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, 1999


[   ]   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)

           24040 Camino del Avion, #A303, Monarch Beach, CA 92629 USA
--------------------------------------------------------------------------------
                    (Address of principal executive offices)


                                 (949) 499-6665
                           (Issuer's telephone number)

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 (   )    No  ( X )

Check if there is no  disclosure of  delinquent  filers  pursuant to Item 405 of
Regulation S-K contained in this form, and 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, 2000 was $0.

     The market value of the voting stock held by  non-affiliates  of the issuer
as of March 23, 2001 was approximately $0.

     The number of shares of the common stock  outstanding  as of March 23, 2001
was 10,659,500.

Documents incorporated by reference:   None.

<PAGE>


PART 1

     Aviation Upgrade  Technologies,  Inc., a Nevada  corporation  ("Company" or
"AUT"),  filed a  Registration  Statement on Form 10-SB on December 2, 1999.  On
February  1,  2000,  the  Company's  Registration  Statement  on Form  10-SB was
declared  effective and the Company became a reporting  company  pursuant to the
Securities  Exchange Act of 1934. The Company has not filed any periodic reports
or other  information  with the  Securities  and Exchange  Commission  since the
Company  became  a  reporting  company.  The  Company  anticipates  that it will
concurrently file all of its delinquent annual and quarterly reports. Therefore,
investors should consider of the Company's filings cumulatively.


Item 1.  Description of Business

     Business  Development  - AUT is a  start-up  business  founded  in  1999 in
Monarch Beach, California.  The Company has had no revenue from operations since
inception  and has no  current  customers.  There  has not been  any  bankruptcy
filing,  receivership or any similar  proceeding since the Company's  inception.
There has been no reclassification,  merger or consolidation since the Company's
inception.  There has been no purchase or sale of a significant amount of assets
that were not in the ordinary course of the Company's business.

     Business of the Issuer - AUT is a Nevada corporation,  organized on January
8, 1999. The primary purpose for the Company was to develop,  market and install
modifications  to  aircraft,  such as the Boeing  727,  which were  designed  to
improve and extend the  economic  life of these  aircraft by bringing  them into
compliance  with  strict  noise  and  emission  control  levels  as they  became
mandatory in the years ahead.  The  Company's  executive  offices are located at
24040 Camino Del Avion #A303,  Monarch Beach,  California  92629.  The Company's
telephone number is (949) 499-6665.  Although a substantial market exists in the
United  States,  the  Company  ultimately  aspires  to  compete  in  the  global
marketplace.

     With  expected   financing  of  $12.3  million  from  the  sale  of  stock,
contributions  by third party  suppliers and the use of two initial  aircraft by
one airline,  the Company expected to have sufficient capital resources to cover
establishment of its management and operational infrastructure and the launching
of its business plan.

     In  mid-1999,  however,  after  months  of  negotiations  with a number  of
aircraft  engine  manufacturers  for the purchase of new  engines,  each company
withdrew at the last minute from  executing a final  contract.  AUT believes the
withdrawals  were the  result of  pressure  from a major  aircraft  manufacturer
fearing  a  reduction  in the sale of new  aircraft  if the  lives  of  existing
aircraft were significantly  increased as proposed by AUT. AUT believes that its
development  and  ability to  implement  its  business  plan have been  severely
hindered.  AUT anticipates that it will file an antitrust  lawsuit against these
companies including the aircraft manufacturer.

     In its efforts to continue  business  development,  AUT  evaluated  several
businesses  for purchase  during the latter half of 1999,  including an aircraft
maintenance  company  and an  aircraft  leasing  company  specializing  in cargo
aircraft, none of which have come to fruition.

     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 aviation  industry;  rather,  the following attempts to identify
those aspects that could affect AUT's business. Also, 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
affect,  in various manners,  the methods in which the industries  involved with
airplanes operate.

     AUT's  business is subject to regulation  by the FAA and the  Department of
Transportation ("DOT") pursuant to the provisions of the Federal Aviation Act of
1958, as amended (the "Aviation Act").  The DOT is responsible,  inter alia, for
evaluating and  determining  the fitness of  individuals  and  organizations  to
function as air carriers and maintains jurisdiction over consolidations, mergers
or acquisitions of air carriers.



                                       1
<PAGE>





     The FAA regulates aircraft and air carrier operations,  including personnel
employed,  equipment used, ground  facilities,  maintenance,  communications and
other matters. More specifically, the FAA regulates the operation of aircraft in
commercial  operations  pursuant  to Federal  Aviation  Regulation  Part 135 and
repair facilities (repair stations) pursuant to Federal Aviation Regulation Part
145.

     The FAA has  the  authority  to  suspend  or  revoke  the  approval  of air
carriers,  commercial  operators,  repair  stations  and pilot  schools or their
licensed  personnel  for  failure  to  comply  with any FAA  regulation  and can
"ground"  aircraft if questions  arise  concerning  their  airworthiness.  AUT's
management  believes AUT will hold all  operating,  airworthiness  and other FAA
certificates  required  for  the  conduct  of  AUT's  business,  although  these
certificates may be suspended or revoked for cause.

