLOGIES, INC.

-------------------------------------------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

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

11150 W. Olympic Blvd. Suite 1020 Los Angeles Ca.              90064
-------------------------------------------------     -------------------------
(Address of Principal Executive Offices)                    (Zip Code)

                                 (310) 914-1849
-------------------------------------------------------------------------------
                           (Issuer's Telephone Number)
-------------------------------------------------------------------------------
          Securities to be registered under Section 12(b) of the Act:

    Title of Each Class to be so               Name of Each Exchange on Which
             Registered                        Each Class is to be Registered

                None                                      None
--------------------------------               --------------------------------

           Securities to be registered under Section 12(g) of the Act:
                          Common Stock, $.001 par value

-------------------------------------------------------------------------------
                                (Title of Class)
-------------------------------------------------------------------------------
         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 past 90 days.

Yes____X_______   No____________

<PAGE>

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained,  to the best of registrant's knowledge, in definitive proxy or any
amendment to this Form 10-KSB.

         State issuer's revenues for its most recent fiscal year.___$-0-______

         The aggregate market value of the common equity held by  non-affiliates
computed by reference to the price at which the common  equity was sold,  or the
average bid and asked price of such common  equity  ($2.125 per share) as of May
2, 2000 was $17,240,137.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 23,150,000 common shares as
of June 30, 2000

         Transitional Small Business Disclosure Format (check one):

Yes________  No___X______
                  -



<PAGE>


                                     PART I

Item 1.           Description of Business

         Forward-Looking Statements

         This document  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. Actual events or results may
differ materially.

         Although   we  believe   that  the   expectations   reflected   in  the
forward-looking  statements are reasonable,  we cannot guarantee future results,
levels of activity,  performance or achievements.  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.

         Readers are also urged to  carefully  review and  consider  the various
disclosures made by us which attempt to advise interested parties of the factors
which affect our business,  including  without  limitation the disclosures  made
under the caption  "Management's  Discussion and Analysis of Financial Condition
or Plan of Operation" and under the caption "Risk Factors" included herein.

         General

         Advanced Engine  Technologies,  Inc. ("we",  "us" or the "Company") was
incorporated  and commenced  operations on September 23, 1996. We were formed to
develop   and   commercialize   the   OX2   internal    combustion   engine,   a
state-of-the-art,  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.

         In 1996, we entered into an exclusive  sub-licensing agreement with OX2
Engine  (Distribution) Ltd. ("OX2"),  pursuant to which we 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). OX2
licensed  the  technology  from  OX2  Intellectual  Property,  Inc.,  a  foreign
corporation  that was assigned the technology  from the original patent holders.
The  sub-license  was for the  longer of (1) life of the  patent  or (2)  twenty
years.  In May 1999, we acquired the worldwide  patent rights for the OX2 engine
from OX2 in exchange for $1.5 million.  We will take  responsibility  for patent
maintenance and for future research and development on the engine.

         We have spent  $1,341,376  for the fiscal  year ended June 30, 2000 and
$525,  000 for the fiscal year ended June 30, 1999, on research and  development
for the OX2 engine.  On July 15, 1998, we entered into a joint venture agreement

                                      -1-
<PAGE>

with Carroll Shelby, our president, to further develop the OX2 engine for use in
a standard  application  for motor  vehicles  and  promote the OX2 engine to the
automotive industry.

         Our Product

         At the present  time only a prototype  of the OX2  internal  combustion
engine,  plus additional  parts which can be used for engine  development or for
the building of additional prototypes, have been built. No OX2 engines have been
manufactured  for  production  use, and no  assurance  can be given that the OX2
engine will be successfully developed or manufactured.

         The OX2 engine prototype is designed to be fuel efficient, lightweight,
low-emission,  multi-fueled,  and smaller and more inexpensive than conventional
internal  combustion  engines. We also believe that it will not have the complex
manufacture/production requirements of conventional internal combustion engines.

         The OX2 engine prototype is designed to have only six major components,
of which only three move.  We believe  this design will result in low set-up and
production  costs and  simplicity  of design  that will  promote a high level of
quality assurance.

         The major parts of the engine prototype are: (1) housing,  (2) cylinder
block,  (3) top piston  plate,  (4) lower piston plate,  (5) cam track,  and (6)
drive shaft. The moving parts are: (1) cylinder block, (2) top piston plate, and
(3) lower piston plate.

