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, 2003


[ ] 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, 2003 was $0.

The aggregate market value of the voting stock held by non-affiliates of the
issuer as of March 29, 2004 was $0.

The number of shares of the common stock outstanding as of March 29, 2004 was
11,347,000

                      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 and 2003 on a timely basis.

ITEM 1.  DESCRIPTION OF BUSINESS

         BUSINESS DEVELOPMENT. We were incorporated in Nevada on January 8,
1999. We have had no revenue from operations since inception and no firm orders
for our Air Alert Valve Cap product. 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.

         Our primary activities during 1999 consisted of interviewing and making
decisions on key personnel, locating possible facilities for the original
business plan of upgrading Boeing 727 aircraft, and making contact with and
engaging various persons with requisite engineering, financing, accounting or
legal expertise. 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 dismissal of
charges but were denied on all counts. On July 9, 2002, the court issued a
series of rulings in the Boeing litigation which dismissed our claims against
Boeing, CFMI and Rolls-Royce. Although the judge found ample evidence of a
conspiracy to exclude AUT from re-engining the Boeing 727s and thus entering the
market in competition with Boeing 757s and 737s, the court also found that we
had not sustained the burden of establishing that we could have raised the
financing necessary to go forward with the project. The judge, however, declined
to award the Boeing defendants' costs in the approximate amount of $50,000. We
filed a notice to appeal the court's ruling on August 2, 2002. In October 2003,
the Court of Appeals affirmed this decision and management, acting on the advice
of counsel, decided not to take an appeal to the U.S. Supreme Court because the
defendants agreed to waive costs to which they would otherwise have been
entitled.

         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. Through December
31, 2003, the Company has incurred $152,645 in total costs for development of
this product.

         PRODUCTS. Aircraft Re-engining. We were originally formed for
re-engining and upgrading of the Boeing 727. Due to the unwillingness of the
third party suppliers to execute their contracts with us, we were forced to
abandon that business.

                  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. No sales of the Air Alert Valve
Cap have been made as of the date of this annual report.


                                       2
<PAGE>

                  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 late 2004.

         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 a limited production run to allow AUT
to establish credibility with our potential customers. Mass production is
scheduled to start in April 2004.

         MARKETING. We believe that our primary target market will consist of
major retailers with a secondary focus on automobile manufacturers and tire
manufacturers. 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.

         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 guaranty 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 guaranty, 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
guaranty that others will not independently develop substantially equivalent
proprietary information or obtain access to our know-how. Further, we cannot
guaranty 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 guaranty 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.


                                       3
<PAGE>

         COMPETITION. Competition for the electronic tire valve cap is limited.
To our knowledge, there is only one mechanical tire valve cap on the market,
which is sold by several companies under different brand names. Our review and
testing of this product has indicated to us that it is unreliable and
inefficient due to its 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. In connection with
the licensing agreement, we have paid $152,645 to our chief executive officer,
and other vendors, as reimbursement and payment for all costs incurred through
December 31, 2003 in developing the electronic valve cap and electronic 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 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.


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, 2004. 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:

         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 dismissal of charges but
were denied on all counts. On July 9, 2002, the court issued a series of rulings
in the Boeing litigation which dismissed our claims against Boeing, CFMI and
Rolls-Royce. Although the judge found ample evidence of a conspiracy to exclude
AUT from re-engining the Boeing 727s and thus entering the market in competition
with Boeing 757s and 737s, the court also found that we had not sustained the
burden of establishing that we could have raised the financing necessary to go
forward with the project. The judge, however, declined to award the Boeing
defendants' costs in the approximate amount of $50,000. We filed a notice to
appeal the court's ruling on August 2, 2002. In October 2003, the Court of
Appeals affirmed this decision and management, acting on the advice of counsel,
decided not to appeal to the U.S. Supreme Court because the defendants agreed to
waive costs to which they would otherwise have been entitled.


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, 2003.