     AUT will be dependent  upon the FAA to re-certify  all of AUT's  re-engined
aircraft before they can be placed into service.  The FAA has already  responded
to requests for the  modification  of the Boeing 727. The FAA has the authority,
pursuant to Section  21.19(b)(1) of the Federal Aviation  Regulations,  to allow
replacement  of the original  Pratt & Whitney  JT8D  engines  with modern,  high
bypass powerplants.  In one such FAA statement, made as a result of one of these
exemption  requests,  the FAA stated that it would be in the public  interest to
grant such an exemption.

     AUT believes that the FAA has already  approved in principle AUT's plan for
re-engining the Boeing 727, because the Rolls Royce RB211-535E4  powerplants are
considered modern, high bypass powerplants. The FAA has further stated that this
can be the  subject  of a  Supplemental  Type  Certificate  as opposed to a Type
Certificate, which requires a much more rigorous approval process.

     The FAA also has authority under the Noise Control Act of 1972, as amended,
to monitor and regulate  aircraft engine noise.  AUT's management  believes that
the aircraft which AUT intend to operate will be in compliance with  regulations
promulgated  by the FAA and that such aircraft  will also comply with  standards
for aircraft exhaust  regulations  promulgated by the  Environmental  Protection
Agency  pursuant to the Clean Air Act of 1979,  as amended.  In addition,  AUT's
operations  may be subject to local  regulation  with respect to noise  control.
Such  authorities  and ordinances  could  restrict AUT's use of older  aircraft,
which produce greater engine noise than newer models.

     On January 1, 2000,  more  stringent  noise and emission  standards  became
mandatory in the U.S. and Europe.  These  regulations will force existing owners
of Boeing  727  aircraft  to make the hard  decisions  that have  probably  been
postponed for years.  Owners of these aircraft will either have to replace these
airplanes  with  new  airplanes  or  have  these  older  aircraft  brought  into
compliance.  AUT  believe  that these new  regulations  will open up an untapped
market with the potential to generate significant revenues.

     Because of the extensive use of radio and other communication facilities in
AUT's  anticipated  aircraft  operations,  AUT will be  subject  to the  Federal
Communications Commission Act of 1934, as amended (the "FCC Act") and regulation
thereunder by the Federal  Communications  Commission ("FCC").  AUT believe that
AUT will be in compliance with all material  requirements of the FCC Act and the
FCC.

     Compliance  with the regulatory  requirements  applicable to AUT's business
imposes material burdens on AUT,  including license  requirements,  maintenance,
training, record keeping and reporting obligations and limitations on the manner
in which AUT may operate its  aircraft.  Further,  the cost of  compliance  with
these  requirements  is  significant.  Management  believes,  however,  that the
regulatory  requirements  applicable to AUT generally are no more  burdensome to
AUT than to other businesses operating in the aviation services industry.

     In  addition,  AUT's  activities  will  be  subject  to  regulation  by the
regulatory  authorities of the  respective  foreign  jurisdictions  in which AUT
anticipates its will do business.




                                       2
<PAGE>






     Patents - AUT does not  presently  own any patents,  trademarks,  licenses,
concessions or royalties. The Company's success, however, depends in part on the
ability of its founder to obtain United States and foreign patent protection for
the tire valve cap,  which is currently in process,  preserve its trade secrets,
and operate without infringing upon the proprietary rights of third parties.

     There can be no assurance, however, that any patents will be issued for the
product or that, if issued, the breadth or degree of protection of these patents
will be adequate to protect the Company's interests.  In addition,  there can be
no assurance that others will not independently develop substantially equivalent
proprietary  information  or obtain access to the Company's  know-how.  Further,
there can be no  assurance  that  others  will not be issued  patents  which may
prevent the sale of the Company's  product or require  licensing and the payment
of  significant  fees or  royalties by the Company in order for it to be able to
carry on its  business.  Finally,  there can be no  guarantee  that any  patents
issued to or licensed by the Company  will not be  infringed  by the products of
others.  Defense and  prosecution  of patent  claims can be  expensive  and time
consuming,  even in those  instances  in which the outcome is  favorable  to the
Company.  If the outcome is adverse, it could subject the Company to significant
liabilities to third parties,  require the Company to obtain licenses from third
parties or require the Company to cease its marketing activities.

     Competition  - In the  re-engineering  project,  the  Company  had a direct
competitor in terms of a re-engineering  company, the Aerospace Division of B.F.
Goodrich Co.  However,  AUT found many flaws in their design and  considered its
technology to be inferior.  Even though the competitor has the resources of B.F.
Goodrich  Aerospace behind it, their product "The Super 27" is considered a weak
solution to the  problem by AUT,  when  compared  to the program  which could be
performed by the Company. Further, once re-engined, AUT's planes would have soon
sold in competition against Boeing 757's and other newly manufactured planes.

