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

                                   FORM 10-KSB

(Mark One)

[ x ] ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES  EXCHANGE
ACT OF 1934

         FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004


[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

         For the transition period from ____________ to _____________.


         Commission File Number 0-27689


                       AVIATION UPGRADE TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


            Nevada                                       33-0881303
--------------------------------------------------------------------------------
(State or other jurisdiction of               (IRS Employer Identification No.)
 incorporation or organization)



                6550 South Pecos Road, Suite 142, Las Vegas, NV 89120 USA
--------------------------------------------------------------------------------
                        (Address of principal executive offices)


                                 (702) 450-0003
                                 --------------
                          (Issuer's telephone number)


Securities registered pursuant to Section 12(b) of the Act:

 Title of each class                  Name of each exchange on which registered

    Common stock                                        None
--------------------------------    --------------------------------------------


Securities registered pursuant to Section 12(g) of the Act:

                                  Common stock
--------------------------------------------------------------------------------
                                (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 of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
As been subject to such filing requirements for the past 90 days.

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

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 not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

The issuer's revenue for the fiscal year ended December 31, 2004 was $77,994.

The aggregate market value of the voting stock held by non-affiliates of the
issuer as of March 28, 2005 was $0.

The number of shares of the common stock outstanding as of March 28, 2004 was
11,457,750



                      DOCUMENTS INCORPORATED BY REFERENCE:

                                  Inapplicable



            TRADITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE)

                               YES _____ NO ___X__




                                       1
<PAGE>



PART 1

         Aviation Upgrade Technologies, Inc., a Nevada corporation ("Company,"
"we," or "AUT"), filed a Registration Statement on Form 10-SB on December 2,
1999. On February 1, 2000, our Registration Statement on Form 10-SB was declared
effective and we became a reporting company pursuant to the Securities Exchange
Act of 1934. We did not file any periodic reports or other information with the
Securities and Exchange Commission until March 2001, at which time, we filed all
delinquent quarterly and annual reports for the year ended December 31, 2000
concurrently. We have filed all quarterly reports for the years ended December
31, 2001, 2002, 2003 and 2004 on a timely basis.

ITEM 1.  DESCRIPTION OF BUSINESS

         BUSINESS DEVELOPMENT. We were incorporated in Nevada on January 8,
1999. We had our first orders of our Air Alert Valve Cap product during the
second half of 2004 and earned $77,994 in revenue for the year. There has not
been any bankruptcy filing, receivership or any similar proceeding since our
inception. There has been no reclassification, merger or consolidation since our
inception. There has been no purchase or sale of a significant amount of assets
that were not in the ordinary course of our business.

         In April 2001, we signed a licensing agreement with Torbjorn Lundqvist
our founder and majority shareholder, for the worldwide marketing rights for an
electronic tire valve cap that may be used on airplanes but was designed
primarily for automobiles. The product provides early warning of low pressure in
tires, which we believe will lead to safer travel in these vehicles and better
fuel efficiency in automobiles. Once the tire is inflated to the appropriate
pressure, the initial tightening of the cap onto the valve stem makes the valve
cap memorize the tire pressure. If the pressure in the tire drops by more than
approximately four pounds per square inch, a red LED light will blink to
indicate the need to check the tire pressure. The licensing agreement calls for
the reimbursement of research and development costs incurred by its founder and
the payment of ongoing costs during the term of the agreement.


         PRODUCTS. Air Alert Valve Cap. We currently license the marketing
rights for an electronic tire valve cap that may be used on both airplanes and
automobiles. The product provides early warning of low pressure in tires, which
we believe will lead to safer travel in these vehicles and better fuel
efficiency in automobiles. Once the tire is inflated to the appropriate
pressure, the initial tightening of the cap onto the valve stem makes the valve
cap memorize the tire pressure. If the pressure in the tire drops by more than
approximately four pounds per square inch, a red LED light will blink to
indicate the need to check the tire pressure. We shipped our first orders of the
Air Alert Valve Cap during the second half of 2004.

                  AIR ALERT VALVE STEM. We are currently developing a new
product called the Air Alert Valve Stem. We are using the same technology as the
Air Alert Valve Cap but the components are baked into a valve stem designed for
today's tubeless tires. We have showed the product at a trade show in Las Vegas
and we had good response primarily from tire and automotive dealers. This
product is anticipated to be released in 2006.

         MANUFACTURING. After careful evaluation of several contract
manufacturers we have entered into a contract with Union Power Information Ind.
Co., LTD in the City of Shenzhen in China. Union Power has the capability of
producing up to several million Air Alert Valve Caps and Air Alert Valve Stems
each month. Union Power has manufactured all sales made during 2004.

         MARKETING. We believe that our initial primary target market will
consist of large fleet operators with a secondary focus on tire dealers. We
believe that the potential market for the tire valve cap is extremely large. The
requirement for a warning system to detect tire pressure is currently under
consideration in the automobile industry. On October 10, 2000, Congress passed
the Transportation Recall Enhancement, Accountability and Documentation Act,
which specified that legislation would be developed concerning a low tire
pressure warning for motor vehicles. We believe that the valve cap technology
could become standard equipment on all new low end vehicles sold in the United
States and all over the industrialized world in the years ahead, in addition to
being added to existing and replacement tires.

         GOVERNMENT REGULATION. The following does not purport to be a summary
of all present and proposed federal, state and local regulations and legislation
relating to the automobile industry. The following attempts to identify those
aspects that could affect our business. Other existing legislation and
regulation and, in many jurisdictions, state and local franchise requirements,
are currently the subject of a variety of judicial proceedings, legislative
hearings and administrative and legislative proposals which could also affect
our method of operation or the methods of industries in which we are involved.



                                       2
<PAGE>

         The Department of Transportation, the National Highway Traffic Safety
Administration and other regulatory and administrative agencies have established
standards for automotive and tire products and processes, which require the
maintenance of certain records and provide for unscheduled inspections of
facilities. Our products may be considered within the scope of such regulation
and in such event, we will have to comply with those agency standards. In
particular, the National Highway Traffic Safety Administration has established
standards regarding the shape, size, and performance requirements of warning
devices, as well as standards relating to tire manufacturing, maintenance and
repair.

         State, local and foreign governments have also adopted regulations
relating to the manufacture and marketing of automotive and tire products. We
cannot guarantee that our products will be in material compliance with all
applicable regulations, which could have a material adverse impact on our
business, financial conditions and results of operations. Any future violation
of, and the cost of compliance with, these laws and regulations could have a
material adverse effect on our business, financial condition and results of
operations.

         PATENTS. We do not presently own any patents, trademarks, concessions
or royalties. Our founder has obtained a US patent (US Patent No. 6,629,454 B2)
for the Air Alert Valve Cap and filings for patent protection have been made in
29 other countries. Patent protection for the Air Alert Valve Stem has also been
filed in 29 countries.

         We cannot guarantee, however, that any patents will be issued for the
Air Alert Valve Stem or that, if issued, the breadth or degree of protection of
these patents will be adequate to protect our interests. In addition, we cannot
guarantee that others will not independently develop substantially equivalent
proprietary information or obtain access to our know-how. Further, we cannot
guarantee that others will not be issued patents which may prevent the sale of
our products or require licensing and the payment of significant fees or
royalties by us in order for us to be able to carry on our business. Finally, we
cannot guarantee that the products of others will not infringe any patents
issued to or licensed by us. Defense and prosecution of patent claims can be
expensive and time consuming, even in those instances in which the outcome is
favorable to us. If the outcome is adverse, it could subject us to significant
liabilities to third parties, require us to obtain licenses from third parties
or require us to cease our marketing activities.

         COMPETITION. Competition for the electronic tire valve cap is limited.
To our knowledge, there are only a few mechanical tire valve caps on the market,
which are sold by several companies under different brand names. Our review and
testing of these products has indicated to us that they are unreliable and
inefficient due to their mechanical nature. We have not seen any product like
the Air Alert Valve Stem. Other solutions to the tire pressure problem facing
the industry are currently directed toward interior warning signals, which are
significantly more expensive than our tire valve cap and valve stem, and
therefore, not considered direct competition. We anticipate that we will compete
on the basis of the technical features, quality of our products and price.

         RESEARCH AND DEVELOPMENT. We are not currently conducting any research
and development activities, other than those activities related to the licensing
agreement for the electronic tire valve cap and valve stem. During the license
period and any renewal periods, we will pay fees, expenses and costs related to
product development and any application fees for patents and trademarks. We have
also issued 50,000 shares of common stock to one individual for efforts in
co-designing the valve cap product with Mr. Lundqvist and another 1,000 shares
of common stock to another individual for the name "Air Alert Valve Cap."