                                       4
<PAGE>

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, 2003; 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 29, 2004, there were 96 record holders of our common stock.

         As of March 29, 2004, 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.

         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, 2003, we issued unregistered shares of our Common Stock in the
following transactions:

         During the three month period ended March 31, 2003, outstanding
warrants to purchase 6,000 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.

         During the three month period ended June 30, 2003, outstanding warrants
to purchase 77,000 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.


                                       5
<PAGE>

         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. 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, 2003, outstanding
warrants to purchase 36,116 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.

         In February 2004, outstanding warrants to purchase 30,466 shares of
common stock were exercised by the holder. 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
two investors for the sale of 55,000 shares of common stock at $.909 per share.
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. To date we have had no revenue from operations. The primary
activities during 1999 consisted of interviewing and making decisions on key
personnel, locating possible facilities for the original business plan of
upgrading Boeing 727 aircraft, and making contact with and engaging various
persons with requisite engineering, financing, accounting or legal expertise.
Since the untimely halt of that plan, we continued our 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 us. In addition, in 2000, we pursued and filed an antitrust lawsuit
against the third party suppliers and aircraft manufacturer involved in the
original business plan. As described below in Plan of Operation, we have been
unsuccessful in this litigation and recently lost an appeal of the District
Court's adverse ruling in the case. Due to the failure of our efforts in the
pursuit of this lawsuit, we are no longer pursuing the original business plan.

         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. A preproduction run of the Air Alert Valve Cap was made
in March 2004 and the first mass production batch is scheduled to be shipped
during the month of April 2004.

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

         LIQUIDITY AND CAPITAL RESOURCES. The cash on hand as of December 31,
2003 was $3,986, as compared to $1,342 as of December 31, 2002. Total current
liabilities were $1,070,934 as of December 31, 2003, an increase over the prior
year balance of $365,446, represented primarily by accrued payroll, advances and
legal fees and costs. We had negative working capital of $1,052,660 as of
December 31, 2003, and we had an accumulated deficit of $1,866,866 as compared
to an accumulated deficit of $1,479,437 at December 31, 2002. In May 2001, AUT
filed a Form SB-2 Registration Statement ("Registration Statement), which was
subsequently amended, with the SEC for a secondary public offering of 250,000
shares of common stock at $8.75 per share. The SEC declared the Registration
Statement effective on March 4, 2002. In June 2002, 3,000 shares were issued by
the Company in connection with the Registration Statement for total cash
consideration of $26,250. Total offering costs for the two years ended December


                                       6
<PAGE>

31, 2002 and 2001 consisting of legal expenses and filing fees amounted to
$26,250. The Registration Statement was withdrawn on October 30, 2002 and the
unsold shares were deregistered. In addition, during the year ended December 31,
2002, the Company issued 253,418 shares and subscribed 3,000 shares of common
stock upon the exercise of warrants at $0.10 per share for total cash
consideration of $25,642. During the year ended December 31, 2003, AUT issued
119,116 shares of common stock upon the exercise of warrants for total cash
consideration of $11,915. During 2003, we also sold 100,000 shares of additional
common stock and profit participations for total cash consideration of $163,000.
On March 1, 2004, we sold 55,000 shares of our common stock for $50,000. All
proceeds for these issuances were used for 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 29, 2004, we are
unable to satisfy our cash requirements for continuing operations. Our continued
ability to operate is dependent upon the raising of additional capital from the
sale of our securities; however, we have not yet identified any source from
which additional funds could be raised. Accordingly, we are currently unable to
produce or market the Air Alert Valve Cap.

         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. 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 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 is only one mechanical tire valve cap on the market, which is
sold by several companies under different brand names. Our review and testing of
this product has indicated to us that it is unreliable and inefficient due to
its mechanical nature. We have not seen any products which would be in direct
competition to our 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 products, and
therefore, not considered direct competition. We anticipate that we will compete
on the basis of the innovative technology, quality of our products and price.