     Research and Development - AUT is not currently conducting any research and
development  activities.  AUT does not anticipate  conducting such activities in
the near future.

     Insurance - The Company has not yet acquired any of the necessary insurance
coverage  typically  required  in  the  aviation  maintenance  industry.  Before
commencing full scale  operations,  the Company will have to secure insurance to
cover general aviation liability and, for clients who are maintaining  ownership
over their aircraft and simply paying for a retrofit,  hangar keeper  insurance.
Typical policy limits for such insurance  coverage are  $200,000,000 for general
aviation  liability and $200,000,000 of hangar keeper insurance,  plus customary
coverage  for other  business  insurance.  Because of the nature of the aviation
business,  even with these insurance limits in force,  there can be no assurance
that such  coverage  will fully  protect us  against  all losses  which we might
sustain. Moreover, typical policies carry a high deductible, which might require
the payment of as much as $20,000 for any loss or damage,  before this insurance
can be engaged.

     The Company is also  investigating  the  availability of product  liability
insurance for its products and intends to obtain product liability coverage,  if
available,  on  terms  acceptable  to  the  Company.  However,  there  can be no
assurance that product  liability  insurance will be available to the Company on
terms that it can afford,  or at all, or that the Company  will ever obtain such
insurance.

     Employees  - AUT  currently  has one  full-time  employee,  who is also the
founder and majority stockholder.  Additional employees are expected to be added
as the Company  sustains  growth.  The Company from time to time supplements its
permanent  staff  with  temporary   personnel.   The  current  employee  is  not
represented by a union nor is subject to a collective bargaining agreement,  and
the Company  considers its relation with its employee to be favorable.  AUT also
utilizes  the  services  of  consultants  for  investor  and  public  relations,
accounting, legal and other services.





                                       3
<PAGE>







Item 2.  Properties

     AUT  leases no  property  directly.  The  Company's  founder  and  majority
stockholder  provides  approximately 400 square feet of office space through his
privately  held  marketing  company  for which AUT pays  $1,500  per month  rent
reimbursement.


Item 3.  Legal Proceedings

     The Company  anticipates  that it will file an  antitrust  lawsuit  against
third party suppliers with whom it had negotiated with for the upgrade of Boeing
727  aircraft,  but who failed to  complete  the deal,  and  against an aircraft
manufacturer who the Company believes thwarted those efforts.


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

     On November 30, 1999, a stockholder  meeting was held,  however, no matters
were submitted for a vote of the stockholders.


PART II


Item 5.  Market for Common Equity and Related Stockholder Matters

     There is no trading  market for the AUT's  common  stock at present.  AUT's
securities  are not listed for  trading on any  exchange or  quotation  service.
Management has not undertaken any  discussions,  preliminary or otherwise,  with
any prospective  market maker concerning the  participation of such market maker
in the  market  of the  Company's  securities.  Management  does not  intend  to
initiate  any  discussion  until such time as the Company has filed all required
financial  statements  and  disclosure  documents.  There is no assurance that a
trading  market will ever develop or, if such market does in fact develop,  that
it will continue.

     The  Company  is 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 8, 2001,  there were 44 record holders of the Company's  common
stock.

     As of March 8, 2001,  there are  456,000  outstanding  warrants to purchase
shares of our  common  stock.  Each  warrant  entitles  the  holder the right to
purchase of an additional share of common stock at $0.10.  These warrants expire
three years from the date of issuance.

     AUT has not  paid any  cash  dividends  since  its  inception  and does not
contemplate  paying dividends in the foreseeable  future. It is anticipated that
earnings, if any, will be retained for the operation of the Company's business.

     Recent  Sales of  Unregistered  Securities  - During the fiscal  year ended
December  31,  1999,  AUT sold  unregistered  shares of its common  stock in the
following transactions:

     o In April 1999, AUT sold 75,000 shares of common stock to two investors in
the United States,  20,000 of which included  warrants to purchase an additional
20,000 shares of common stock at $0.10 per share.



                                       4
<PAGE>





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

     General - AUT was organized in 1999 for the purpose of upgrading engines in
Boeing 727 aircraft  currently in the marketplace to extend their efficiency and
life. After months of negotiations  with several aircraft engine  manufacturers,
for the  purchase  and upgrade of  engines,  each  company  withdrew at the last
minute from executing a final contract.  AUT believes the  withdrawals  were the
result of pressure from a major aircraft manufacturer fearing a reduction in the
sale of new  aircraft  if the  lives of  existing  aircraft  were  significantly
increased as proposed by AUT. AUT is considering  antitrust  litigation  against
these companies, including the aircraft manufacturer. Since the untimely halt of
that  plan,  AUT has  continued  its  business  development  efforts  in 2000 by
evaluating  several  businesses in the airline  industry,  including an aircraft
maintenance  company  and an  aircraft  leasing  company  specializing  in cargo
aircraft. Ultimately, none of these deals was economically feasible for AUT.

