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UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION
  WASHINGTON, D.C. 20549

FORM 10-KSB

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934

For the Fiscal Year Ended April 30, 2007

COMMISSION FILE NO. 0-23920

REGI U.S., INC.(Name of
small business issuer as specified in its charter)

|OREGON                          | 91-1580146            
|------------------------------- | ----------------------
|(State or other jurisdiction of | (I.R.S. Employer      
|incorporation or organization)  | Identification Number)

240 - 11780 HAMMERSMITH WAY RICHMOND, BRITISH COLUMBIA
V7A 5E9, CANADA(Address, including postal code, of registrant's
principal executive offices)

(604) 278-5996 (Telephone number including area code)

Securities registered pursuant to Section 12(b) of the Exchange
Act: NONE

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

|Title of each class        | Name of each Exchange on which registered:                  
|-------------------------- | ------------------------------------------------------------
|Common stock, no par value | NASD Over the Counter Bulletin Board                        
|                           | Berlin Bremen Stock Exchange 
      Frankfurt Stock Exchange

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act: Yes [ ] No [x]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Act: Yes [ ] No [ x ]

Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to the
filing requirements for the past 90 days: Yes [x] No [ ]

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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K: Yes [ ] No [x]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer:

Larger accelerated filer [ ]        Accelerated
  filer [ ]       Non-accelerated filer [x]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]

The aggregate market value of the voting stock held by
non-affiliates of the registrant on July 16, 2007, computed by reference to the
price at which the stock was sold on that date: $21,010,706.40.

The number of shares outstanding of the registrant's common
stock, no par value, as of July 6, 2007 was 27,011,208.

Documents incorporated by reference: See Exhibits.

Transitional Small Business Disclosure Format (Check one): Yes (
) No (X).

2

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REGI U.S., INC. FORM 10-KSB TABLE OF CONTENTS

|PART I                                                                                                                                                    | 4 
|--------------------------------------------------------------------------------------------------------------------------------------------------------- | --
|ITEM 1. DESCRIPTION OF BUSINESS                                                                                                                           | 4 
|GENERAL                                                                                                                                                   | 4 
|BUSINESS OF THE COMPANY AND PRODUCTS                                                                                                                      | 4 
|Overview and History                                                                                                                                      | 4 
|PRODUCTS AND PROJECTS                                                                                                                                     | 6 
|Rand Cam Technology                                                                                                                                       | 6 
|Gasoline and Diesel Engine                                                                                                                                | 6 
|Compressor                                                                                                                                                | 7 
|Ceramic
      Rand CamTMEngine                                                                                                                            | 7 
|MARKETING                                                                                                                                                 | 11
|RAW
      MATERIALS AND PRINCIPAL SUPPLIERS                                                                                                               | 12
|PATENTS,
      TRADEMARKS, LICENCES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS, LABOR
      CONTRACTS, INCLUDING DURATION                               | 12
|Patents                                                                                                                                                   | 12
|Royalty
      Payments                                                                                                                                    | 13
|RISK
      FACTORS                                                                                                                                        | 14
|ITEM
      2. DESCRIPTION OF PROPERTY                                                                                                                     | 17
|ITEM
      3. LEGAL PROCEEDINGS                                                                                                                           | 17
|ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                         | 17
|PART
      II                                                                                                                                             | 18
|ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL
      BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES                     | 18
|Bid
      Price Asked Price                                                                                                                               | 18
|DIVIDEND
      POLICY                                                                                                                                     | 19
|RECENT
      SALES OF UNREGISTERED SECURITIES                                                                                                             | 20
|ITEM
      6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS                                                                                  | 21
|LIQUIDITY
      AND CAPITAL RESOURCES                                                                                                                     | 22
|ITEM
      7. FINANCIAL STATEMENTS                                                                                                                        | 22
|ITEM
      8. CHANGES IN AND DISAGREEEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE                                                 | 22
|ITEM
      8A. CONTROLS AND PROCEEDURES.                                                                                                                  | 22
|ITEM
      8B. OTHER INFORMATION.                                                                                                                         | 24
|PART
      III                                                                                                                                            | 25
|ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, CORPORATE
      GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT | 25
|ITEM
      10. EXECUTIVE COMPENSATION                                                                                                                     | 28
|ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
      RELATED STOCKHOLDER MATTERS                                       | 30
|ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE                                                            | 32
|ITEM
      13. EXHIBITS.                                                                                                                                  | 33
|ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.                                                                                                    | 35
|SIGNATURES                                                                                                                                                | 36

3

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THIS ANNUAL REPORT ON FORM 10-KSB, INCLUDING EXHIBITS THERETO,
CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS ARE TYPICALLY
IDENTIFIED BY THE WORDS "ANTICIPATES", "BELIEVES", "EXPECTS", "INTENDS",
"FORECASTS", "PLANS", "FUTURE", "STRATEGY", OR WORDS OF SIMILAR MEANING. VARIOUS
FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN
THE FORWARD-LOOKING STATEMENTS, INCLUDING THOSE DESCRIBED IN "RISK FACTORS" IN
THIS FORM 10-KSB. WE ASSUME NO OBLIGATION TO UPDATE THESE FORWARD-LOOKING
STATEMENTS TO REFLECT ACTUAL RESULTS, CHANGES IN ASSUMPTIONS, OR CHANGES IN
OTHER FACTORS, EXCEPT AS REGULATED BY LAW.