         We expect the OX2 engine, once completed,  will have several advantages
over a four stroke conventional engine. Some of these advantages are expected to
include:

         o  The OX2 engine prototype has only six major components, which should
            result in lower set-up and production and manufacturing costs than a
            typical conventional engine.

         o  We believe the OX2 engine prototype to have greater effective engine
            capacity than a typical conventional engine.

         o  The OX2 engine  prototype  does not use a  conventional  crankshaft,
            which we believe will result in a leverage  advantage over a typical
            conventional engine.

         o  The OX2  engine  prototype  design  should  enable  the timing to be
            adjusted,   which  will  produce  a  more   effective  burn  on  the
            combustible fuel being used.

         o  The OX2 engine  prototype's  piston  speed  should  remain  constant
            throughout the entire power stroke,  thus allowing  exhaust gases to
            be more efficiently expelled than a typical conventional engine.

         In  the  short  term,  our  plans  are to  complete  the  research  and
development  of the OX2  engine  in  order  to  prepare  it for  production  and
marketing.  We currently have an agreement with Steven Manthey,  the inventor of
the OX2 engine,  which  provides  that Mr.  Manthey will continue to develop and

                                      -2-
<PAGE>

maintain the OX2 engine  prototype.  We have an agreement with the University of
California, Riverside ("UCR"), which provides that they will continue to conduct
research and development on the OX2 engine  prototype,  in conjunction  with us.
The research and development at UCR is being conducted under the guidance of Dr.
Joseph  Norbeck  (of  the  CE-CERT  program  at the  University  of  California,
Riverside)  and  Dr.  Roberta  Nichols,  one of  our  consultants.  We are  also
conducting research and development activities in Gardena, California.

         Marketing

         Assuming the  completion  of the  necessary  research  and  development
required to complete  our product,  and assuming the tests of our OX2  prototype
are successful, we will attempt to introduce the OX2 engine into the market. The
total size of the internal  combustion engine industry makes the introduction of
any significant change to industry standards a complex promotional and marketing
exercise.  We believe the multi-purpose  nature of the OX2 engine should make it
compatible to several different market applications.

         Upon completion of the OX2 engine, we expect,  initially,  to market it
to specialist engine  manufacturers who produce  stationary  engines.  We expect
that sub-licenses allowing the manufacture of OX2 engines, will be granted by us
only to a limited  number of engine  manufacturers,  to achieve a manageable and
controlled market introduction.

         Sources of Income

         We expect to  generate  income in two ways:  (1) we expect to receive a
licensing fee from approved manufacturers in return for the right to produce and
sell the OX2 engine;  license  fees will be  determined  by  territory  size and
market potential; and (2) we expect to receive a royalty payment for each engine
produced and sold.  We expect  royalty  payments  will be  determined  by engine
capacity and application.

         Patents

         We have been granted a U.S.  patent for an Axial Piston  Rotary  Engine
(U.S.  Patent No.  5,813,372).  We have filed a patent  application for an Axial
Piston Rotary Engine in Australia  (No.  PCT/AU95/00815).  In addition,  we have
patent applications pending in countries throughout the world.

         Employees

         We have one employee,  our president.  We are currently  evaluating the
need to hire additional  employees to assist in the daily  operations and market
placement of our product.  We also engage consultants who receive fees for their
consulting services.

         Other Agreements

         In June  1999,  we agreed to grant  1,000,000  shares of the  Company's
common stock  ("Shares") to the University of California  Riverside  Foundation.
The stock is to be issued in five annual  installments  of 200,000  Shares each.
Two  installments  have been granted,  one in July,  1999 and the other in July,
2000,  for a total of  400,000  Shares.  The Shares  were  donated to provide an

                                      -3-
<PAGE>

endowment  for  research  funds  for  the  College  of  Engineering-Center   for
Environmental  Research and  Technology.  This  donation is  independent  of the
relationship  between Advanced Engine  Technologies  Inc., and the University of
California, Riverside for research and development of the OX2 engine.

         Risk Factors

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

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

o    A market for our OX2 engine may take longer to develop than  anticipated or
     may never develop, which would adversely affect revenues and profitability.
     Our OX2 engine  represents  an  innovation  in the  industry  for  internal
     combustion  engines.  The size 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  assurance  that we will be  successful  with our marketing
     efforts or the development of our joint ventures.

o    Our cash 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 2001
     with our  current  cash  reserves,  which  were  obtained  from the sale of
     securities.  However,  our cost estimates do not include provisions for any
     contingencies, unexpected expenses or increases in costs that may arise.

o    We may not be able to raise the capital we need.  It is likely that we will
     need to raise additional capital at some point in the future. If additional
     funds  are  raised  through  the  issuance  of  equity,  our  shareholders'
     ownership  will be  diluted.  There  can be no  assurance  that  additional