         INSURANCE. We are currently insured with an aggregate limit policy of
$2,000,000 of product liability insurance for the Air Alert Valve Cap.

         EMPLOYEES. We have one full time employee and two part time
directors/officers. Mr. Lundquist currently works for us on a full time basis.
Mr. Lindholm currently devotes approximately ten hours per week, but anticipates
that he will devote significantly more hours if the valve cap starts producing
significant revenues. Mr. Rhodes currently devotes approximately two hours per
week, but anticipates that he will devote significantly more hours if the valve
cap starts producing significant revenues. We anticipate that we will not hire
any employees in the next six months, unless we generate significant revenues.
We believe our future success depends in large part upon the continued service
of our key senior management personnel and our ability to attract and retain
managerial personnel.



                                       3
<PAGE>


ITEM 2.  DESCRIPTION OF PROPERTY

         Our corporate headquarters are located in Las Vegas, Nevada. We have
renewed that lease for office space for which we pay $350 per month. The lease
has a term of six months and expires on June 30, 2005 . It includes certain
amenities such as receptionist services and conference rooms. We do not
anticipate any difficulty in extending the term of our lease on substantially
the same terms as currently exists.


ITEM 3.  LEGAL PROCEEDINGS

         There are no legal actions pending against us nor are any legal actions
contemplated by us at this time:


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

         No matters were submitted for a vote of the stockholders at any time
during the fourth quarter of the year ended December 31, 2004.


PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our securities are not listed for trading on any exchange or quotation
service. We are not required to comply with the timely disclosure policies of
any exchange or quotation service. The requirements to which we would be subject
if our securities were so listed typically include the timely disclosure of a
material change or fact with respect to our affairs and the making of required
filings. We have not yet delivered an annual report to security holders for the
year ended December 31, 2004, however, we intend to provide an annual report to
our security holders which will include audited financial statements. All our
filings and reports are available through our web site at:
http://www.AviationUpgrade.com with a direct link to the SEC web site.

         We are a reporting company with the Securities and Exchange Commission.
The public may read and copy any materials filed with the Securities and
Exchange Commission at the Security and Exchange Commission's Public Reference
Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may also
obtain information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Securities and Exchange Commission. The address of that
site is http://www.sec.gov.

         As of March 28, 2005, there were 120 record holders of our common
stock.

         As of March 28, 2005, there were 150,000 outstanding warrants to
purchase shares of our common stock. Each warrant entitles the holder the right
to purchase an additional share of common stock at $2.00 per share. These
warrants expire seven years from the date of issuance.

         Most of the shares of our common stock are subject to Rule 144
promulgated pursuant to the Securities Act of 1933. Rule 144 provides, among
other things, that persons holding restricted securities for a period of one
year may each sell, assuming all of the conditions of Rule 144 are satisfied, in
brokerage transactions every three (3) months an amount of restricted securities
equal to one percent (1%) of our outstanding shares of common stock, or the
average weekly reported volume of trading during the four calendar weeks
preceding the filing of a notice of proposed sale, which ever is more. Rule 144
also provides that, after holding such securities for a period of two (2) years,
a non-affiliate of the company may sell those securities without restriction,
other than the requirement that we are current with respect to our information
reporting requirements.


                                       4
<PAGE>

         There have been no cash dividends declared on our common stock.
Dividends are declared at the sole discretion of our Board of Directors.

         RECENT SALES OF UNREGISTERED SECURITIES. During the fiscal year ended
December 31, 2004, we issued unregistered shares of our Common Stock in the
following transactions:

         During the three month period ended March 2004, outstanding warrants to
purchase 30,466 shares of common stock were exercised by the holders. The
warrants were issued as part of a Rule 506 Regulation D offering, exempt under
Section 4(2) of the Securities Act of 1933. No underwriter was involved in the
exercise of the warrants.

         On March 1, 2004, we entered into a Securities Purchase Agreement with
an accredited investor for the sale of 55,000 shares of common stock for cash
consideration of $50,000. These securities were issued under Section 4(2) of the
Securities Act of 1933. No underwriter was involved in the sale of these
securities.

         On April 26, 2004, we entered into a Securities Purchase Agreement with
an accredited investor for the sale of 20,000 shares of common stock for cash
consideration of $20,000. These securities were issued under Section 4(2) of the
Securities Act of 1933. No underwriter was involved in the sale of these
securities.

         During the three month period ended September 30, 2004, AUT entered
into Securities Purchase Agreements with various accredited investors for the
sale of 61,050 shares of common stock for cash consideration of $55,500. These
securities were issued under Section 4(2) of the Securities Act of 1933. No
underwriter was involved in the sale of these securities.

         During the three month period ended December 31, 2004, AUT entered into
Securities Purchase Agreements with various accredited investors for the sale of
28,875 shares of common stock for cash consideration of $26,250 and a stock
subscription of $750. These securities were issued under Section 4(2) of the
Securities Act of 1933. No underwriter was involved in the sale of these
securities.

         There are no compensation plans under which equity securities of the
Company are authorized for issuance.

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

         GENERAL. As of December 31, 2004, we have generated $77,994 in revenue
from the sale of our Air Alert Valve Cap product.

         In April 2001, we acquired from Torbjorn B. Lundqvist, our chief
executive officer and one of our directors, the marketing rights to an
electronic tire valve cap for airplanes and automobiles that blinks if the tire
pressure falls below an initially calibrated level. The product provides early
warning of low pressure in tires which we believe will lead to safer travel in
both these types of vehicles and better fuel efficiency in automobiles. Once the
tire is inflated to the appropriate pressure, the initial tightening of the cap
onto the valve stem makes the valve cap memorize the tire pressure. If the
pressure in the tire drops by more than approximately four pounds per square
inch, a red LED light will blink to indicate the need to check the tire
pressure. The licensing agreement has a term of five years and requires the
payment of a license fee equal to 12% of the monthly gross profit from sales of
the tire valve cap. It also requires the reimbursement of research and
development costs incurred by its founder and the payment of ongoing development
costs during the term of the agreement. In addition, it stipulates the issuance
of 50,000 shares of its common stock to one individual for efforts in
co-designing the product and 1,000 shares of common stock to another individual
for naming the product

         We are currently developing a new product called the Air Alert Valve
Stem. We are using the same technology and a lot of the same parts as in the Air
Alert Valve Cap but the components are baked into a valve stem designed for
today's tubeless tires. We have showed a mock up of the product at a trade show
in Las Vegas, and we had a positive response primarily from tire and automobile
dealers. This product is anticipated to be released during the latter part of
2004 and will be primarily marketed to tire and automobile dealers.

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004, COMPARED TO THE FISCAL YEAR ENDED
DECEMBER 31, 2003.

         LIQUIDITY AND CAPITAL RESOURCES. The cash on hand as of December 31,
2004 was $8,212, as compared to $3,986 as of December 31, 2003. We continue to
operate without any source of liquidity to pay our liabilities, which are
increasing steadily as our vendors and others continue to support us. Total
current liabilities were $1,359,032 as of December 31, 2004, an increase of
$288,098 over the prior year balance of $1,070,934, represented primarily by
accrued payroll, advances, profit participation agreements and research and


                                       5
<PAGE>

development costs. We had negative working capital of $1,344,040 as of December
31, 2004, and we had an accumulated deficit of $2,310,465 as compared to an
accumulated deficit of $1,866,866 at December 31, 2003. Due to the lack of cash
to meet ongoing general operating expenses, payroll and related expenses, total
current liabilities increased $288,098 from $1,070,934 at December 31, 2003 to
$1,359,032 at December 31, 2004. During the year ended December 31, 2004, AUT
issued 30,466 shares of common stock upon the exercise of warrants for total
cash consideration of $3,047. During 2004, we also sold 164,925 shares of
additional common stock and subscribed 825 shares of common stock for total cash
consideration of $152,500. All proceeds for these issuances were used for
production set up costs and general operating purposes. The amount of
expenditures required to maintain operations and to continue business
development has been estimated at $31,500 per month. At March 28, 2005, we are
unable to satisfy our cash requirements for continuing operations. Our continued
ability to operate is dependent upon the raising of additional capital and the
sale of our product; however, we cannot guarantee that additional funds could be
raised on terms acceptable to us or that sales will occur.

         RESULTS OF OPERATIONS. During 2004, we generated $77,994 in revenues.
Total operating expenses for the year ended December 31, 2004 were $415,934
compared to total operating expenses for the prior year period of $371,222. The
increase of $44,712 resulted primarily from additional expenses associated with
the production of the tire valve cap. For the year ended December 31, 2004, our
net loss was $443,599, compared to a loss of $387,429 for the prior period.