PART I

|ITEM 1. | DESCRIPTION OF BUSINESS
|------- | -----------------------

GENERAL

We were organized under the laws of the State of Oregon on July
27, 1992 as Sky Technologies, Inc. On August 1, 1994, our name was officially
changed by a vote of a majority of our shareholders to REGI U.S., Inc. We are
controlled by Rand Energy Group Inc., a privately held British Columbia
corporation ("RAND") which holds approximately 11% of the common shares of REGI,
which, in turn, is controlled 51% by Reg Technologies Inc., a publicly held
British Columbia corporation ("Reg Tech").

We are engaged in the business of developing and building an
improved axial vane-type rotary engine known as the Rand Cam/Direct Charge
Engine ("RC/DC Engine"), which is a variation of the Rand Cam Rotary Engine, an
axial vane rotary engine ("Original Engine"). The worldwide, exclusive of the
United States, intellectual and marketing rights to the RC/DC Engine are held by
Reg Tech. The Company owns the U.S. marketing and intellectual rights and has a
project cost sharing agreement, whereby it will fund 50% of the further
development of the RC/DC Engine and Reg will fund 50%.

Our principal offices are located at 240-11780 Hammersmith Way,
Richmond, British Columbia V7A 5E9, Canada. Our telephone number is (604)
278-5996 and our telefacsimile number is (604) 278-3409. Our website is
www.regtech.com.

We will likely need to raise additional capital in the future
beyond any amount currently on hand and which may become available as a result
of the exercise of warrants and options which are currently outstanding, in
order to fully implement our intended plan of operations.

BUSINESS OF THE COMPANY AND PRODUCTS

Overview and History

We are engaged in the business of developing and building an
improved axial vane-type rotary engine known as the Rand CamTM Direct
Charge (RC/DC) Engine, which is a variation of the Original Engine. The
Original Engine is an axial vane rotary engine, the worldwide marketing rights
to which are held by Reg Tech. A United States patent was issued for the RC/DC
Engine on July 4, 1995, and assigned to us. Since no marketable product has yet
been developed, we have not received any revenues from operations.

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The RC/DC Engine is based upon the Original Engine patented in
1983. Brian Cherry, a former officer and director of the Company, has done
additional development work on the Original Engine which resulted in significant
changes and improvements for which the U.S. patent has been issued and assigned
to us. We believe the RC/DC Engine offers important simplification from the
basic Original Engine, which will make it easier to manufacture and will also
allow it to operate more efficiently.

Pursuant to an agreement dated October 20, 1986 between Reg
Tech, Rand Cam Corp. and James McCann, Reg Tech agreed to acquire a 40% voting
interest in a new corporation to be incorporated to acquire the rights to the
Original Engine. The new corporation was RAND. Reg Tech acquired the 40% voting
interest in RAND in consideration of the payment of $250,000.

Pursuant to an agreement made as of April 27, 1993 among Reg
Tech, Rand Cam Corp., RAND and James McCann, Reg Tech acquired an additional
330,000 shares (11%) of RAND from Rand Cam Corp. to increase its investment to
51%.

On August 20, 1992, we entered in an agreement with RAND and
Brian Cherry (the "August 1992 Agreement") under which we issued 5,700,000
shares of our common stock at a deemed value of $0.01 per share to RAND in
exchange for certain valuable rights, technology, information, and other
tangible and intangible assets, including improvements, relating to the United
States rights to the Original Engine.RAND's president is also our
president and its Vice President and Secretary is also one of our directors. The
terms of the agreement were negotiated between the parties and were deemed to be
mutually advantageous based upon conditions and circumstances existing at the
time.

We entered into an agreement dated April 13, 1993 with RAND,
Reg Tech and Brian Cherry (the "April 1993 Agreement") and made as an amendment
to a previous Amendment Agreement dated November 23, 1992 between RAND, Reg Tech
and Brian Cherry and an original agreement dated July 30, 1992 between RAND, Reg
Tech and Brian Cherry, Cherry agreed to: (a) sell, transfer and assign to RAND
worldwide rights, except for the United States, to all of his right, title and
interest in and to the technology related to the RC/DC Engine (the
"Technology"), including all pending and future patent applications in respect
of the Technology, together with any improvements, changes or other variations
to the Technology; (b) sell, transfer and assign to the Company United States of
America rights to all of his right, title and interest in and to the Technology,
including all pending and future patent applications in respect of the
Technology, together with any improvements, changes or other variations to the
Technology. On November 9, 1993, in consideration for this transfer of the
Technology, Brian Cherry was issued 100,000 shares of Reg Tech with a deemed
value of $200,000.