     Liquidity  and Capital  Resources  - AUT has  generated  no revenues  since
inception.  The cash on hand as of  December  31, 1999 was zero.  Total  current
liabilities  were $54,509 as of December 31, 1999. As of December 31, 1999,  AUT
had an accumulated  deficit of $54,509.  In the absence of any sales or profits,
AUT shall continue to seek funding to meet its working capital needs through the
sale of its securities.

     Results of Operations-Period Ended December 31, 1999 - Since its inception,
AUT has  generated no  revenues.  Total  operating  expenses for the year period
December 31, 1999 were $125,674.  Majority of its operating  expenses  relate to
the preparation costs of raising capital. In the period ended December 31, 1999,
AUT's net loss was $129,509.

     Total  liabilities  were  $54,509 at December  31, 1999 which were due to a
related party.

     Plan of  Operation  For Next  Twelve  Months - AUT's plan of  operation  is
materially  dependent on its ability to generate  revenues or raise  substantial
capital.  AUT does not anticipate  that it will be able to generate  significant
revenues in the next twelve  months.  AUT can make no  prediction as to when, if
ever,  it will be able to conduct its  operations  on a  profitable  basis.  The
report of AUT's  independent  accountants for the fiscal year ended December 31,
1999 states that due to  recurring  losses from  operations,  the absence of any
operating  revenues and limited capital  resources,  there is substantial  doubt
about AUT's ability to continue as a going concern.

     AUT  is  considering   antitrust   litigation   against  several   aircraft
manufacturers.  In addition, AUT is in the process of evaluating the purchase of
an  aircraft  leasing  company  specializing  in  cargo  aircraft.  AUT has been
negotiating  with several  investment  and/or lending groups to obtain financing
for the purchase of various businesses.  Any business development proposals must
be tailored to the funding  groups'  objectives.  In addition,  it is of extreme
importance to find a solid and profitable  business to purchase.  In the absence
of any sales or profits,  AUT shall continue to seek funding to meet its working
capital needs through the sale of its securities.

     AUT  anticipates  that it needs to raise  additional  capital  to  develop,
promote  and  conduct  our  operations.  Such  additional  capital may be raised
through  public or private  financing as well as borrowings  and other  sources.
There can be no assurance that additional funding will be available on favorable
terms,  if at all. If adequate  funds are not  available,  AUT believes that the
officers  and  directors  of the Company  will  contribute  funds to pay for its
expenses.

     AUT is not currently  conducting any research and  development  activities.
AUT does not anticipate  conducting any other such activities in the next twelve
months.  We do not  anticipate  that we will  purchase  or sell any  significant
equipment  in the next six to  twelve  months  unless  we  generate  significant
revenues.

     Although AUT does not anticipate any  significant  changes in the number of
employees,  AUT may not be able to retain its present  employees  if  additional
financing  is not  obtained.  The loss of key  employees  could  have a material
adverse effect upon the operations of AUT.


                                       5
<PAGE>





     Forward  Looking  Statements  - This Form 10-KSB  contains  forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995.  Such  forward-looking  statements  made by AUT involve  known and unknown
risks,  uncertainties  and other  factors  which may cause the  actual  results,
performance or  achievements  of AUT 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; the ability of AUT to
sustain, manage or forecast its growth; the of 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.  AUT's management disclaims any obligation to
forward-looking  statements  contained  herein to  reflect  any  change in AUT's
expectation   with  regard   thereto  or  any  change  in  events,   conditions,
circumstances or assumptions underlying such statements.




                                       6
<PAGE>









Item 7.  Financial Statements

Independent Auditors' Report.................................................. 8

Balance Sheets as of December 31, 1999.........................................9

Statements of Operations for the period
January 8, 1999 (inception) through December 31, 1999.........................10

Statements of Stockholders' Equity (Deficit)
for the period January 8, 1999 (inception) through December 31, 1999..........11

Statements of Cash Flows for the period January 8, 1999
(inception) through December 31, 1999.........................................12

Notes to Financial Statements ...........................................13 - 16
















                                       7
<PAGE>


                          Independent Auditors' Report
                          ----------------------------


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



     We  have  audited  the  accompanying  balance  sheet  of  Aviation  Upgrade
Technologies,  Inc.  (the  "Company")  as of December 31, 1999,  and the related
statement of operations,  stockholders'  equity (deficit) and cash flows for the
period January 8, 1999  (inception)  through  December 31, 1999. These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility is to express an opinion on the financial statements based on our
audits.

     We conducted  our audit in  accordance  with  generally  accepted  auditing
standards.  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 audit provides 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, 1999,  and the results of its  operations
and its cash flows for the period January 8, 1999  (inception)  through December
31, 1999 in conformity with generally accepted accounting principles.