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003, COMPARED TO THE FISCAL YEAR ENDED
DECEMBER 31, 2002.

         RESULTS OF OPERATIONS. Since our inception, we have generated no
revenues. Total operating expenses for the year ended December 31, 2003 were
$371,222 compared to total operating expenses for the prior year period of
$699,565. The decrease of $328,343 resulted primarily from a decrease of
$330,000 in costs associated with the Boeing Litigation and other legal fees.
For the year ended December 31, 2003, our net loss was $387,429, compared to a
loss of $706,054 for the prior period.

         PLAN OF OPERATION FOR NEXT 12 MONTHS. With regard to the tire valve
cap, we believe that our primary target market will consist of major retailers
with a secondary focus on automobile manufacturers and tire manufacturers. With
regard to the valve stem we believe our primary target is tire and automobile
dealers as well as auto and tire manufacturers. We believe that the potential
market for both the tire valve cap and the valve stem are large. The requirement
for a warning system to detect low tire pressure is currently under
consideration in the automobile industry. On October 10, 2000, Congress passed
the Transportation Recall Enhancement, Accountability and Documentation Act,
which specified that legislation would be developed concerning a low tire
pressure warning for motor vehicles. We believe that the valve cap technology
could become standard equipment on all new low end vehicles sold in the United
States and all over the industrialized world in the years ahead, in addition to
being added to existing and replacement tires.

         Competition for the electronic tire valve cap is limited. To our
knowledge, there are only a few mechanical tire valve caps on the market, which
are sold by several companies under different brand names. Our review and
testing of these products has indicated to us that they are unreliable and
inefficient due to their mechanical nature. We have not seen any product like
the Air Alert Valve Stem. Other solutions to the tire pressure problem facing
the industry are currently directed toward interior warning signals, which are
significantly more expensive than our tire valve cap and valve stem, and
therefore, not considered direct competition. We anticipate that we will compete
on the basis of the technical features, quality of our products and price.

         Our plan of operation is wholly dependent on our ability to generate
revenues from the sale of our tire pressure monitoring products. During the
first half of 2003, we visited several potential contract manufacturers in China
and Taiwan and after careful evaluation we have entered into a contract with
Union Power Information Ind. Co., LTD in the City of Shenzhen in China. Union
Power has the capability of producing up to several million Air Alert Valve Caps
each month. Union Power has indicated that it will help us meet any orders we
may receive by providing favorable terms of payment if those orders come from
qualified major U.S. retailers. Union Power has also indicated their interest in
manufacturing the Air Alert Valve Stem for us.

         Notwithstanding any assistance from Union Power, we will need to raise
additional capital to market, promote and sell the tire valve cap product. Such
additional capital may be raised through public or private financing as well as
borrowings and other sources. We cannot guarantee that additional funding will
be available on favorable terms, if at all.


                                       6
<PAGE>

         We are not currently conducting any research and development
activities, other than those activities related to the production of the
electronic tire valve cap and valve stem.

         Mr. Lundqvist is our only employee. The loss of Mr. Lundqvist could
have a material adverse effect upon our operations.

         OFF BALANCE SHEET ARRANGEMENTS.  Inapplicable.
         ------------------------------

         FORWARD LOOKING STATEMENTS. This Form 10-KSB contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Our forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Factors
that could cause actual results to differ materially from the forward looking
statements include, but are not limited to, risks associated with lack of
significant operating history, international, national and local general
economic and market conditions; our ability to sustain, manage or forecast
growth; new business development, adverse publicity; competition; changes in
business strategy or development plans; business disruptions; the ability to
attract and retain talented personnel; the ability to protect technology; and
other factors referenced in this report. Given these uncertainties, readers are
cautioned not to place undue reliance on such forward-looking statements.
Management disclaims any obligation to forward-looking statements contained
herein to reflect any change in our expectation with regard thereto or any
change in events, conditions, circumstances or assumptions underlying such
statements.









                                       7
<PAGE>


ITEM 7.  FINANCIAL STATEMENTS

Report of Independent Registered Accounting Firm.............................9

Balance Sheets as of December 31, 2004 and 2003.............................10

Statements of Operations for the years ended
December 31, 2004, 2003 and 2002............................................11

Statements of Stockholders' Deficit for the years
ended December 31, 2004, 2003 and 2002......................................12

Statements of Cash Flows for the years ended
December 31, 2004, 2003 and 2002............................................13

Notes to Financial Statements .........................................14 - 20













                                       8
<PAGE>



             Report of Independent Registered Public Accounting Firm
             -------------------------------------------------------



To the Board of Directors and Stockholders of
 AVIATION UPGRADE TECHNOLOGIES, Inc.



         We have audited the accompanying balance sheets of Aviation Upgrade
Technologies, Inc. (the "Company") as of December 31, 2004 and 2003, and the
related statements of operations, stockholders' deficit, and cash flows for each
of the years in the three-year period ended December 31, 2004. 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 standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit 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 includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Aviation Upgrade
Technologies, Inc. as of December 31, 2004 and 2003, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 2004 in conformity with accounting principles generally
accepted in the United States of America.

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the accompanying
financial statements, the Company has experienced significant losses since
inception. These factors and other factors discussed in Note 1 to the financial
statements raise substantial doubt about the ability of the Company to continue
as a going concern. Management's plans in regard to these matters are described
in Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.





                                      Lesley, Thomas, Schwarz & Postma, Inc.
                                      A Professional Accountancy Corporation



Newport Beach, California
February 7, 2005



                                       9
<PAGE>



                       AVIATION UPGRADE TECHNOLOGIES, INC.

                                 BALANCE SHEETS


                                     ASSETS
<TABLE>
<CAPTION>
                                                                           DECEMBER 31,
                                                                      2004                2003
                                                                ----------------    ---------------
<S>                                                                   <C>                  <C>
CURRENT ASSETS
   Cash                                                         $         8,212     $         3,986
   Stock subscription receivable                                            750                   0
   Inventory                                                                 39               8,619
   Prepaid expenses                                                       5,991               5,669
                                                                ---------------     ---------------

     Total current assets                                                14,992              18,274
                                                               ----------------    ----------------

PROPERTY AND EQUIPMENT
   Tooling costs, net (Note 2)                                           42,083                   0
   Equipment, net (Note 2)                                                1,245                   0
                                                               ----------------    ----------------

     Total property and equipment                                        43,328                   0
                                                               ----------------    ----------------

DEPOSITS                                                                    350              40,350
                                                                ---------------     ---------------

     Total assets                                               $        58,670     $        58,624
                                                                ===============     ===============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
   Accounts payable                                             $       651,632     $       509,563
   Profit participation payable (Note 4)                                  2,420                   0
   Due to related party (Note 8)                                         15,594              38,313
   Accrued payroll and related expenses                                 455,590             313,560
   Loan payable, stockholder                                            131,972             113,498
   Profit participation advances, net (Note 4)                          101,824              96,000
                                                               ----------------    ----------------

     Total current liabilities                                        1,359,032           1,070,934
                                                                ---------------     ---------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
   Common stock, $0.001 par value; 100,000,000 shares
     authorized; 11,457,750 and 11,261,534 shares
     issued and outstanding at
     December 31, 2004 and 2003, respectively                            11,458              11,261
   Additional paid-in capital                                           998,645             843,295
   Accumulated deficit                                               (2,310,465)         (1,866,866)
                                                                ----------------    ----------------

     Total stockholders' deficit                                     (1,300,362)         (1,012,310)
                                                                ----------------    ----------------

     Total liabilities and stockholders' deficit                $        58,670     $        58,624
                                                                ===============     ===============
</TABLE>






            See the accompanying notes to these financial statements

                                       10
<PAGE>



                       AVIATION UPGRADE TECHNOLOGIES, INC.