                                      -4-
<PAGE>

     financing  will be available on terms  favorable to us, or at all. If funds
     are not  available or are not  available on terms  acceptable to us, we may
     not be able to continue  the  development  of our  product,  respond to our
     competitors or continue our business.

o    Our business depends on the protection of our intellectual property and may
     suffer if we are unable to adequately  protect our  intellectual  property.
     The  success of our  business  depends on our ability to patent our engine.
     Currently,  we have been granted one U.S. Patent for an Axial Piston Rotary
     Engine.  We have one patent  application  pending in Australia for an Axial
     Piston Rotary Engine. We also have patent applications pending in 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
     assurance  that  our  patent  will  not  be  invalidated,  circumvented  or
     challenged,  that  the  rights  granted  under  the  patents  will  give us
     competitive advantages or that our patent applications will be granted.

o    If we are found to infringe on the intellectual  property rights of others,
     we may  not be able to  continue  the  development  and  production  of our
     engine,  or we  may  have  to  enter  into  costly  license  or  settlement
     agreements.  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
     could  require  us to  develop  non-infringing  technology  or  enter  into
     royalty,  licensing or settlement agreements.  These agreements could be on
     terms  unfavorable or unacceptable to us and could  significantly  harm the
     development of our product, and ultimately, our business. In the future, we
     may also have to enforce our patent and other intellectual  property rights
     through  litigation.  Any such enforcement could also result in substantial
     costs and could materially affect our financial condition and our business.

o    Our  business  is  dependent  on  our  relationships  with  other  parties.
     Research,  development  and  testing of our engine is being  carried out in
     conjunction  with UCR. Steven  Manthey,  the inventor of the engine is also
     actively  participating  in the research and development.  In addition,  we
     have a joint venture  agreement with Carroll Shelby, to further develop and
     promote our engine. Completion of the research,  development and testing is
     essential to the success of our business. Until such testing,  research and
     development  has been  completed,  we will not have a  finished  product to
     introduce to the market.  Thus, if we are unable maintain our relationships
     with UCR, Steven Manthey and Carroll Shelby, our business will be adversely
     affected.

o    We have a history of losses. We have a history of operating losses,  and an
     accumulated  deficit,  as of June 30, 2000, of  $3,546,906.  Our ability to
     generate  revenues  and  profits is subject to the risks and  uncertainties
     encountered by development stage companies.

o    Our future revenues and profitability are  unpredictable.  We are 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   assurance  that  management  will  be  successful  in
     negotiating such contracts.

                                      -5-
<PAGE>

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

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

o    Our principal  stockholders  can exercise  significant  control over us and
     could limit the ability of our other  stockholders to influence the outcome
     of  transactions   requiring   shareholder  vote.  As  of  June  30,  2000,
     approximately 65% of our outstanding common stock is owned by our executive
     officers,  directors and principal  stockholders.  These  stockholders will
     have the ability to exercise  influence over all matters requiring approval
     by our  stockholders,  including  the election of directors and approval of
     significant corporate transactions.

Item 2.           Description of Property

         We lease office space for our  headquarters in Los Angeles,  California
and work space for engine development in Gardena, California.

Item 3.           Legal Proceedings

         There are two pending lawsuits that name us as a defendant.  One action
was filed in the State of New Mexico  and the other in the state of  California.
Both  actions  have been filed by the Estate of Paul Ebbage (the  "Estate")  and
concern the Estate's  beneficial  entitlement  to a percentage of Shares,  which
were originally  issued to OX2 ("Disputed  Shares").  Neither lawsuit alleges or
seeks  to  recover  any  monetary  damages  from  us.  We  are  a  disinterested
stakeholder as to the Disputed  Shares,  which we will deposit with the Superior
Court of Los Angeles so the court can then  determine  who  rightfully  owns the
Disputed  Shares as between the plaintiff and the named  defendants  (other than
us). The two lawsuits are:

         1) Raymond J. Ebbage,  as executor of the Estate of Paul Gerrard Ebbage
            v. Steven  Charles  Manthey,  et.al.  Superior Court of the State of
            California, County of Los Angeles, No. BC 232758.

         2) Raymond J. Ebbage,  as executor of the Estate of Paul Gerrard Ebbage
            v. Steven Charles Manthey,  et.al. Second Judicial District,  County
            of Bernalillo, State of New Mexico, CV No. 2000-02628.

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

         Not applicable


                                      -6-
<PAGE>


                                     Part II

Item 5.           Market for common equity and related stockholder matters

         Since the first  quarter of 1998,  our  Common  Stock has traded in the
over-the-counter  market and has been quoted on the Bulletin Board of the NASDAQ
under the symbol: AENG.

         Set  forth  below are the range of  prices  by  quarter  since  trading
commenced.