     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 is a start up company which has experienced significant
losses  since  inception  with no  revenues.  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
January 11,  2001



                                       8
<PAGE>




                       AVIATION UPGRADE TECHNOLOGIES, INC.

                                 BALANCE SHEETS

                                DECEMBER 31, 1999


                                     ASSETS

CURRENT ASSETS
   Cash .........................................................   $          0
                                                                    ------------
     Total current assets .......................................              0

OTHER ASSETS ....................................................              0
                                                                    ------------
                                                                    $          0
                                                                    ============
                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
   Due to related party .........................................   $     54,509
                                                                    ------------
     Total current liabilities ..................................         54,509
                                                                    ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)
   Common stock, $0.001 par value; 100,000,000 shares authorized;
     10,000,000 shares issued and outstanding ...................         10,000
   Common stock subscribed, $.001 par value; 75,000 shares ......             75
   Additional paid-in capital ...................................         64,925
   Accumulated deficit ..........................................      (129,509)
                                                                    ------------
     Total stockholders' equity (deficit) .......................       (54,509)
                                                                    ------------
                                                                    $          0
                                                                    ============



















            See the accompanying notes to these financial statements


                                       9
<PAGE>



                       AVIATION UPGRADE TECHNOLOGIES, INC.

                            STATEMENTS OF OPERATIONS

              JANUARY 8, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999




REVENUES                                                       $               0
                                                               -----------------
COST OF SALES                                                                  0
                                                               -----------------
GROSS PROFIT (LOSS)                                                            0
                                                               -----------------
OPERATING EXPENSES
   General and administrative ($18,000
   of rent was paid to a related party)                                  125,674
                                                               -----------------
LOSS FROM OPERATIONS                                                   (125,674)
                                                               -----------------
OTHER INCOME (EXPENSE)
   Interest expense                                                      (3,835)
                                                               -----------------
NET LOSS                                                       $       (129,509)
                                                               =================
BASIC AND DILUTED LOSS PER COMMON SHARE                        $          (0.01)
                                                               =================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                             9,943,978
                                                               =================





























            See the accompanying notes to these financial statements


                                       10
<PAGE>



                       AVIATION UPGRADE TECHNOLOGIES, INC.

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
              JANUARY 8, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999


<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, January 8, 1999 (inception) ...............0   $        0            0   $        0   $        0    $        0    $       0


Common stock issued to founder ............10,000,000       10,000            0            0      (10,000)            0            0
Common stock subscribed for $1.00 per
  share ............................................0            0       75,000           75       74,925             0       75,000
Net loss ...........................................0            0            0            0            0      (129,509)   (129,509)
                                           ----------   ----------     ---------  ----------   ----------    -----------  ----------
Balance, December 31, 1999 ................10,000,000   $   10,000       75,000   $       75   $   64,925    $ (129,509)  $ (54,509)
                                           ==========   ==========     =========  ==========   ==========    ===========  ==========

</TABLE>
























            See the accompanying notes to these financial statements

                                       11
<PAGE>




                       AVIATION UPGRADE TECHNOLOGIES, INC.

                            STATEMENTS OF CASH FLOWS

              JANUARY 8, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999

<TABLE>
<CAPTION>

<S>                                                                             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss .................................................................   $(129,509)
   Adjustments to reconcile net loss to net cash used in operating activities
     Changes in operating assets and liabilities
       Due to related party .................................................      54,509
                                                                                ----------
         Net cash used in operating activities ..............................     (75,000)
                                                                                ----------
CASH FLOWS FROM FINANCING ACTIVITIES
   Common stock subscribed ..................................................      75,000
                                                                                ----------
         Net cash provided by financing activities ..........................      75,000
                                                                                ----------
NET CHANGE IN CASH ..........................................................           0

CASH, beginning of period ...................................................           0
                                                                                ----------
CASH, end of period .........................................................   $       0
                                                                                ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
   Cash paid during the period for interest .................................   $   3,835
   Cash paid during the period for taxes ....................................   $       0


</TABLE>









            See the accompanying notes to these financial statements

                                       12
<PAGE>



                       AVIATION UPGRADE TECHNOLOGIES, INC.

                          NOTES TO FINANCIAL STATEMENTS

              JANUARY 8, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999




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.  The primary
purpose  for the Company was to  develop,  market and install  modifications  to
aircraft,  such as the Boeing 727, which were designed to improve and extend the
economic  life of these  aircraft by bringing them into  compliance  with strict
noise and emission control levels as they became mandatory in the years ahead.

     In  mid-1999,  however,  after  months  of  negotiations  with a number  of
aircraft  engine  manufacturers,  for the purchase of new engines,  each company
withdrew at the last minute from  executing a final  contract.  AUT believes the
withdrawals  were the  result of  pressure  from a major  aircraft  manufacturer
fearing  a  reduction  in the sale of new  aircraft  if the  lives  of  existing
aircraft  were  significantly  increased  as proposed by AUT. AUT has retained a
prominent  antitrust  law firm on a  contingency  basis and on June 30, 2000 AUT
filed an antitrust  lawsuit  against  these  companies,  including  the aircraft
manufacturer (see Note 8).