                            STATEMENTS OF OPERATIONS





<TABLE>
<CAPTION>
                                                                       YEARS ENDED
                                               ----------------------------------------------------------
                                                                      DECEMBER 31,
                                               ----------------------------------------------------------
                                                     2004                 2003                 2002
                                               ----------------     ----------------     ----------------
<S>                                                   <C>                  <C>                  <C>
REVENUES                                       $         77,994     $              0     $              0

COST OF SALES                                            83,732                    0                    0
                                               ----------------     ----------------     ----------------

GROSS PROFIT                                             (5,738)                   0                    0
                                               -----------------    ----------------     ----------------

OPERATING EXPENSES
   General and administrative                           335,767              363,140              666,429
   Research and development (Note 8)                     71,501                8,082               33,136
   Depreciation expense                                   8,666                    0                    0
                                               ----------------    -----------------    -----------------
                                                        415,934              371,222              699,565
                                               ----------------    -----------------    -----------------

LOSS FROM OPERATIONS                                   (421,672)            (371,222)            (699,565)

OTHER EXPENSE
   Profit participation expense                          (1,244)                   0                    0
   Interest expense                                     (20,683)             (16,207)              (6,489)
                                               -----------------    -----------------    -----------------

NET LOSS                                       $       (443,599)    $       (387,429)    $       (706,054)
                                               ================     ================     ================

BASIC AND DILUTED LOSS PER COMMON SHARE        $         (0.04)     $         (0.03)     $         (0.06)
                                               ================     ================     ================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING           11,348,970           11,153,332           11,029,956
                                               ================     ================     ================
</TABLE>







            See the accompanying notes to these financial statements

                                       11
<PAGE>




                       AVIATION UPGRADE TECHNOLOGIES, INC.

                       STATEMENTS OF STOCKHOLDERS' DEFICIT
                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                                                       ADDITIONAL
                                           COMMON STOCK       COMMON STOCK SUBSCRIBED    PAID-IN      ACCUMULATED
                                         SHARES      AMOUNT     SHARES    AMOUNT         CAPITAL         DEFICIT          TOTAL
                                      -----------  ---------- ---------  ----------   -------------   -------------   -------------
<S>                                       <C>          <C>        <C>        <C>            <C>            <C>              <C>
Balance, December 31, 2001             10,783,000  $   10,783         0  $       0    $     700,877   $    (773,383)  $     (61,723)

Common stock issued on warrant
  exercise for $0.10 per share            256,418         256         0          0           25,385               0          25,641
Common stock issued for $8.75 per
  share                                     3,000           3         0          0           26,247               0          26,250
Write off of deferred offering costs            0           0         0          0           12,090               0          12,090
Net loss                                        0           0         0          0                0        (706,054)       (706,054)
                                      -----------  ----------  --------  ---------    -------------   -------------   -------------

Balance, December 31, 2002             11,042,418      11,042         0          0          764,599      (1,479,437)       (703,796)

Common stock issued on warrant
  exercise for $0.10 per share            119,116         119         0          0           11,796               0          11,915
Common stock issued under Securities
  Purchase Agreement                      100,000         100         0          0           66,900               0          67,000
Net loss                                        0           0         0          0                0        (387,429)       (387,429)
                                      -----------  ----------  --------  ---------    -------------   -------------   -------------

Balance, December 31, 2003             11,261,534      11,261         0          0          843,295      (1,866,866)     (1,012,310)

Common stock issued on warrant
  exercise for $0.10 per share             30,466          31         0          0            3,016               0           3,047
Common stock issued under Securities
  Purchase Agreements                     164,925         165       825          1          152,334               0         152,500
Net loss                                        0           0         0          0                0        (443,599)       (443,599)
                                      -----------  ----------  --------  ---------    -------------   -------------   -------------

Balance, December 31, 2004             11,456,925  $   11,457       825  $       1    $     998,645   $  (2,310,465)  $  (1,300,362)
                                      ===========  ==========  ========  =========    =============   ==============  ==============
</TABLE>






            See the accompanying notes to these financial statements

                                       12
<PAGE>






                       AVIATION UPGRADE TECHNOLOGIES, INC.

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                            YEARS ENDED
                                                                      -------------------------------------------------------
                                                                                           DECEMBER 31,
                                                                      -------------------------------------------------------
                                                                            2004                2003               2002
                                                                      ----------------    ----------------   ----------------
<S>                                                                          <C>                 <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                           $       (443,599)   $       (387,429)  $       (706,054)
   Adjustments to reconcile net loss to net cash used in operating
activities
     Write off of deferred offering costs                                            0                   0             43,877
     Depreciation                                                                8,666                   0                  0
     Amortization of profit participation advances                              (1,176)                  0                  0
     Changes in operating assets and liabilities
       Inventory                                                                 8,581              (8,619)                 0
       Prepaid expenses                                                           (322)             (5,669)            10,000
       Other assets                                                                  0             (40,000)                 0
       Accounts payable                                                        144,489             118,618            357,422
       Due to related party                                                    (22,719)              1,681             13,406
       Accrued payroll and related expenses                                    142,030             142,161            147,728
                                                                      ----------------    ----------------   ----------------

         Net cash used in operating activities                                (164,050)           (179,257)          (133,621)
                                                                      ----------------    ----------------   ----------------

CASH FLOWS FROM INVESTING ACTIVITES
   Factory tooling costs                                                       (11,995)                  0                  0
                                                                      ----------------    ----------------   ----------------

         Net cash used in investing activities                                 (11,995)                  0                  0
                                                                      ----------------    ----------------   ----------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Advances from stockholder                                                    18,474               6,986            106,512
   Proceeds from issuance of common stock                                      155,547              78,915             51,891
   Proceeds from profit participation investments                                7,000              96,000                  0
   Common stock subscribed                                                        (750)                  0                  0
   Stock offering costs                                                              0                   0            (31,787)
                                                                      ----------------    ----------------   -----------------

         Net cash provided by financing activities                             180,271             181,901            126,616
                                                                      ----------------    ----------------   ----------------

NET INCREASE (DECREASE) CASH                                                     4,226               2,644             (7,005)

CASH, beginning of year                                                          3,986               1,342              8,347
                                                                      ----------------    ----------------   ----------------

CASH, end of year                                                     $          8,212    $          3,986   $          1,342
                                                                      ================    ================   ================


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
   Cash paid during the period for interest                           $         20,683    $         16,207   $              0
   Cash paid during the period for taxes                              $            195    $          1,627   $             17


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

    During the year ended December 31, 2002, the Company wrote off deferred
offering costs of $43,877.
</TABLE>





            See the accompanying notes to these financial statements

                                       13
<PAGE>




                       AVIATION UPGRADE TECHNOLOGIES, INC.

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 2004, 2003 AND 2002


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         NATURE OF BUSINESS - Aviation Upgrade Technologies, Inc.("AUT" or the
"Company") is a Nevada  corporation,  organized on January 8, 1999.

         In April 2001, we acquired from Torbjorn B. Lundqvist, our chief
executive officer and one of our directors, the marketing rights to an
electronic tire valve cap for airplanes and automobiles that blinks if the tire
pressure falls below an initially calibrated level. The product provides early
warning of low pressure in tires which we believe will lead to safer travel in
both these types of vehicles and better fuel efficiency in automobiles. Once the
tire is inflated to the appropriate pressure, the initial tightening of the cap
onto the valve stem makes the valve cap memorize the tire pressure. If the
pressure in the tire drops by more than approximately four pounds per square
inch, a red LED light will blink to indicate the need to check the tire
pressure. The licensing agreement has a term of five years and requires the
payment of a license fee equal to 12% of the monthly gross profit from sales of
the tire valve cap. It also requires the reimbursement of research and
development costs incurred by its founder and the payment of ongoing development
costs during the term of the agreement. In addition, it stipulates the issuance
of 50,000 shares of its common stock to one individual for efforts in
co-designing the product and 1,000 shares of common stock to another individual
for naming the product

         GOING CONCERN - The Company is attempting to obtain revenues from
additional product sales, but there is no commitment by any person for future
purchase of the Company's electronic tire valve cap. The Company has significant
working capital needs in order to produce sufficient products for sale.
Moreover, in the absence of significant sales and profits, the Company will
likely seek to raise additional funds to meet its working capital needs
principally through the additional sales of its securities. However, there is no
assurance that the Company will be able to obtain sufficient additional funds
when needed, or that such funds, if available, will be obtainable on terms
satisfactory to the Company.

         These circumstances raise substantial doubt about the Company's ability
to continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

         CASH AND CASH EQUIVALENTS - For the purposes of the balance sheets and
statements of cash flows, cash and cash equivalents consist of all cash balances
and highly liquid investments with an initial maturity of three (3) months or
less. At December 31, 2004 and 2003, there were no cash equivalents.

         INVENTORIES - Inventories are stated at the lower of cost or market
with cost determined using the first-in, first-out (FIFO) method.

         PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost
and depreciated by the straight-line method over the expected useful lives of
the assets. Expenditures for normal maintenance and repairs are charged to
operations and significant improvements are capitalized. The estimated useful
life for the tooling and equipment costs is 3 years.

         PREPRODUCTION DESIGN AND DEVELOPMENT COSTS - All tooling, equipment and
molds of $ 51,994 used for production have been capitalized as of December 31,
2004.