                                    High                     Low
                                    ----                     ---

July-September 1997                 7 1/2                    1 3/4
October-December 1997               29 1/4                   6 1/2
January-March 1998                  21                       7 1/2
April-June 1998                     26 7/8                   6 3/4
July-September 1998                 17 1/2                   7 3/4
October-December 1998               9 5/8                    4 7/8
January-March 1999                  9 3/4                    5 1/8
April-June 1999                     8                        5 1/8
July-September 1999                 14 7/8                   4 1/2
October-December 1999               4 1/2                    2
January-March 2000                  4/78                     3
April-June 2000                     3 1/4                    2 1/8

         As of June 30, 2000, we had 290 shareholders of record.

         We have not paid any dividends  since  inception.  We do not anticipate
paying any dividends in the future even if we were to have earnings.

Item 6.           Management's Discussion and Analysis or Plan of Operation

         We plan to continue the development of prototypes and marketing  during
the 2001 fiscal year. The planned  activities  include:  (1)  demonstrations  to
prospective   original  equipment   manufacturers  of  products  using  internal
combustion engines; (2) work with our joint venture partners and shareholders to
continue  the  development,  in the shorter  term,  of an engine for  stationary
generator  applications  and, in the longer  term,  of an engine for  automobile
and/or  aircraft  applications;  and (3) the  development  of  additional  joint
venture partners to market the engine. While prototypes of the OX2 engine exist,
there can be no assurance  that we will be successful in our marketing  efforts,
the  development  of our joint  ventures or in the ultimate  development  of the
engine for commercial applications.

         We expect that our cash flow requirements to fund general operations in
2001 will total  approximately  $750,000  including outside  consulting fees and
expenditures  for  equipment.  We  expect  to fund  these  costs  with  our cash
reserves,  which were  $1,026,990 as of June 30, 2000. Our cost estimates do not
include  provisions for any contingencies or unexpected  expenses that may arise

                                      -7-
<PAGE>

or any unanticipated  increases in costs. As a result, our cash reserves may not
be adequate to cover the actual costs of  operations in the 2001 fiscal year, in
which event we will be required to raise  additional  capital.  Historically  we
have obtained cash through private placements of securities.

         Our net loss since  inception  (September 23, 1996) is $3,546,906.  Our
net loss for the 2000 Fiscal Year is $2,170,657.

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


                                      -8-
<PAGE>

Item 7. Financial Statements

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





                                    CONTENTS

                                                                      Page

INDEPENDENT AUDITORS' REPORT                                            9

FINANCIAL STATEMENTS

               Balance Sheet                                            10

               Statements of Operations                                 11

               Statements of Stockholders' Equity                       12

               Statements of Cash Flows                                 14

               Notes to Financial Statements                            15



                                      -8-
<PAGE>

NEFF & RICCI LLP
____________________________

CERTIFIED PUBLIC ACCOUNTANTS
7001 PROSPECT PLACE NE
ALBUQUERQUE, NM  87110



                          Independent Auditors' Report

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


We have audited the accompanying  balance sheet of Advanced Engine Technologies,
Inc.  (a  development  stage  company)  as of June  30,  2000,  and the  related
statements of  operations,  stockholders'  equity,  and cash flows for the years
ended  June 30,  2000 and 1999,  and for the  period  from  September  23,  1996
(inception)   through  June  30,  2000.  These  financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial  statements.  An audit also include
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion the financial statements referred to above present fairly, in all
material respects, the financial position of Advanced Engine Technologies,  Inc.
as of June 30, 2000 and the results of its operations and its cash flows for the
years ended June 30, 2000 and 1999,  and for the period from September 23, 1996,
(inception) to June 30, 2000, in conformity with generally  accepted  accounting
principles.



/s/ Neff & Ricci, LLP
-----------------------
Albuquerque, New Mexico
September 20, 2000


                                     -9-
<PAGE>

ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
June 30, 2000

ASSETS

Current Assets

    Cash and cash equivalents                                   $  1,026,990
    Prepaid expenses                                                  22,768
    Due from related party                                            26,000
                                                                ------------
           Total current assets                                    1,075,758
                                                                ------------

Fixed Assets

    Automobile                                                        10,000
    Furniture                                                         12,242
    Computer equipment                                                44,156
    Manufacturing equipment and tooling                               67,922
    Less accumulated depreciation                                    (46,636)
                                                                ------------
           Total fixed assets                                         87,684
                                                                ------------

Other Assets

    Patent rights, net of accumulated
        amortization of $177,353                                   1,344,365
    Patent, copyrights and designs, net of
        accumulated amortization of $13,854                           29,896
                                                                ------------
           Total other assets                                      1,374,261
                                                                ------------

           Total assets                                         $  2,537,703
                                                                ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

    Accounts payable                                            $    115,359
    Accrued payroll                                                    5,000
                                                                ------------
           Total current liabilities                                 120,359
                                                                ------------

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                                     5,941,300
    Deficit accumulated during the development stage              (3,546,906)
                                                                ------------
           Total stockholders' equity                              2,417,344
                                                                ------------

Total liabilities and stockholders' equity                      $  2,537,703
                                                                ============

See Notes to Financial Statements.