         Due to the failure of our appeal in the Boeing litigation, our plan of
operation is now 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. We believe
Union Power is committed to manufacturing a limited production run to allow AUT
to establish credibility with our potential customers. 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 produced a pre-production run of Air Alert Valve Caps in March 2004 and the
first mass production run is scheduled to be shipped during April 2004. 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.

         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. In connection with the licensing
agreement, we have paid $152,645 to our chief executive officer, and other
vendors, as reimbursement and payment for all costs incurred through December
31, 2003 in developing the electronic valve cap. 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 product with Mr. Lundqvist and another 1,000 shares of common
stock to another individual for the name "Air Alert Valve Cap."


                                       7
<PAGE>

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

         OFF BALANCE SHEET ARRANGEMENTS.  In applicable.
         ------------------------------

         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.





                                       8
<PAGE>




ITEM 7.  FINANCIAL STATEMENTS

Independent Auditors' Report.................................................10

Balance Sheets as of December 31, 2003 and 2002..............................11

Statements of Operations for the years ended
December 31, 2003, 2002 and 2001.............................................12

Statements of Stockholders' Equity (Deficit) for the years
ended December 31, 2003, 2002 and 2001.......................................13

Statements of Cash Flows for the years ended
December 31, 2003, 2002 and 2001.............................................14

Notes to Financial Statements ..........................................15 - 20





                                       9
<PAGE>




                          Independent Auditors' Report



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, 2003 and 2002, and the
related statements of operations, stockholders' equity (deficit), and cash flows
for the years ended December 31, 2003, 2002 and 2001. 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also 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, 2003 and 2002, and the results of its
operations and its cash flows for the years ended December 31, 2003, 2002 and
2001 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 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 14, 2004



                                       10
<PAGE>



                       AVIATION UPGRADE TECHNOLOGIES, INC.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                     ASSETS

                                                                                            DECEMBER 31,
                                                                                       2003                2002
                                                                                 ----------------    ---------------
<S>                                                                                    <C>                  <C>
CURRENT ASSETS
   Cash                                                                          $         3,986     $         1,342
   Inventory                                                                               8,619                   0
   Prepaid expenses                                                                        5,669                   0
                                                                                 ---------------     ---------------

     Total current assets                                                                 18,274               1,342

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

     Total assets                                                                $        58,624     $         1,692
                                                                                 ===============     ===============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
   Accounts payable                                                              $       509,563     $       390,944
   Due to related party                                                                   38,313              36,632
   Accrued payroll and related expenses                                                  313,560             171,400
   Loan payable, stockholder                                                             113,498             106,512
   Profit participation advances                                                          96,000                   0
                                                                                ----------------    ----------------

     Total current liabilities                                                         1,070,934             705,488
                                                                                 ---------------     ---------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
   Common stock, $0.001 par value; 100,000,000 shares authorized; 11,261,534 and
     11,042,418 shares issued and outstanding at
     December 31, 2003 and 2002, respectively                                             11,261              11,042
   Additional paid-in capital                                                            843,295             764,599
   Accumulated deficit                                                                (1,866,866)         (1,479,437)
                                                                                 ----------------    ----------------

     Total stockholders' deficit                                                      (1,012,310)           (703,796)
                                                                                 ----------------    ----------------

     Total liabilities and stockholders' deficit                                 $        58,624     $         1,692
                                                                                 ===============     ===============
</TABLE>







            See the accompanying notes to these financial statements

                                       11
<PAGE>



                       AVIATION UPGRADE TECHNOLOGIES, INC.