     In its efforts to continue  business  development,  AUT  evaluated  several
businesses  for  purchase  during the latter half of 1999 and  throughout  2000,
including  an  aircraft  maintenance  company and an  aircraft  leasing  company
specializing in cargo aircraft, none of which came to fruition. AUT is currently
negotiating  with its founder and majority  stockholder for the marketing rights
for an electronic tire valve cap for airplanes and/or automobiles that blinks if
the tire pressure falls below an initially calibrated level.

     Going Concern - AUT hopes to obtain revenues from future product sales, but
there is no  commitment  by any person for purchase of the  Company's  potential
product.  In the absence of significant sales and profits,  the Company may 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.

     Equipment - During the period from  inception  to December  31,  1999,  AUT
purchased an insignificant  amount of equipment.  The Company elected to expense
these purchases immediately.

     Basic and Diluted  Loss Per Share - The Company  has adopted  Statement  of
Financial  Accounting Standards No. 128 "Earnings Per Share" ("SFAS 128"). 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  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.


                                       13
<PAGE>



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

     Use of Estimates - The  preparation  of financial  statements in conformity
with  generally  accepted  accounting  principles  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.

     Risks  and  Uncertainties  - AUT  is a  start  up  company  subject  to the
substantial  business  risks  and  uncertainties  inherent  to such  an  entity,
including the potential risk of business failure.

     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.

     Start Up  Activities  - The Company has adopted  Statement  of Position No.
98-5  ("SOP  98-5"),  "Reporting  the Costs of  Start-Up  Activities."  SOP 98-5
requires  that all  non-governmental  entities  expense  the  costs of  start-up
activities, including organization costs as those costs are incurred.


NOTE 2 - INCOME TAXES

     No provisions for income taxes for the period  January 8, 1999  (inception)
through December 31, 1999 is required, except for minimum state taxes, since the
Company incurred taxable losses during these periods.

     As  of  December  31,  1999  the  Company's  only  deferred  tax  item  was
capitalized start-up costs of approximately  $130,000. Due to the Company's lack
of operations, no deferred tax benefit has been recognized for this deferred tax
asset.


NOTE 3 - COMMITMENTS

     Operating Lease - AUT has no operating  leases.  The Company's  founder and
majority stockholder provides  approximately 400 square feet of office space for
its use through his privately held marketing company.

     Rent  expense  was  $18,000  for the period  from  January 8, 1999 (date of
inception) to December 31, 1999.




                                       14
<PAGE>







NOTE 4 - WARRANTS

     During 1999, the Company issued 20,000 warrants in connection with the sale
of its common  stock to  investors.  For each  share of stock  sold at $1.00,  a
warrant was issued for the  purchase of an  additional  share of common stock at
$0.10. These warrants expire three years from the date of issuance.

    The following represents a summary of the warrants outstanding as of
    December 31, 1999:

                                                                      Wtd Avg
                                                    Shares            Ex Price
                                                  ------------     -------------

    Outstanding, beginning of period                    0        $        0

    Granted                                        20,000              0.10
    Expired/forfeited                                   0                 0
                                                  ------------     -------------
    Outstanding, end of period                     20,000        $     0.10
                                                  ============     =============
    Weighted average fair value of                               $     0.10
    warrants granted                                             ===============


    The outstanding warrants at December 31, 1999 are all held by stockholders.



NOTE 5 - STOCKHOLDERS' EQUITY (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  therefore 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.

     All 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.

     In April 1999,  the  Company  received  $75,000 for the  purchase of common
stock at $1.00 per share.  As of December  31,  2000,  none of these shares have
been issued and the stock is considered subscribed.




                                       15
<PAGE>






NOTE 6 - LOSS PER SHARE

     The following is a reconciliation of the numerators and denominators of the
basic and diluted loss per share computations at December 31, 1999:

         Numerator for basic and diluted loss per share
           Net loss                                            $       (129,509)

         Denominator for basic and diluted loss per share
           Weighted average shares                                     9,943,978

         Basic and diluted loss per share
           Net loss                                            $          (0.01)


NOTE 7 - 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, including
400 square feet of office space,  through his privately held marketing  company.
All amounts  advanced to AUT are reflected in due to related party and amount to
$5,287 and $54,509 as of December 31, 2000 and 1999, respectively.


NOTE 7 - SUBSEQUENT EVENTS

     During  2000,  AUT  issued  148,500  shares  of 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.

     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  generally  accepted  accounting  principles 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.