                                         -10-
<PAGE>



ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Years Ended June 30, 2000 and 1999 and the
Period From September 23, 1996 (Inception)
Through June 30, 2000

                                                                      9/23/96
                                                                    (Inception)
                                                                      Through

                                          2000           1999         6/30/00

Operating expenses                   $     899,985       400,161     1,798,430

Research and development expenses        1,341,376       525,000     1,866,376
                                     -----------------------------------------

Loss from operations                    (2,241,361)     (925,161)   (3,664,806)

Interest   income                           70,704        22,780       117,900
                                     -----------------------------------------

Net loss                             $  (2,170,657)     (902,381)   (3,546,906)
                                     =========================================

Basic net loss per share             $        (.10)         (.04)         (.17)
                                     =========================================

Weighted average number of common
    shares outstanding                  22,787,500    21,947,500    21,364,237
                                     =========================================


See Notes to Financial Statements.



                                      -11-

<PAGE>

ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT  STAGE COMPANY)
STATEMENTS OF  STOCKHOLDERS'  EQUITY
Years Ended June 30, 2000 and 1999
Period From September 23, 1996 (Inception)
Through June 30, 2000
<TABLE>
<CAPTION>

                                                                         (Deficit)
                                                                        Accumulated
                                     Common Stock         Additional    During the
                                -----------------------     Paid-in     Development
                                  Shares       Amount       Capital        Stage         Total
<S>                             <C>          <C>             <C>          <C>            <C>
Issuance of common stock
    to parent corporation for
    license rights              20,000,000   $   20,000      (18,000)         --           2,000

Issuance of common stock
    for services                   600,000          600        5,400          --           6,000

Issuance of common stock
    for cash                       499,200          499      498,701          --         499,200

Net loss                              --           --           --        (164,233)     (164,233)
                                ----------------------------------------------------------------

Balance, June 30, 1997          21,099,200       21,099      486,101      (164,233)      342,967

Issuance of common stock
    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

Issuance of stock for assets
    and services                   325,000          325      568,425          --         568,750

Issuance of common stock
    for cash                       400,000          400    1,999,600          --       2,000,000

Net loss                              --           --           --        (902,381)     (902,381)
                                ----------------------------------------------------------------

Balance, June 30, 1999          22,325,000       22,325    3,554,425    (1,376,249)    2,200,501
                                ----------------------------------------------------------------

</TABLE>

See Notes to Financial Statements.


                                      -12-
<PAGE>

ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)
Period From September 23, 1996 (Inception)
Through June 30, 2000
<TABLE>
<CAPTION>

                                                                         (Deficit)
                                                                        Accumulated
                                     Common Stock         Additional    During the
                                -----------------------     Paid-in     Development
                                  Shares       Amount       Capital        Stage         Total
<S>                             <C>          <C>           <C>         <C>            <C>

Balance forward                 22,325,000   $   22,325    3,554,425   (1,376,249)    2,200,501

Issuance of stock

    for cash                       400,000          400    1,999,600           --     2,000,000

Issuance of stock for
    services                       225,000           25      387,275           --       387,500

Net loss                                --           --           --   (2,170,657)   (2,170,657)
                                ---------------------------------------------------------------

Balance June 30, 2000           22,950,000   $   22,950    5,941,300   (3,546,906)    2,417,344
                                ---------------------------------------------------------------

</TABLE>

See Notes to Financial Statements.

                                      -13-

<PAGE>

ADVANCED ENGINE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Years Ended June 30, 2000 and 1999
and the Period From September 23, 1996 (Inception)
Through June 30, 2000
<TABLE>
<CAPTION>
                                                                                 9/23/96
                                                                               (Inception)
                                                                                 Through

                                                  2000             1999          6/30/00
<S>                                            <C>               <C>           <C>
Reconciliation of net losses to net
  cash provided by operations:

        Net loss                               $(2,170,657)      (902,381)     (3,546,906)
        Depreciation and amortization              188,207         47,834         237,843
        Issuance of common stock for
           assets and services                     387,500        568,750         964,250
Changes in current assets and liabilities:
        Prepaid expenses                           (14,552)        (8,216)        (22,768)
        Due from related party                     (26,000)             -         (26,000)
        Accounts payable                           112,479        (28,402)        115,360
        Accrued payroll                              5,000              -           5,000
                                               ------------------------------------------
           Net cash flows used by
               operating activities             (1,518,023)      (322,415)     (2,273,221)
                                               -------------------------------------------

Cash flows from investing activities:

        Fixed asset purchases                      (16,782)       (95,757)       (134,321)
        Intangible asset purchases                       -     (1,565,468)     (1,565,468)
                                               ------------------------------------------
           Net cash flows used by
               investing activities                (16,782)    (1,661,225)     (1,699,789)
                                               ------------------------------------------

Cash flows from financing activities:

        Issuance of common stock                 2,000,000      2,000,000       5,000,000
        Loan proceeds                                    -              -          50,000
        Loan payments                                    -              -        (500,000)
                                               ------------------------------------------
           Net cash flows provided by
               financing activities              2,000,000      2,000,000       5,000,000
                                               ------------------------------------------

Net increase in cash                               465,195         16,360       1,026,990

Cash at beginning of period                        561,795        545,435               -
                                               ------------------------------------------

Cash at end of period                          $ 1,026,990        561,795       1,026,990
                                               ==========================================

</TABLE>

See Notes to Financial Statements.

                                      -14-
<PAGE>


ADVANCED ENGINE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS

June 30, 2000

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, 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.

A dispute has arisen related to the shares originally owned by OX2. As a result,
two lawsuits  were filed which  included  the Company as a defendant.  The suits
seek to have the  disputed  shares  surrendered  to the  Company  and the  stock
records  amended to reflect  OX2 as the  beneficial  owner of these  shares.  In
August 2000,  the Company  accepted the  surrender of  10,713,238  shares of its
common stock which it subsequently  deposited with the court.  As a result,  the
Company's legal counsel expects the Company to be dismissed from the litigation.

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 June 30, 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.


                                      -15-
<PAGE>

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 and other securities.

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 $174,500 from  September 23, 1996  (inception) to
June 30, 1999,  including  $84,249 for the year ended June 30, 2000,  and $1,895
for the year ended June 30, 1999.

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.


                                     -16-
<PAGE>


NOTE 3.  RELATED PARTY TRANSACTIONS

The  Company  paid  consulting  fees  to its  former  President,  who is  also a
shareholder  and former  director,  in the amount of $290,303 from September 23,
1996 (inception) to June 30, 2000 including  $82,505 for the year ended June 30,
1999, and $79,100 for the year ended June 30, 2000.

The Company paid  administrative  fees and reimbursed expenses to a company that
is owned by one of its shareholders in the amount of $101,570 from September 23,
1996 (inception) to June 30, 2000 including  $31,293 for the year ended June 30,
1999, and $51,560 for the year ended June 30, 2000.

The Company has paid research and development  costs and rent to a company owned
by its current  President  in the amount of  $124,437  from  September  23, 1996
(inception)  to June 30,  2000,  including  $124,437 for the year ended June 30,
2000.  Also,  starting  in May  2000,  monthly  salary  of $5,000 is paid to the
President, who is also a shareholder and director.

The Company has paid legal fees and reimbursed  expenses,  including  rent, to a
company that is owned by its  Secretary/Treasurer in the amount of $187,985 from
September 23, 1996,  (inception)  to June 30, 2000,  including  $187,985 for the
year ended June 30, 2000.

The Company  has paid for  services to a company  that is a  shareholder  in the
amount of  $71,956  from  September  23,  1996,  (inception)  to June 30,  2000,
including $71,956 for the year ended June 30, 2000.

In May 2000, the Company paid engine development costs to an individual who is a
shareholder of OX2 in the amount of $300,000.

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



                                      -17-

<PAGE>


NOTE 3.  RELATED PARTY TRANSACTIONS (CONTINUED)

directors.  As of June 30, 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
patent maintenance and enforcement.

The Company has an outstanding  receivable from one of its  secretary/treasurer.
The receivable at June 30, 2000 is $26,000.

NOTE 4.  INCOME TAXES

At June 30, 2000 the Company had deferred tax assets  amounting to approximately
$1,350,000.  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 $842,000 and $328,000 for the year ended June 30, 2000
and 1999,  respectively.  The net change is due primarily to the increase in net
operating loss carryforwards.

At  June  30,  2000,  the  Company  had  net  operating  loss  carryforwards  of
approximately  $3,500,000  available to offset future state and federal  taxable
income. These carryforwards will expire in 2017 to 2020 for federal tax purposes
and at various times 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


                                      -18-

<PAGE>


NOTE 5.  COMMON STOCK (CONTINUED)

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 and became President.