                            STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                                                       Years Ended
                                                               ----------------------------------------------------------
                                                                                      December 31,
                                                               ----------------------------------------------------------
                                                                     2003                 2002                 2001
                                                               ----------------     ----------------     ----------------
<S>                                                                   <C>                  <C>                  <C>
REVENUES                                                       $              0     $              0     $              0

COST OF SALES                                                                 0                    0                    0
                                                               ----------------     ----------------     ----------------

GROSS PROFIT                                                                  0                    0                    0
                                                               ----------------     ----------------     ----------------

OPERATING EXPENSES
   General and  administrative  ($18,000 of rent was paid to
     a related party in 2001)                                           363,140              666,429              313,377
   Research and development                                               8,082               33,136               72,648
                                                              -----------------    -----------------    -----------------
                                                                        371,222              699,565              386,025
                                                              -----------------    -----------------    -----------------

LOSS FROM OPERATIONS                                                   (371,222)            (699,565)            (386,025)

OTHER INCOME (EXPENSE)
   Interest income                                                            0                    0                3,806
   Interest expense                                                     (16,207)              (6,489)                   0
                                                               -----------------    -----------------    ----------------

NET LOSS                                                       $       (387,429)    $       (706,054)    $       (382,219)
                                                               ================     ================     ================

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

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                           11,153,332           11,029,956           10,757,574
                                                               ================     ================     ================
</TABLE>











            See the accompanying notes to these financial statements

                                       12
<PAGE>




                       AVIATION UPGRADE TECHNOLOGIES, INC.

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                  YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

<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, 2000            10,616,500  $   10,617      43,000   $      43   $   617,340   $  (391,164)   $    236,836

Common stock issued for $1.00 per
  share                                  114,000         114     (43,000)        (43)       69,429             0          69,500
Common stock issued for services          52,500          52           0           0        52,448             0          52,500
Cost of funding                                0           0           0           0       (38,340)            0         (38,340)
Net loss                                       0           0           0           0             0      (382,219)       (382,219)
                                     -----------  ----------  ----------   ---------   -----------   -----------    ------------

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)
                                     ===========  ==========  ==========   =========   ===========   ============   =============
</TABLE>






            See the accompanying notes to these financial statements

                                       13
<PAGE>





                       AVIATION UPGRADE TECHNOLOGIES, INC.

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                            YEARS ENDED
                                                                      -------------------------------------------------------
                                                                                            DECEMBER 31,
                                                                      -------------------------------------------------------
                                                                            2003                2002               2001
                                                                      ----------------    ----------------   ----------------
<S>                                                                          <C>                 <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                           $       (387,429)   $       (706,054)  $       (382,219)
   Adjustments to reconcile net loss to net cash used in operating
activities
     Write off of deferred offering costs                                            0              43,877                  0
     Common stock issued for services                                                0                   0             51,000
     Changes in operating assets and liabilities
       Inventory                                                                (8,619)                  0                  0
       Prepaid expenses                                                         (5,669)             10,000                  0
       Other assets                                                            (40,000)                  0               (350)
       Accounts payable                                                        118,618             357,422             29,784
       Due to related party                                                      1,681              13,406             17,939
       Accrued payroll and related expenses                                    142,161             147,728            (26,434)
                                                                      ----------------    ----------------   -----------------

         Net cash used in operating activities                                (179,257)           (133,621)          (310,280)
                                                                      ----------------    ----------------   ----------------


CASH FLOWS FROM FINANCING ACTIVITIES
   Advances from stockholder                                                     6,986             106,512                  0
   Proceeds from issuance of common stock                                       78,915              51,891             71,000
   Proceeds from profit participation investments                               96,000                   0                  0
   Common stock subscribed                                                           0                   0             43,000
   Stock offering costs                                                              0             (31,787)           (38,340)
                                                                      ----------------    -----------------  -----------------

         Net cash provided by financing activities                             181,901             126,616             75,660
                                                                      ----------------    ----------------   ----------------

NET INCREASE (DECREASE) CASH                                                     2,644              (7,005)          (234,620)

CASH, beginning of year                                                          1,342               8,347            242,967
                                                                      ----------------    ----------------   ----------------

CASH, end of year                                                     $          3,986    $          1,342   $          8,347
                                                                      ================    ================   ================


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
   Cash paid during the period for interest                           $         16,207    $              0   $              0
   Cash paid during the period for taxes                              $          1,627    $             17   $          2,455
</TABLE>

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.