     During the year ended December 31, 2000, AUT conducted a Regulation D, Rule
506 Offering  ("Rule 506 Offering") of the common stock in the United States and
a  Regulation  S  offering  of common  stock  overseas.  As part of the Rule 506
Offering,  the Company  issued 40,000 shares of common stock for aggregate  cash
consideration  of  $40,000.  As part of the  Regulation  S offering , AUT issued
396,000 shares of common stock for aggregate cash consideration of $396,000.

     On June 30, 2000, AUT filed a $2.5 billion  antitrust lawsuit against third
party  suppliers with whom it had negotiated  with for the upgrade of Boeing 727
aircraft  for  failure  to execute a final  contract  and  against  an  aircraft
manufacturer  who AUT believes  exerted pressure on the suppliers not to execute
the final contract. The defendants filed a motion for dismal of charges but were
denied on all counts.  At this time,  the lawsuit is in the discovery  phase and
any possible outcome cannot be predicted.


                                       16
<PAGE>




Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosures

     On June 15, 2000,  AUT decided  that Barry L.  Friedman,  Certified  Public
Accountant would no longer be retained as the Company's  independent  accountant
for the  fiscal  years  ended  December  31,  2000 and  1999.  Accordingly,  the
client-independent  accountant  relationship was terminated as of that date. Mr.
Friedman's  report on the  Company's  financial  statements  for the period from
inception  to July 31, 1999 did not contain any adverse  opinion or a disclaimer
of opinion, or was not qualified,  but contained an explanatory  paragraph as to
the Company's ability to continue as a going concern.

     On December 30, 2000, a new independent  accounting firm,  Lesley,  Thomas,
Schwarz  &  Postma,  Inc.,  Newport  Beach,  California,  was  engaged  as AUT's
independent  accountants.  From the  Company's  inception  to July 31,  1999 and
subsequent interim periods, the Company did not consult Lesley,  Thomas, Schwarz
& Postma, Inc., regarding (i) either the application of accounting principles to
a specified  transaction  or the type of audit opinion that might be rendered on
the Company's financial statements, or (ii) any matter that was the subject of a
disagreement or was a reportable event.


PART III

Item 9.   Directors and Executive Officers of the Registrant

     The executive  officers and  directors of AUT, the positions  held by them,
and their ages as of March 8, 2001 are as follows:

         Name                    Age                    Position
------------------------       --------     ------------------------------------
Torbjorn B. Lundqvist             48        Chairman and Chief Executive Officer
Dick G. Lindholm                  50        Director
William S. Rhodes                 50        Director


     Torbjorn B. Lundqvist - Mr. Lundqvist has been the Chief Executive  Officer
and Chairman of the Company's Board of Directors since the Company's  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/President of Minitec  Marketing,  Inc. which is an import/export
firm  dedicated to finding  buyers/sellers  for a wide range of products.  Among
other things,  Minitec invented,  patented and manufactured a Power Take Out for
4-wheel  drive GM vehicles.  The product was developed to suit a niche market in
Finland.  Since 1989 he has also been  Owner/President of Minitec Motors,  Inc.,
USA, a car  dealership  specializing  in exporting  cars to niche  markets.  Mr.
Lundqvist is married with two children and resides in Orange County, California.






                                       17
<PAGE>








     Dick Lindholm - Mr.  Lindholm has been the Vice President and a director of
the Company since December 1999. Mr. Lindholm is known in the aircraft  industry
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  8000  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 either  Director  or  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,  the world's  leading
helicopter  company.  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,  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.

     William S. Rhodes - Mr. Rhodes has been the President and a director of the
Company  since August 2000.  Mr.  Rhodes is well known 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. Mr. Rhodes has
been involved in the day to day management in DOD 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, Dynair, and Avtel Services. 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.

     The Company's success is principally  dependent upon its current management
personnel  for  the  operation  of its  business.  In  particular,  Torbjorn  B.
Lundqvist, its founder and Chief Executive Officer, has played a crucial role in
the  development  and management of AUT.  There is no assurance that  additional
managerial assistance will not be required. If the Company loses the services of
its  executive  officer or one or more  directors  or its ability to attract and
retain such personnel, the business,  financial condition, results of operations
and cash flows will be materially and adversely affected.

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.

    AUT believes that during 1999 no Section 16(a) filings were required.




                                       18
<PAGE>











Item 10.  Executive Compensation And Other Information

     Cash  Compensation  of Executive  Officers - The following table sets forth
the total  compensation  earned by the Chief Executive Officer and Directors per
annum since inception.