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.

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 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.

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 research and development expense.

NOTE 6.  SUBSEQUENT EVENTS

In August 2000, the Company entered into a subscription agreement with a current
shareholder  to issue 10  million  shares at one  dollar  per share in a private
placement.

Also in August  2000,  the Company  adopted a stock  option plan and  reserved 5
million shares for the plan.


                                      -19-
<PAGE>



Item 8.           Changes in and Disagreements with Accountants

         None

                                      -20-
<PAGE>


                                    Part III

Item 9.           Directors, Executive Officers, Promoters and Control Persons

         Set forth below are the names and ages of all  directors  and executive
officers of the Company.

Name                                  Age                   Position
----                                  ---                   --------
Carroll Shelby                        76                    President
George Hunt                           70                    Director
Noel Holmes                           51                    Director
Alexandria Phillips                   52                    Director
M. Neil Cummings                      49                    Secretary/Treasurer


         Carroll Shelby - President

         Carroll Shelby has over 50 years of successful experience in the engine
industries.  He has been inducted  into a number of automotive  related Halls of
Fame. Mr. Shelby has been our president since May 2000.

         Mr. Shelby is a Founder and Director of:

                  Shelby American, Inc
                  Carroll Shelby Licensing, Inc.
                  Shelby Technologies
                  Carroll Shelby Enterprises
                  Carroll Shelby Children's Foundation
                  International Chili Society

         M. Neil Cummings- Secretary/Treasurer

         M.  Neil  Cummings  has  been  a  practicing  lawyer  in the  State  of
California  since 1977,  and was a partner for many years in the Los Angeles law
firm of Walker, Wright, Tyler & Ward. In July of 1995, Mr. Cummings founded, and
is currently the owner and president of, M. Neil Cummings and Associates,  a law
firm that focuses on the area of business law, with an emphasis on licensing and
intellectual  property in the  context of existing as well as emerging  modes of
ground  transportation.  Mr. Cummings has been our secretary and treasurer since
1999.

         George Hunt - Director

         George  Hunt has 36 years of  experience  in the marine  industry as an
agent and supplier of related  equipment,  products and  services.  In 1972,  he
established Sterling Marine, a Colorado company, gradually building the business
to four marine sales and service locations in the United States, and having been
recognized by Bayliner for multimillion-dollar sales achievements.  Mr. Hunt has
been one of our directors since 1997.

                                      -21-
<PAGE>

         Alexandria Phillips-Director

         Alexandria  Phillips brings to AET her years of wide ranging experience
and  expertise as a tax advisor and  financial  consultant to Robert E. Petersen
and  entities  controlled  by Mr.  Petersen.  Ms.  Phillips  resides in Southern
California, and has been one of our directors since 1999.

         Noel Holmes - Director

         Mr. Holmes is a native of Australia,  but spends a good deal of time in
Southern  California,  while  maintaining a diverse  international  business and
accounting practice. Mr. Holmes has been one of our directors since 1999.

         Section 16(a) Beneficial Ownership Reporting Compliance

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires that our officers and directors,  and persons who beneficially own more
than ten percent of our common  stock,  file reports of ownership and changes in
ownership  with the  commission.  These  reporting  persons are also required to
furnish us with copies of all Section 16(a) forms they file.  To our  knowledge,
based solely on our internal  review of the reports we believe  should have been
filed,  we believe that none of the Section 16(a)  reporting  requirements  were
complied with during the fiscal year ended June 30, 2000.

Item 10. Executive Compensation

         We paid consulting fees to our former  President,  Murray Bailey who is
also a shareholder,  in the amount of $79,100 for the fiscal year ended June 30,
2000. In addition, we pay a salary of $5,000 per month to our current president,
Carroll  Shelby.  Our board of directors has approved a stock incentive plan. No
awards have been granted under this plan.

                                      -22-
<PAGE>


Item 11. Security Ownership of Certain Beneficial Owners and Management

         The following  table sets forth  information as of June 30, 2000,  with
respect to all shareholders  known by us to be beneficial owners of more than 5%
of the outstanding common stock of the Company, all directors, and all directors
and executive  officers as a group.  Except as noted below, each shareholder has
sole voting and investment power with respect to shares owned.