         COMMON STOCK ISSUED FOR SERVICES RENDERED - AUT periodically issues
common stock for services rendered. Common stock issued is valued at the
estimated fair market value, as determined by management and the board of
directors of the Company. Management and the board of directors consider, recent
stock offering prices and other factors in determining fair market value for
purposes of valuing the common stock. No common stock was issued for services
during the years ended December 31, 2004, 2003 and 2002.



                                       14
<PAGE>



NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         REVENUE RECOGNITION - The Company recognizes revenue on product sales
at the time of shipment and customer acceptance.

         SHIPPING AND HANDLING COSTS - Freight billed to customers is considered
sales revenue and the related freight cost is considered cost of sales.

         BASIC AND DILUTED LOSS PER SHARE - Basic and diluted loss per share
were computed based on the weighted average number of shares outstanding for the
period. Basic and diluted loss per share are the same as the effect of warrants
on loss per share and are antidilutive and thus not included in the diluted loss
per share calculation.

         INCOME TAXES - The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes." Under SFAS 109, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. A valuation
allowance is provided for significant deferred tax assets when it is more likely
than not that such assets will not be recovered.

         USE OF ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make certain estimates and assumptions that
affect the reported amounts of 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.

         DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - The Company has
adopted Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities on the balance sheet at their fair value. This
statement, as amended by SFAS 137, is effective for financial statements for all
fiscal quarters of all fiscal years beginning after June 15, 2000. The adoption
of this SFAS 133 has not materially impacted the Company's results of
operations, financial position or cash flows as it currently does not engage in
any derivative or hedging activities.

         RESEARCH AND DEVELOPMENT - Research and development costs related to
the tire valve cap are charged to operations as incurred. The Company recognized
research and developments costs of $71,501, $8,082 and $33,136 for the years
ended December 31, 2004, 2003 and 2002, respectively.

         FAIR VALUE OF FINANCIAL INSTRUMENTS - The Company's financial
instruments consist primarily of cash, prepaid expenses and current liabilities.
The Company believes all the financial instruments recorded are valued at their
approximate fair value.

         WARRANTIES - The Company provides a one-year manufacturer's warranty
covering product defects. Accruals for product warranties are estimated based
upon current product performance trends and are recorded at the time revenue is
recognized.

         CONCENTRATIONS - As discussed in Note 9, the Company has a
concentration of risk in the form of one major customer and one major supplier.

The Company is attempting to mitigate its sales risk with the introduction of
new products and the expansion of its sales and business.

While primarily one source of supply is utilized, other sources are available
should the Company have to change suppliers. A change in suppliers, however,
could cause a delay in shipping and a possible loss of sales and could be at
less favorable terms. This would affect operating results adversely.



                                       15
<PAGE>





NOTE 2 - PROPERTY AND EQUIPMENT

         Property and equipment consists of the following at December 31, 2004:

     Tooling                                                   $       50,500
     Equipment                                                          1,494
                                                               --------------
                                                                       51,994

     Accumulated depreciation                                          (8,666)
                                                               --------------

     Property and equipment, net                               $       43,328
                                                               ==============



NOTE 3 - INCOME TAXES

         No provisions for income taxes for the years ended December 31, 2004,
2003 and 2002 is required since the Company incurred taxable losses during these
periods.

         The components of the net deferred tax asset are as follows:



                                Depreciation                   $       (6,335)
                                Section 195 start-up costs            571,476
                                Net operating losses                   66,501
                                Accruals                              155,173
                                                               --------------

                                                                      786,815

                                Less: valuation allowance            (786,815)
                                                               --------------

                                                               $          ---
                                                               ==============


         The provision for income taxes consists of the following:



                              Current                          $          ---
                              Deferred (benefit)                     (150,787)
                              Change in valuation allowance           150,787
                                                               --------------

                                                               $          ---
                                                               ==============




                                       16
<PAGE>



NOTE 4 - COMMITMENTS

         OPERATING LEASE - In December 2001, AUT entered into an operating lease
for the rental of its new executive offices in Las Vegas, Nevada. Monthly lease
payments are $350 for a term of six (6) months. The lease expires on June 30,
2005. Lease expense was $4,200, $4,200 and $4,550 for the years ended December
31, 2004, 2003 and 2002, respectively.

         EMPLOYMENT AGREEMENT - On May 31, 2000, AUT entered into an employment
agreement with Mr. Lundqvist to employ him as its Chief Executive Officer. The
agreement, which has an initial term of two years, provides for an annual base
salary of $140,000 effective June 1, 2000, adjustable annually at the discretion
of the board of directors. Among other provisions, the agreement also provides
for an annual cash salary incentive equal to 3% of adjusted net profits
beginning with the year ended December 31, 2001. The "adjusted net profit" shall
be the net profit of the Company before federal and state income taxes,
determined in accordance with accounting principles generally accepted in the
United States of America by the Company's independent accounting firm and
adjusted to exclude: (i) any incentive salary payments paid pursuant to this
employment agreement; (ii) any contributions to pension and/or profit sharing
plans; (iii) any extraordinary gains or losses; (iv) any refund or deficiency of
federal and state income taxes paid in a prior year; and (v) any provision for
federal or state income taxes made in prior years which is subsequently
determined to be unnecessary. The maximum incentive salary payable for any given
year may not exceed 400% of the then applicable base salary.

         LICENSING AGREEMENT - In April 2001, AUT acquired from Torbjorn B.
Lundqvist, our Chief Executive Officer and one of our directors, the marketing
rights to the electronic tire valve cap. The licensing agreement has a term of
five years and requires the payment of a license fee equal to 12% of the monthly
gross profit from sales of the tire valve cap. It also requires the
reimbursement of research and development costs incurred by its founder and the
payment of ongoing development costs during the term of the agreement, In
addition, it stipulates the issuance of 50,000 shares of its common stock to one
individual for efforts in co-designing the product and 1,000 shares of common
stock to another individual for naming the product, all shares of which were
issued in 2001.

         PROFIT PARTICIPATION ADVANCES - The Company has entered into several
profit participation agreements in order to raise capital for operations. In
exchange for the investment, the Company shares profits on the product by giving
the investor an agreed upon price for every package sold up to a specified
amount as defined in the agreement. The total estimated liability under these
agreements is $636,000. The Company has accrued $103,000 of profit sharing
advances and this amount is being amortized based on the terms of the related
agreements. Amortization expense was $1,176 and $0 as of December 31, 2004 and
2003, respectively. The Company has accrued a liability of $2,420 and $0 as of
December 31, 2004 and 2003, respectively, for amounts payable under these
agreements. No amounts have been paid out under these agreements as of December
31, 2004 and 2003.


NOTE 5 - WARRANTS

         In July 2003, the Company entered into a stock purchase agreement which
included warrants to purchase 150,000 shares of common stock at $2.00 per share.
These warrants are exercisable at the option of the warrant holder and expire
seven years from the date of issuance.

         No warrants were issued during the year ended December 31, 2004.

         All warrants were issued in connection with the sale of stock, and
therefore, no expense was recorded for their issuance.



                                       17
<PAGE>



NOTE 5 - WARRANTS (CONTINUED)

         The following represents a summary of the warrants outstanding as of
December 31, 2004 and 2003:
<TABLE>
<CAPTION>
                                                                2004                               2003
                                                   -------------------------------    -------------------------------
                                                                        WTD AVG                            WTD AVG
                                                      SHARES           EX PRICE          SHARES           EX PRICE
           <S>                                         <C>                <C>              <C>               <C>
         Outstanding, beginning of year                  180,466     $        1.68          270,582     $        0.10

         Granted                                               0                 0          150,000              2.00
         Exercised                                       (30,466)             0.10         (119,116)             0.10
         Expired/forfeited                                     0                 0         (121,000)                0
                                                   -------------     -------------    --------------    -------------

         Outstanding, end of year                        150,000     $        2.00          180,466     $        1.68
                                                   =============     =============    =============     =============

         Weighted average fair value of warrants granted             $           0                      $        2.00
                                                                     =============                      =============
</TABLE>


         The outstanding warrants at December 31, 2004 and 2003 are all held by
stockholders.


NOTE 6 - STOCKHOLDERS' DEFICIT

         Holders of the common stock do not have preemptive rights to purchase
additional shares of common stock or other subscription rights. The common stock
carries no conversion rights and is not subject to redemption or to any sinking
fund provisions. All shares of common stock are entitled to share equally in
dividends from sources legally available therefor when, as and if declared by
the board of directors and, upon liquidation or dissolution of the company,
whether voluntary or involuntary, to share equally in the assets of the Company
available for distribution to stockholders. The board of directors is authorized
to issue additional shares of common stock on such terms and conditions and for
such consideration as the Board may deem appropriate without further stockholder
action.