<TABLE>
<CAPTION>

                                        Annual Compensation                           Long-Term Compensation
                      ----------------------------------------------------------------------------------------------

                                                                                Restricted       Common Shares
                                                                 Other            Stock        Underlying Options
                                                 Annual          Awards          Granted           Granted            All Other
  Name and Position     Year       Salary         Bonus       Compensation       (# Share)        (# Shares)        Compensation
----------------------------------------------- -----------------------------------------------------------------------------------

<S>                     <C>         <C>             <C>            <C>           <C>                   <C>                 <C>
Torbjorn B.             1999        $-0-           -0-            -0-            10,000,000           -0-                 -0-
Lundqvist, Chairman
and CEO

Dick G. Lindholm,       1999         -0-           -0-            -0-               -0-               -0-                 -0-
Director

William S. Rhodes,      1999         -0-           -0-            -0-               -0-               -0-                 -0-
Director (2)

Darle K. Ford,          1999         -0-                          -0-               -0-               -0-                 -0-
Former Director (1)

</TABLE>

     1.    Mr. Ford resigned as Director in July, 2000.

     Director   Compensation   -  Board   members  are  serving   without   cash
compensation.  During 2000,  directors received shares of AUT's common stock for
their services to the Company. 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  Agreements - The Company anticipates that it will enter into an
employment  agreement  with Mr.  Lundqvist to employ him as its Chief  Executive
Officer.















                                       19
<PAGE>









Item 10.  Executive Compensation And Other Information (continued)

     Indemnification of Directors - Insofar as  indemnification  for liabilities
arising under the  Securities  Act may be permitted to  directors,  officers and
controlling persons of the Company pursuant to the provisions in its Articles of
Incorporation,  78 et seq.  of the Nevada  Code,  the  Bylaws of the  Company or
otherwise,  AUT has been  advised  that in the  opinion  of the  Securities  and
Exchange  Commission (the "Commission")  such  indemnification is against public
policy as expressed in the Act, and is, therefore,  unenforceable.  In the event
that a claim  for  indemnification  against  such  liabilities  (other  than the
payment by the  Company of expenses  incurred or paid by a director,  officer or
controlling person of the Company in the successful defense of any action,  suit
or proceeding) is asserted by such  director,  officer or controlling  person in
connection with the securities being registered, the Company will, unless in the
opinion of counsel the matter has been settled by controlling precedent,  submit
to a court of appropriate jurisdiction the question whether such indemnification
by it is against  public policy as expressed in the  Securities  Act and will be
governed by the final adjudication of such issue.


Item 11.  Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth certain information regarding the beneficial
ownership  of the shares of common  stock as of March 8, 2001 by (i) each person
who is known by the Company to be the beneficial owner of more than five percent
(5%) of the  issued and  outstanding  shares of common  stock,  (ii) each of the
Company's directors and executive officers and (iii) all directors and executive
officers as a group.  Except as otherwise  indicated,  each  stockholder  listed
below has sole  voting  power and  investment  power with  respect to the shares
beneficially owned by such person.

                                                  Number              Percentage
         Name and Address *                      Of Shares               Owned
 ----------------------------                   -----------           ----------
 Torbjorn B. Lundqvist                           10,000,000              93.8%
 Dick G. Lindholm                                    35,000               0.3%
 William S. Rhodes                                   10,000               0.1%
 All Directors and Officers
 as a group (3 persons)                          10,045,000              94.2%

*  Address is 24040 Camino del Avion, #A303, Monarch Beach, CA  92629


Item 12.  Certain Relationships and Related Transactions

     AUT's  founder and  majority  shareholder  provides  substantially  all the
assets  used by the  Company,  including  its 400 square  feet of office  space,
through his privately held  marketing  company.  AUT has reimbursed  this entity
$1,500 per month for the use of this space.











                                       20
<PAGE>






Item 13.  Exhibits, Financial Statement Schedules and Reports on Form 8-K



(A)    The following financial statements are included in Part II, Item 7.

<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>                                                                                                              <C>

Independent Auditors' Report......................................................................................7

Balance Sheets as of December 31, 1999............................................................................8

Statements of Operations for the period January 8, 1999 (inception) through December 31, 1999.....................9

Statements of Stockholders' Equity (Deficit) for the period January 8, 1999 (inception)
   through December 31, 1999.....................................................................................10

Statements of Cash Flows for the period January 8, 1999 ( inception) through December 31, 1999...................11
Notes to Financial Statements ..............................................................................12 - 15

</TABLE>

(A2).....Financial Statement Schedules - Not Applicable

(A3).....List of Exhibits Filed as Part of the Report

Exhibit No.
3.1            Certificate of Incorporation of the Company(1)
3.2            Bylaws of the Company(2)
3.3            Certificate of Amendment(3)
4.1            Specimen of Common Stock Certificate (12)
4.2            Certificate of Designations
(B)            Reports on Form 8-K - There were no reports on Form 8-K




















                                       21
<PAGE>





                                   SIGNATURES

In accordance  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. Lunqvist
                                        ----------------------------------------
                                            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 and Chief Executive       March 23, 2001
Torbjorn B. Lundqvist          Officer (principal executive
                               officer)

/s/  Dick G. Lindholm          Vice President, Director           March 23, 2001
Dick G. Lindholm

/s/    William S. Rhodes       President, Director                March 23, 2001
William S. Rhodes





























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