Name & Address                        Number Of Common
of Beneficial Owner                   Shares Beneficially Owned     Percent*
-------------------                   -------------------------     --------

Robert/Margaret Petersen                   2,445,534                 10.56%
6420 Wilshire Blvd./20th Floor
Los Angeles, CA.  90048

OX2 Engine (Distribution) Pty. Ltd.        10,963,238                47.35%***
1-2 Greg Chappell Road
Burleigh Heads
Queensland, Australia, 4220

Macro Management Group, Ltd.               1,179,820                  5.1%
Windsor House 2nd Floor
Kummel Highway
Port Vila, Vanuatu

Carroll Shelby                             360,000                    1.55%
c/o Advanced Engine Technologies, Inc.
11150 W. Olympic Blvd. Suite 1020
Los Angeles, CA  90064

George Hunt                                87,000**                   0.38%
906 Holly
Sterling, Colorado 80751

M. Neil Cummings                           1,402                      0.006%
c/o Advanced Engine Technologies, Inc.
11150 W. Olympic Blvd. Suite 1020
Los Angeles, CA  90064

*Based upon 23,150,000 shares outstanding.  Does not include 250,000 shares that
may be issued to Carroll Shelby in connection with the joint venture agreement.

**These  shares are owned by Cecil L. Hunt,  wife of George  Hunt who  disclaims
beneficial ownership.

***The ownership of these shares is disputed, and such dispute is the subject of
the lawsuit between the Estate of Paul Ebbage and Steven Manthey. The shares are
beneficially  owned  by OX2  Engine  (Distribution)  Pty.  Ltd,  but  have  been
deposited  with the registry of the court in Los Angeles in the name of Advanced
Engine Technologies, Inc., pending the outcome of a lawsuit between the parties.

                                      -23-
<PAGE>


Item 12. Certain Relationships and Related Transactions

         We have paid research and development costs and rent to a company owned
by Carroll  Shelby in the amount  $124,437 for the year ended June 30, 2000.  In
addition,  we will pay (beginning in May 2000) a monthly salary of $5,000 to Mr.
Shelby, who is also a shareholder and director.

         We have paid legal fees and reimbursed  expenses,  including rent, to a
company that is owned by our  Secretary/Treasurer,  Neil Cummings, in the amount
of $187,985 for the fiscal year ended June 30, 2000.

         In May 2000, we paid engine development costs to Steven Manthey, who is
a shareholder of OX2, in the amount of $300,000.

         As of June 30, 2000, we have an outstanding receivable of $26,000, from
a company  owned by Neil  Cummings,  our  Secretary/Treasurer,  to reimburse Mr.
Cummings' company for the build-out of office space.

         On July 15,  1998,  we  entered  into a joint  venture  agreement  with
Carroll Shelby,  our president,  to develop the OX2 engine for use in a standard
application  for motor  vehicles and to promote the OX2 engine to the automotive
industry.  The agreement will expire on December 31, 2001.  Mr. Shelby  received
300,000  Shares for the initial  joint  venture  agreement  and will  receive an
additional  250,000  Shares if the objective of the joint  venture  agreement is
obtained.

                                      -24-
<PAGE>


Item 13. Exhibits, List and Reports;  Reports on 8-K

          Exhibits

            EXHIBIT NO.     TITLE
            -----------     -----

     (1)            3.1     Certificate of Incorporation of Advanced Engine
                            Technologies, Inc.
     (1)            3.2     Bylaws of Advanced Engine Technologies, Inc.
       *            4.1     Advanced Engine Technologies, Inc. 2000 Stock
                            Incentive Plan
     (1)           10.1     Cancellation of 19,000,000 Share Issuance
                   10.2     Deed of Agreement Concerning the Patents, Licensing
                            and Research and Development in Relation to the OX2
                            Engine, dated as of May 12, 1999
     (1)           10.3     Joint Venture with Carroll Shelby, dated
                            July 15, 1998
       *           10.4     Agreement with Steven Charles Manthey, dated as of
                            May 23, 2000.
       *           10.5     Release Agreement between Steven Charles Manthey,
                            Advanced Engine Technology Pty. Ltd. and Advanced
                            Engine Technologies, Inc., dated as of May 23, 2000

      (*) Filed herewith

      (1) Incorporated herein by reference from the Company's previous filings

               Reports on Form 8K

                        None


                                      -25-
<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

Date:                             June 30, 2000
        ------------------------------------------------------------------------


By:                             /s/ Neil Cummings
         -----------------------------------------------------------------------
                       Neil Cummings, Treasurer/Secretary

Date:                            June 30, 2000
        ------------------------------------------------------------------------


In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

By:                              /s/ George Hunt
        ------------------------------------------------------------------------
                              George Hunt, Director

Date:                             June 30, 2000
        ------------------------------------------------------------------------

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

By:                             /s/ Noel Holmes
        ------------------------------------------------------------------------
                              Noel Holmes, Director

Date:                             June 30, 2000
        ------------------------------------------------------------------------




                                      -26-
<PAGE>