    During the year ended December 31, 2001, the Company issued 1,500 shares of
       common stock valued at $1.00 per share for services relating to raising
       capital.





            See the accompanying notes to these financial statements

                                       14
<PAGE>



                       AVIATION UPGRADE TECHNOLOGIES, INC.

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 2003, 2002 AND 2001


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 Company
was originally formed 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. The Company pursued
and filed an antitrust lawsuit against the third party suppliers and aircraft
manufacturer involved in the original business plan. AUT has been unsuccessful
in this litigation and recently lost an appeal of the District Court's adverse
ruling in the case. Due to the failure of our efforts in the pursuit of this
lawsuit, we are no longer pursuing the original business plan.

         In April 2001, AUT 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 sets the pressure inside a control chamber in the valve cap equal
to the pressure in the tire. If the pressure in the tire drops by more than
approximately four pounds per square inch, a red 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 to a
maximum of $50,000. 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
another 1,000 shares of common stock to another individual for naming the
product.

         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
electronic tire valve cap. 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.

         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, 2003 and 2002, 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.

         EQUIPMENT - During the year ended December 31, 2003, AUT purchased an
insignificant amount of equipment. The Company elected to expense these
purchases immediately.



                                       15
<PAGE>



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

         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, 2003 and 2002. During the year ended
December 31, 2001, AUT issued 52,500 shares of common stock for services, 1,500
shares for investor relations services and 51,000 shares were issued in
connection with a licensing agreement for the electronic tire valve cap.

         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 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 $8,082, $33,136 and $72,648 for the years
ended December 31, 2003, 2002 and 2001, 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.



                                       16
<PAGE>




NOTE 2 - INCOME TAXES

         No provisions for income taxes for the years ended December 31, 2003,
2002 and 2001 is required, except for minimum state taxes, since the Company
incurred taxable losses during these periods.

         As of December 31, 2003, 2002 and 2001, the Company's only deferred tax
item was capitalized start-up costs of approximately $1,870,000, $1,483,000, and
$777,000, respectively. 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 - The Company's founder and majority stockholder
provided approximately 400 square feet of office space for the Company's use
through his privately held marketing company to December 2001. Rent expense was
$18,000 for the year ended December 31, 2001.

         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, 2004. Lease expense
was $4,200 and $4,550 for the years ended December 31, 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 to a
maximum of $50,000. 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.


NOTE 4 - WARRANTS

         During 2001 and 2000, the Company issued 71,000 and 436,000 warrants in
connection with the sale of its common stock to investors, respectively. 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 are exercisable at the
option of the warrant holder and expire three years from the date of issuance.

         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.

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



                                       17
<PAGE>


NOTE 4 - WARRANTS (CONTINUED)

         The following represents a summary of the warrants outstanding as of
December 31, 2003 and 2002:
<TABLE>
<CAPTION>
                                                                2003                               2002
                                                   -------------------------------    -------------------------------
          <S>                                           <C>               <C>              <C>               <C>
                                                                        WTD AVG                            WTD AVG
                                                      SHARES           EX PRICE          SHARES           EX PRICE

         Outstanding, beginning of period                270,582     $        0.10          527,000     $        0.10

         Granted                                         150,000              2.00                0                 0
         Exercised                                      (119,116)             0.10         (256,418)             0.10
         Expired/forfeited                              (121,000)                0                0                 0
                                                   --------------    -------------    -------------     -------------

         Outstanding, end of period                      180,466     $        1.68          270,582     $        0.10
                                                   =============     =============    =============     =============

         Weighted average fair value of warrants granted             $        2.00                      $        0.10
                                                                     =============                      =============
</TABLE>
         The outstanding warrants at December 31, 2003 and 2002 are all held by
stockholders, five thousand (5,000) of which were issued to a former officer and
director in connection with his purchase of stock.


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 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.