         Each holder of common stock is entitled to one vote per share, either
in person or by proxy, on all matters that may be voted on by the owners thereof
at meetings of the stockholders. Since the shares of common stock do not have
cumulative voting rights, the holders of more than 50% of the shares voting for
the election of directors that can elect all the directors and, in such event,
the holders of the remaining shares will not be able to elect any person to the
board of directors.

         Most of the Company's common stock is held by insiders and persons who
acquired shares in private offerings. These are "restricted securities" as that
term is defined in Rule 144 promulgated under the Securities Act. The Company
has not declared or paid any dividends on its common stock to date, and there is
no assurance that the Company will ever be able to pay dividends in the future.

         On July 3, 2003, we entered into a securities purchase agreement with
two investors for the sale of $100,000 of units to purchase common stock,
warrants and a participation in the sale of the valve cap products for cash
consideration of $100,000. These securities were issued under Section 4(2) of
the Securities Act of 1933. No underwriter was involved in the sale of these
securities.

         During the year ended December 31, 2003, outstanding warrants to
purchase 119,116 shares of common stock were exercised by the holders for cash
consideration of $11,915. The warrants were issued as part of a Rule 506
Regulation D offering, exempt under Section 4(2) of the Securities Act of 1933.
No underwriter was involved in the exercise of the warrants.

         In February 2004, outstanding warrants to purchase 30,466 shares of
common stock were exercised by the holders. The warrants were issued as part of
a Rule 506 Regulation D offering, exempt under Section 4(2) of the Securities
Act of 1933. No underwriter was involved in the exercise of the warrants.



                                       18
<PAGE>



NOTE 6 - STOCKHOLDERS' DEFICIT (CONTINUED)

         On March 1, 2004, we entered into a Securities Purchase Agreement with
an accredited investor for the sale of 55,000 shares of common stock for cash
consideration of $50,000. These securities were issued under Section 4(2) of the
Securities Act of 1933. No underwriter was involved in the sale of these
securities.

         On April 26, 2004, we entered into a Securities Purchase Agreement with
an accredited investor for the sale of 20,000 shares of common stock for cash
consideration of $20,000. These securities were issued under Section 4(2) of the
Securities Act of 1933. No underwriter was involved in the sale of these
securities.

         During the three month period ended September 30, 2004, AUT entered
into Securities Purchase Agreements with various accredited investors for the
sale of 61,050 shares of common stock for cash consideration of $55,500. These
securities were issued under Section 4(2) of the Securities Act of 1933. No
underwriter was involved in the sale of these securities.

         During the three month period ended December 31, 2004, AUT entered into
Securities Purchase Agreements with various accredited investors for the sale of
28,875 shares of common stock for cash consideration of $26,250 and a stock
subscription of $750. These securities were issued under Section 4(2) of the
Securities Act of 1933. No underwriter was involved in the sale of these
securities. The $750 stock subscription was collected on January 14, 2005.


NOTE 7 - LOSS PER SHARE

         The following is a reconciliation of the numerators and denominators of
the basic and diluted loss per share computations:
<TABLE>
<CAPTION>
                                                                                         YEAR ENDED
                                                                   -------------------------------------------------------
                                                                                        DECEMBER 31,
                                                                   -------------------------------------------------------
                                                                         2004                2003               2002
                                                                   ----------------    ----------------   ----------------
         <S>                                                             <C>                  <C>                <C>
         Numerator for basic and diluted loss per share
           Net loss                                                $       (443,599)   $       (387,429)  $       (706,054)
                                                                   ================    ================   ================

         Denominator for basic and diluted loss per share
           Weighted average shares                                       11,348,970          11,153,332         11,029,956
                                                                   ================    ================   ================

         Basic and diluted loss per share
           Net loss                                                $         (0.04)    $         (0.03)   $         (0.06)
                                                                   ================    ================   ================
</TABLE>


NOTE 8 - RELATED PARTY TRANSACTIONS

         Since its inception, AUT has not generated sufficient working capital
to cover the cost of its operations. Therefore, its founder and Chief Executive
Officer has provided working capital and substantially all its assets. All
amounts advanced to AUT have been recorded as expenses of the Company in the
period they were incurred, and the amount owing is reflected in due to related
party and totals $15,594 and $38,313 as of December 31, 2004 and 2003,
respectively. All the payroll and related expenses recorded as of December 31,
2004 were owing to the Chief Executive Officer and majority stockholder. In
addition, during the year ended December 31, 2004, AUT obtained advances from
Mr. Lundqvist's privately held marketing company in the amount of $18,474, which
are borrowed from third parties. Mr. Lundqvist's privately held marketing
company passes through the interest on these advances to the Company which
ranges from nine and one quarter percent (9.25%) to twenty-eight and ninety-nine
one hundredths percent (28.99%). Interest paid on all advances to date totaled
$20,683 for the year ended December 31, 2004.



                                       19
<PAGE>



NOTE 8 - RELATED PARTY TRANSACTIONS (CONTINUED)

            In accordance with the valve cap licensing agreement AUT has entered
into with its founder and Chief Executive Officer, the Company incurred $71,501,
$8,082 and $33,136 during the years ended December 31, 2004, 2003 and 2002,
respectively, for research and development costs in connection with the
development of the tire valve cap.


NOTE 9 - MAJOR CUSTOMERS/SUPPLIERS

            During the year ended December 31, 2004, the Company had sales of
$66,076 or eight-five percent (85%) to one (1) customer. At December 31, 2004,
there were no amounts due from this customer.

            During the year ended December 31, 2004, the Company purchased all
(100%) of its cost of goods sold from one supplier in China. At December 31,
2004, the amount due to the supplier included in accounts payable was $160,630.





                                       20
<PAGE>



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

         Inapplicable.


ITEM 8A.  CONTROLS AND PROCEDURES

         Evaluation of Disclosure Controls and Procedures. An evaluation was
performed by the Company's Chief Executive Officer/Chief Financial Officer of
the effectiveness of the design and operation of the Company's disclosure
controls and procedures. Based upon that evaluation, the Company's Chief
Executive Officer/Chief Financial Officer concluded that as of December 31,
2004, the Company's disclosure controls and procedures were effective and
designed to ensure that material information relating to the Company would be
made known to him by others.

         There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect the internal
controls subsequent to the last day they were evaluated.


PART III

ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         We are dependent on the efforts and abilities of certain of our senior
management. The interruption of the services of key management could have a
material adverse effect on our operations, profits and future development, if
suitable replacements are not promptly obtained. We anticipate that we will
enter into employment agreements with each of our key executives. We cannot
guarantee that each executive will remain with us during or after the term of
his or her employment agreement. In addition, our success depends, in part, upon
our ability to attract and retain other talented personnel. Although we believe
that our relations with our personnel are good and that we will continue to be
successful in attracting and retaining qualified personnel, we cannot guarantee
that we will be able to continue to do so. Our officers and directors will hold
office until their resignations or removal.

         Our directors and principal executive officers are as specified on the
following table:

======================== ====== ================================================
 NAME                     AGE            POSITION
------------------------ ------ ------------------------------------------------
 Torbjorn B. Lundqvist    52    Chairman, Chief Executive Officer /
                                Chief Financial Officer
------------------------ ------ ------------------------------------------------
 Dick G. Lindholm         55    Vice President, Director
------------------------ ------ ------------------------------------------------
 William S. Rhodes        55    President, Director
======================== ====== ================================================

       TORBJORN B. LUNDQVIST. Mr. Lundqvist has been our chief executive officer
and the chairman of our board of directors since our inception. Mr. Lundqvist
has been primarily responsible for the formation and development to date of
Aviation Upgrade Technologies, Inc. Mr. Lundqvist has had vast experience in
international business. His strength is managing and developing new ventures and
ideas. Mr. Lundqvist was born in Helsinki, Finland in 1952. After serving as a
transportation officer during his mandatory service in the Finnish army, he
owned and managed several companies in Finland, including companies involved in
remodeling and manufacturing. Since 1982, Mr. Lundqvist has been owner and
president of Minitec Marketing, Inc. which is an import and export firm. Among
other things, Minitec Marketing, Inc. invented, patented and manufactured a
Power Take Out for 4-wheel drive GM vehicles. This product allows the user to
divert some of the power from the vehicles engine and use it for other purposes
than powering the vehicle itself, e.g. external devices like snow blowers,
generators, and pumps. The product was developed to suit a niche market in
Finland. Since 1989 he has also been owner and president of Minitec Motors,
Inc., USA, a car dealership specializing in exporting cars to niche markets
where a slight modification of the vehicle would put it in a lower tax bracket
when imported to that particular niche market. Mr. Lundqvist is not an officer
or director of any other reporting company.