         In May 2001, AUT filed a Form SB-2 Registration Statement
("Registration Statement), which was subsequently amended, with the SEC for a
secondary public offering of 250,000 shares of common stock at $8.75 per share.
The SEC declared the Registration Statement effective on March 4, 2002. In June
2002, 3,000 shares were issued by the Company in connection with the
Registration Statement for total cash consideration of $26,250. Total offering
costs for the years ended December 31, 2002 and 2001 consisting of legal
expenses and filing fees amounted to $26,250. The Registration Statement was
withdrawn on October 30, 2002. In addition, during the year ended December 31,
2002, the Company issued 253,418 shares and subscribed 3,000 shares of common
stock upon the exercise of warrants at $0.10 per share for total cash
consideration of $25,641. All proceeds were used for general operating purposes.


                                       18
<PAGE>


NOTE 5 - STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)

         In August 2001, AUT entered into an agreement with a consultant to
assist the Company in ensuring that the tire valve cap qualifies for standards
in a new rule to be issued by the National Highway Traffic Safety
Administration. The new rule, which was issued in early May 2002, requires that,
by 2006, all vehicles sold in the United States have a low-tire-pressure warning
system in the dashboard. On July 17, 2002, AUT filed a petition for the
inclusion of the electronic tire valve cap in the rule. In addition to $5,000 in
consulting fees paid under the agreement during the year ended December 31,
2001, 10,000 shares of common stock may be issued if the tire valve cap
ultimately qualifies for the new rule.


NOTE 6 - 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,
                                                                   -------------------------------------------------------
                                                                         2003                2002               2001
                                                                   ----------------    ----------------   ----------------
          <S>                                                            <C>                  <C>               <C>
         Numerator for basic and diluted loss per share
           Net loss                                                $       (387,429)   $       (706,054)  $       (382,219)
                                                                   ================    ================   ================

         Denominator for basic and diluted loss per share
           Weighted average shares                                       11,153,332          11,029,956         10,757,574
                                                                   ================    ================   ================

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

NOTE 7 - LEGAL MATTERS

         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 dismissal of charges but
were denied on all counts. On July 9, 2002, the court issued a series of rulings
in the Boeing litigation which dismissed our claims against Boeing, CFMI and
Rolls-Royce. Although the judge found ample evidence of a conspiracy to exclude
AUT from re-engining the Boeing 727s and thus entering the market in competition
with Boeing 757s and 737s, the court also found that we had not sustained the
burden of establishing that we could have raised the financing necessary to go
forward with the project. The judge, however, declined to award the Boeing
defendants' costs in the approximate amount of $50,000. We filed a notice to
appeal the court's ruling on August 2, 2002. In October 2003, the Court of
Appeals affirmed this decision and management, acting on the advice of counsel,
decided not to appeal to the U.S. Supreme Court because defendants agreed to
waive costs to which they would otherwise have been entitled.


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 $38,313 and $36,632 as of December 31, 2003 and 2002,
respectively. All the payroll and related expenses recorded as of December 31,
2003 were owing to the Chief Executive Officer and majority stockholder. In
addition, during the year ended December 31, 2003, AUT obtained advances from
Mr. Lundqvist's privately held marketing company in the amount of $6,986. The
Company pays interest on these advances ranging from nine percent (9%) to twenty
percent (20%). Interest paid on all advances to date totaled $16,207 for the
year ended December 31, 2003.


                                       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 $8,082,
$33,136 and $72,648 (including $51,000 in value of stock issued for services
valued at $1.00 per share) during the years ended December 31, 2003, 2002 and
2001, respectively, for research and development costs in connection with the
development of the tire valve cap. No research and development costs were
incurred in prior periods.

NOTE 9 - SUBSEQUENT EVENTS

In February 2004, outstanding warrants to purchase 30,466 shares of common stock
were exercised by the holder.

On March 1, 2004, two unaffiliated accredited investors (a husband and wife)
purchased 55,000 shares of the Company's common stock for an aggregate of
$50,000. The shares are subject to a standard Securities Act of 1933 restrictive
legend and may not be sold or transferred except in compliance with said Act.