                                       21
<PAGE>




         DICK G. LINDHOLM. Mr. Lindholm has been our vice president and one of
our directors since December 1999. Mr. Lindholm is known in the Scandinavian
aviation circles as a problem solver and skillful negotiator, including
experience dealing with clients, suppliers and labor unions. He has over thirty
years aviation experience, primarily in rotorcraft. He has thirty years flying
experience with over 8,000 flying hours. From 1976 until 1985, he was president
of Helikopteripalvelu, the leading helicopter company in Finland. From 1985
until 1993, he held various duties as a pilot for Helikopter Service A/S. From
1993 until 1997, he was managing director of Helifyg AB, the leading helicopter
operator in Sweden. From 1997 to March 1999, he was area manager, Nordic
Countries, of Helicopter Service A/S, which at the time was the world's largest
helicopter company in terms of revenues. From March to November 1999, Mr.
Lindholm has been vice president of business development for Copter Action Oy,
Finland. Since December 1999, Mr. Lindholm has been vice president of flight
operations for SHT AB of Finland, a company responsible for development of the
helicopter emergency medical service in the country. Mr. Lindholm was born in
1950 and resides in Espoo, Finland. Mr. Lindholm is not an officer or director
of any other reporting company.

         WILLIAM S. RHODES. Mr. Rhodes has been our president and one of our
directors since August 2000. Mr. Rhodes has spent most of his career in
commercial aircraft, military aircraft and third party aircraft maintenance. Mr.
Rhodes has been intimately involved in the managing, planning and production of
commercial aircraft modification and maintenance of transport aircraft for
twenty-three years. His maintenance management experience has been with air
carriers including American, Continental, Hawaiian, United, and U.S. Air. During
the period 2000 through 2001, Mr. Rhodes has been working with AUT. From 1997 to
2000, Mr. Rhodes was the General Manager and Senior Vice President of
administration for Santa Barbara Aerospace, Inc., which repairs and maintains
aircraft, and Director of Programs for Avtel Services, Inc., which maintains and
repairs aircraft. His career includes the day-to-day management in Department of
Defense contracts with NAVAIR and ARL for a period of fifteen years including
mission specific requirements for the secretary of defense and chief of naval
operations. Mr. Rhodes has held positions with aircraft corporations including
Beech Aircraft, Garrett Aviation, Tracor Aviation, Rogerson Aircraft and Dynair.
These positions have ranged from program manager to senior vice president in
technical and administrative management fields. Mr. Rhodes is a currently
licensed A&P whose aviation work experience started in the U.S. Marines in 1968,
and education is in engineering and business administration. Mr. Rhodes
currently resides in San Bernardino County, California. Mr. Rhodes is not an
officer or director of any other reporting company.

         There is no family relationship between any of our officers or
directors. There are no orders, judgments, or decrees of any governmental agency
or administrator, or of any court of competent jurisdiction, revoking or
suspending for cause any license, permit or other authority to engage in the
securities business or in the sale of a particular security or temporarily or
permanently restraining any of our officers or directors from engaging in or
continuing any conduct, practice or employment in connection with the purchase
or sale of securities, or convicting such person of any felony or misdemeanor
involving a security, or any aspect of the securities business or of theft or of
any felony. Nor are any of the officers or directors of any corporation or
entity affiliated with us so enjoined.

         BOARD OF DIRECTOR MEETINGS AND COMMITTEES
         -----------------------------------------

         The Board of Directors regularly maintains communication among
themselves throughout the year regarding the operations and status of the
Company. During the fiscal year ended December 31, 2004, there was one formal
telephonic meeting of the board of directors on December 28, 2004. Due to the
small size of our Board of Directors, the whole board acts as the Audit
Committee.

         CODE OF ETHICS
         --------------

         The Company has adopted a Code of Ethics for Financial Professionals
[which Code of Ethics will be provided to any person without charge, upon
request to Aviation Upgrade Technologies, Inc., 6550 South Pecos Road, Suite
142, Las Vegas, Nevada 89120, Attention: Torbjorn Lundqvist, President.]



                                       22
<PAGE>



SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the officers and directors of the Company and those persons who
beneficially own more than 10% of the outstanding shares of common stock of the
Company to file reports of securities ownership and changes in such ownership
with the Securities and Exchange Commission ("the Commission"). Officers,
directors and greater than 10% beneficial owners are also required by rules
promulgated by the Commission to furnish the Company with copies of all Section
16(a) forms they file.

         In August 2003, Mr. Lundqvist transferred 50,000 of his shares as an
accommodator to a financing transaction for the Company and a Form 4 was filed
by Mr. Lundqvist at that time. However, none of the Company's officers or
directors filed the required Form 5 to report their holdings by February 14,
2005.

ITEM 10.  EXECUTIVE COMPENSATION

         CASH COMPENSATION OF EXECUTIVE OFFICERS - The following table sets
forth the total compensation earned by the Chief Executive Officer and Directors
per annum for the previous three years.
<TABLE>
<CAPTION>
                                        ANNUAL COMPENSATION                           LONG-TERM COMPENSATION
                      ----------------------------------------------------------------------------------------------

                                                                                 RESTRICTED      COMMON SHARES
                                                                 OTHER         STOCK GRANTED   UNDERLYING OPTIONS
                                                 ANNUAL          AWARDS          (# SHARES)         GRANTED            ALL OTHER
  NAME AND POSITION     YEAR       SALARY         BONUS       COMPENSATION                         (# SHARES)        COMPENSATION
-------------------- ---------- --------------- ---------- -------------------- ------------- -------------------- -----------------
<S>                      <C>        <C>            <C>            <C>               <C>               <C>                 <C>
Torbjorn B.             2004      $140,000         -0-            -0-               -0-               -0-                 -0-
Lundqvist, Chairman     2003      $140,000         -0-            -0-               -0-               -0-                 -0-
and CEO                 2002      $140,000         -0-            -0-               -0-               -0-                 -0-
</TABLE>



         OPTION/SAR GRANTS IN LAST FISCAL YEAR.  Inapplicable.
         -------------------------------------

         DIRECTOR COMPENSATION. Board members are currently serving without cash
compensation. Each director holds office until his successor is elected and
qualified or until his earlier resignation in the manner provided in the Bylaws
of the Company. The Company has not secured "key man" or liability insurance
coverage for its officers and directors.

         EMPLOYMENT CONTRACTS. On May 31, 2000, we entered into an employment
agreement with Mr. Lundqvist to employ him as our chief executive officer. The
agreement, which has an initial term of two years, provided for an annual base
salary of $140,000 effective June 1, 2000, adjustable annually at the discretion
of the board of directors. Among other provisions, the agreement also provides
for an annual cash salary incentive equal to 3% of adjusted net profits
beginning with the year ended December 31, 2001. The "adjusted net profit" shall
be our net profit before federal and state income taxes, determined in
accordance with generally accepted accounting principles by our independent
accounting firm and adjusted to exclude:

     o    any incentive salary payments paid pursuant to this employment
          agreement;
     o    any contributions to pension and/or profit sharing plans;
     o    any extraordinary gains or losses;
     o    any refund or deficiency of federal and state income taxes paid in a
          prior year; and
     o    any provision for federal or state income taxes made in prior years
          which is subsequently determined to be unnecessary.

         The maximum incentive salary payable for any given year may not exceed
400% of the then applicable base salary. The salary to Mr. Lundqvist has been
accrued since November 2002 and is reflected in accrued payroll on the Company's
Balance Sheet.



                                       23
<PAGE>


         INDEMNIFICATION OF DIRECTORS. Section 6 of our Bylaws provide, among
other things, that our officers or directors shall not be personally liable to
us or our shareholders for monetary damages for breach of fiduciary duty as an
officer or director, except liability for:

     o    any breach of such officer's or director's duty of loyalty to us or
          our security holders;
     o    for acts or omissions not in good faith or which involve intentional
          misconduct or a knowing violation of law;
     o    unlawful payments of dividends or unlawful stock purchase or
          redemption by us; or
     o    any transaction from which such officer or director derived any
          improper personal benefit.

         Accordingly, our officers or directors may have no liability to our
shareholders for any mistakes or errors of judgment or for any act of omission,
unless such act or omission involves intentional misconduct, fraud, or a knowing
violation of law or results in unlawful distributions to our shareholders.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.

         REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION. No
report has been issued by the Compensation Committee.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding the
beneficial ownership of our common stock as of March 28, 2005 by each person or
entity known by us to be the beneficial owner of more than 5% of the outstanding
shares of common stock, each of our directors and named executive officers, and
all of our directors and executive officers as a group.
<TABLE>
<CAPTION>
TITLE OF CLASS       NAME AND ADDRESS OF BENEFICIAL OWNER    AMOUNT AND NATURE OF BENEFICIAL       PERCENT OF CLASS
                                                             OWNER
-------------------- --------------------------------------- ------------------------------------- -------------------
<S>                           <C>                                     <C>                                 <C>
Common Stock         Torbjorn B. Lundqvist,                  9,572,300 shares, chief executive           83.5%
                     6550 South Pecos Road, Suite 142        officer, chief financial officer,
                     Las Vegas, Nevada   89120               chairman of board of directors

Common Stock         Dick G. Lindholm                        235,000 shares, vice president,              2.1%
                     6550 South Pecos Road, Suite 142        director
                     Las Vegas, Nevada   89120


Common Stock         William S. Rhodes*                      10,000 shares, president, director           0.1%
                     P.O. Box 10746
                     San Bernardino, California  92423


Common Stock         All directors and named executive       9,817,300 shares                            85.7%
                     officers as a group
</TABLE>
* William S. Rhodes is the beneficial owner of 10,000 shares of common stock
through his spouse Lyn Rhodes.


                                       24
<PAGE>


Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.

CHANGES IN CONTROL. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         CONFLICTS RELATED TO OTHER BUSINESS ACTIVITIES. The persons serving as
our officers and directors have existing responsibilities and, in the future,
may have additional responsibilities, to provide management and services to
other entities in addition to us. As a result, conflicts of interest between us
and the other entities may occur from time to time.

         In addition to serving as our chief executive officer and chairman of
our board of directors, Mr. Lundqvist is the president and a director of Minitec
Marketing, Inc., a California corporation and an importer and exporter of
products. Minitec Marketing, Inc. has not conducted any operations in the last
two years. Mr. Lundqvist currently devotes approximately 4% of his time to
Minitec Marketing, Inc. Mr. Lundqvist is the president and a director of Minitec
Motors, Inc., a California corporation. Mr. Lundqvist currently devotes
approximately 1% of his time to Minitec Motors, Inc. We do not believe that we
have any conflicts of interest with the business or industry of Minitec
Marketing, Inc., other than Mr. Lundqvist's duty to provide management and
services.

         In addition to serving as our officers and directors, Mr. Rhodes and
Mr. Lindholm currently devote a significant portion of their time to other
companies. Mr. Lindholm currently devotes approximately ten hours per week, but
anticipates that he will devote significantly more hours if the valve cap starts
producing significant revenues. Mr. Rhodes currently devotes approximately two
hours per week, but anticipates that he will devote significantly more hours if
the valve cap starts producing significant revenues. We do not believe that we
have any conflicts of interest with the business or industry of those companies,
other than their duties to provide management and services.

         We will attempt to resolve any such conflicts of interest in our favor.
Our officers and directors are accountable to us and our shareholders as
fiduciaries, which requires that such officers and directors exercise good faith
and integrity in handling our affairs. A shareholder may be able to institute
legal action on our behalf or on behalf of that shareholder and all other
similarly situated shareholders to recover damages or for other relief in cases
of the resolution of conflicts in any manner prejudicial to us.

         RELATED PARTY TRANSACTIONS. Mr. Lundqvist, our chief executive officer
and director and principal shareholder, provides substantially all the assets
used by us, through Minitec Marketing, Inc., his privately held marketing
company. We have reimbursed this entity for the cost of the services it has paid
on behalf of AUT.

         We entered into a license agreement with Torbjorn B. Lundqvist, to
license the marketing rights for the tire valve technology. During the years
ended December 31, 2004, 2003 and 2002, we incurred $71,501, $8,082 and $33,136
for research and development costs in connection with the licensing agreement.
During the license period and any renewal period, we will pay fees, expenses and
costs related to product development and any application for patents and
trademarks. The license agreement also specifies that we will enter into a
manufacturing agreement with Torbjorn B. Lundqvist, our chief executive officer.
However, no terms of the manufacturing agreement have been negotiated.


                                       25
<PAGE>


         Mr. Lundqvist was issued 10,000,000 shares of our common stock in
exchange for services relating to founding and organizing the business, which
were valued at $10,000. In addition, during the period ended December 31, 1999,
Mr. Lundqvist, our chief executive officer and director and principal
shareholder, paid for various goods and performed services relating to our
operations. Those goods included office supplies of $2,000. Those services of
$8,000 provided by Mr. Lundqvist were for services as our promoter including
founding and organizing the business.

ITEM 13.  EXHIBITS

3.1       Certificate of Incorporation of the Company(1)
3.2       Bylaws of the Company(1)
10.1      Employment Agreement (2)
21.1      Subdivision of small business issuer.  Not applicable
31.1      Rule 13a-14(a)/15d-14(a) Certificate of Chief Executive Officer
31.2      Rule 13a-14(a)/15d-14(a) Certificate of Chief Financial Officer
32.1      Certification Pursuant to 18 U.S.C. ss.1350 of Chief Executive Officer
32.2      Certification Pursuant to 18 U.S.C. ss.1350 of Chief Financial Officer

(1) Previously filed on December 2, 1999, as exhibit to the Registration
Statement on Form 10-SB. (2) Previously filed in March 2002 as exhibit to the
2001 Annual Report on Form 10-KSB.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

         The Board of Directors has selected Lesley, Thomas, Schwarz & Postma,
Inc. as independent accountants to audit our books, records and accounts for the
fiscal year 2004. Lesley, Thomas, Schwarz & Postma, Inc. previously audited our
financial statements during the two fiscal years ended December 31, 2003 and
2002.

AUDIT AND NON-AUDIT FEES

         Aggregate fees for professional services rendered to the Company by
Lesley, Thomas, Schwarz & Postma, Inc. for the years ended December 31, 2004 and
2003, were as follows:

--------------------- ---------------------- ----------------------
Services Provided            2004                    2003
-----------------            ----                    ----
--------------------- ---------------------- ----------------------

--------------------- ---------------------- ----------------------
Audit Fees            $           23,925     $           21,700
--------------------- ---------------------- ----------------------
Audit Related Fees    $                0     $                0
--------------------- ---------------------- ----------------------
Tax Fees              $              828     $              832
--------------------- ---------------------- ----------------------
All Other Fees        $                0     $                0
                      ------------------     ------------------
--------------------- ---------------------- ----------------------
         Total        $           24,753     $           22,532
--------------------- ---------------------- ----------------------

         AUDIT FEES. The aggregate fees billed for the years ended December 31,
2004 and 2003 were for the audits of our financial statements and reviews of our
interim financial statements included in our annual and quarterly reports.

         AUDIT RELATED FEES. There were no fees billed for the years ended
December 31, 2004 and 2003 for the audit or review of our financial statement
that are not reported under Audit Fees.

         TAX FEES. The aggregate fees billed for the years ended December 31,
2004 and 2003 were for professional services for tax compliance, tax advice and
tax planning.

         ALL OTHER FEES.  There were no other fees billed for the years ended
December 31, 2004 and 2003.



                                       26
<PAGE>


AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

         Due to the small size of our Board of Directors, the whole board acts
as the Audit Committee.

         The Board of Directors has implemented pre-approval policies and
procedures related to the provision of audit and non-audit services. Under these
procedures, the Board of Directors pre-approves both the type of services to be
provided by Lesley, Thomas, Schwarz & Postma, Inc. and the estimated fees
related to these services.

         During the approval process, the Board of Directors considers the
impact of the types of services and the related fees on the independence of the
auditor. The services and fees must be deemed compatible with the maintenance of
the auditor's independence, including compliance with SEC rules and regulations.

         Throughout the year, the Board of Directors will review any revisions
to the estimates of audit and non-audit fees initially approved.




                                       27
<PAGE>






                                   SIGNATURES

In accordance with Section 13(a) or 15(d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
                                 Aviation Upgrade Technologies, Inc.


                                 By: /s/ Torbjorn B. Lundqvist
                                     -------------------------------------------
                                     Torbjorn B. Lundqvist
                                     Chairman and Chief Executive Officer


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

       Signatures                         Title                       Date
--------------------------   ---------------------------------- ----------------


/s/ Torbjorn B. Lundqvist    Chairman, Chief Executive Officer   March 28, 2005
Torbjorn B. Lundqvist        (principal executive officer) and
                             Chief Financial Officer (principal
                             financial officer)

/s/ Dick G. Lindholm         Director                            March 28, 2005
--------------------------
Dick G. Lindholm




/s/ William S. Rhodes
--------------------------
William S. Rhodes            Director                            March 28, 2005