                                       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,
2003, 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
guaranty 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 guaranty
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      51       Chairman, Chief Executive Officer /
                                     Chief Financial Officer
----------------------- ------------ ------------------------------------------
 Dick G. Lindholm           54                Vice President, Director
----------------------- ------------ ------------------------------------------
 William S. Rhodes          54                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

         During the fiscal year ended December 31, 2003, there were no meetings
of the board of directors. 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.]

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,
2004.


                                       22
<PAGE>


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.             2003      $140,000         -0-            -0-               -0-               -0-              -0-
Lundqvist, Chairman     2002      $140,000         -0-            -0-               -0-               -0-              -0-
and CEO                 2001      $140,000         -0-            -0-               -0-               -0-              -0-
</TABLE>


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

         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 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, 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 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.

         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.


                                       23
<PAGE>

         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.  None
         --------------------------------------------------------------

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 29, 2004 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           84.4%
                     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                            86.6%
                     officers as a group
</TABLE>
* William S. Rhodes is the beneficial owner of 10,000 shares of common stock
through his spouse Lyn Rhodes.

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.


                                       24
<PAGE>

         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, including the 400 square feet of office space we occupied to
December 2001, through Minitec Marketing, Inc., his privately held marketing
company. We reimbursed this entity $1,500 per month for the use of this space
through December 2001. We have also 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, 2003, 2002 and 2001, we incurred $8,082, $33,136 and $72,648
for research and development costs in connection with the licensing agreement
(including $51,000 for shares issued for services in 2001). We issued 50,000
shares to Claes Grondahl for his efforts in co-designing the product with
Lundqvist and 1,000 shares to Doug Watt, one of our shareholders, for the name
"Air Alert Valve Cap." The 51,000 shares were valued at $51,000. Claes Grondahl
is a cousin of Torbjorn B. Lundqvist, our chief executive officer. 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.

         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.


                                       25
<PAGE>



ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Index to Exhibits

Exhibit No.
----------
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.

(B) Reports on Form 8-K

         None


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, 2003 and
2002, were as follows:

---------------------- ------------------------- -----------------------
Services Provided              2003                       2002
-----------------              ----                       ----
---------------------- ------------------------- -----------------------

---------------------- ------------------------- -----------------------
Audit Fees                $           21,700        $            19,500
---------------------- ------------------------- -----------------------
Audit Related Fees        $                0        $                 0
---------------------- ------------------------- -----------------------
Tax Fees                  $              832        $               838
---------------------- ------------------------- -----------------------
All Other Fees            $                0        $             1,445
---------------------- ========================= =======================

         Total            $           22,532        $            21,783
---------------------- ------------------------- -----------------------

         Audit Fees. The aggregate fees billed for the years ended December 31,
2003 and 2002 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, 2003 and 2002 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,
2003 and 2002 were for professional services for tax compliance, tax advice and
tax planning.

         All Other Fees. There were no fees billed for the year ended December
31, 2003. For the year ended December 31, 2002, $1,445 of fees were charged for
services in connection with the Company's Form SB-2 Registration Statement.



                                       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 od 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.
<TABLE>
<CAPTION>
                    Signatures                                        Title                            Date
--------------------------------------------------- ----------------------------------------------------------------
<S>                                                                    <C>                              <C>

/s/ Torbjorn B. Lundqvist                           Chairman, Chief Executive Officer             March 29, 2004
-------------------------------------------------   (principal executive officer) and Chief
Torbjorn B. Lundqvist                               Financial Officer (principal financial
                                                    officer)

/s/ Dick G. Lindholm                                Director                                      March 29, 2004
-------------------------------------------------
Dick G. Lindholm


/s/ William S. Rhodes                               Director                                      March 29, 2004
-------------------------------------------------
William S. Rhodes
</TABLE>




<PAGE>

                                       29