A final provision of the April 1993 Agreement assigned and
transferred ownership of any patents, inventions, copyrights, know-how,
technical data, and related types of intellectual property conceived, developed
or created by RAND or its associated companies either to us which results or
derives from the direct or indirect use of the Original Engine and/or RC/DC
Engine technologies by RAND.

We entered into a letter of understanding dated December 13,
1993, with RAND and Reg Tech, as grantors, and West Virginia University Research
Corporation ("WVURC"), the grantors agreed that WVURC shall own 5% of all
patented technology relating to the Original Engine and the RC/DC Engine. WVURC
performed extensive analysis and testing on the RC/DC engine. WVURC provided
support and development of the RC/DC Engine including research, development,
testing evaluation and creation of intellectual property. In addition, WVURC

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introduced us to potential customers and licensees. We are
entitled to all intellectual property developed by WVURC relating to the RC/DC
Engine.

Based upon testing work performed by independent organizations
on prototype models, we believe that the RC/DC Engine holds significant
potential in a number of other applications ranging from small stationary
equipment to automobiles and aircraft. In additional to its potential use as an
internal combustion engine, the RC/DC Engine design is being employed in the
development of several types of compressors, pumps, expanders and other
applications.

To date, several prototypes of the RC/DC Engine have been
tested and additional development and testing work is continuing. We believe
that such development and testing will continue until a commercially feasible
design is perfected. There is no assurance at this time, however, that such a
commercially feasible design will ever be perfected, or if it is, that it will
become profitable. If a commercially feasible design is perfected, we do,
however, expect to derive revenues from licensing the Technology relating to the
RC/DC Engine regardless of whether actual commercial production is ever
achieved. There is no assurance at this time, however, that revenues will ever
be received from licensing the Technology even if it does prove to be
commercially feasible.

We believe that a large market would exist for a practical
rotary engine which could be produced at a competitive price and which could
provide a good combination of fuel efficiency, power density and exhaust
emissions.

Based on the market potential, we believe the RC\DC Engine is
well suited for application to internal combustion engines, pumps, compressors
and expansion engines. The mechanism can be scaled to match virtually any size
requirement. This flexibility opens the door to large markets being
developed.

We are currently testing prototypes for several applications.
Our strategy is to develop engines and compressors for low to medium horsepower
applications, then apply the Technology to larger applications. We have licensed
the Technology for several projects. The licensees have agreed to fund their
projects for research and development of the specific applications. To date, we
have completed a license agreement with Radian MILPARTS for greater than 10 H.P.
for military applications. License agreements to Rotary Power have been
terminated due to non payment. The Advanced Ceramics agreement has also
terminated due to the fact that Phase II funding was not approved and received
pursuant to our agreement.

PRODUCTS AND PROJECTS

Rand Cam Technology

Gasoline and Diesel Engine

Two prototype engines were built in 1993 and 1994 by the WVURC
to run on gasoline. Testing on these prototypes suggested that the concept is
fundamentally sound and that with a program of engine review, design, testing
and development, a technically successful range of engines can be developed. The
current prototype design for the diesel engine was designed by a consortium made
up of Alliant Techsystems (formerly Hercules Aerospace Company) ("Alliant"),
WVURC and us. Alliant was involved in the design and development including
drawings for the RC/DC diesel engine. In addition Alliant performed extensive
analysis on the diesel engine including bearings, cooling, leakage, rotor,
vanes, housing, vane tip heating, geometry and combustion. This engine was
designed as a general purpose power plant for military and commercial
applications. A prototype of the diesel engine has been assembled and
tested.

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On January 24, 2006 REGI announced the completion of several
continuous successful combustion tests at 245 RPM on the new version of the Rand
Cam engine. Several spin tests were conducted initially up to 800 RPM on the
new modified version of the Rand Cam engine. An insignificant amount of wear on
the engine has been confirmed during the months of December 2005, and January
2006.

The world wide patents cover Canada and several countries in
Europe, namely, Germany, France, Great Britain, and Italy. Reg Technologies,
Inc., together with REGI U.S., Inc., is in the process of testing a Rand Cam
diesel engine for a generator application for hybrid electric cars.
Additionally, our licensee for the 42 H.P. production model diesel Rand Cam is
currently completing the engine for unmanned aerial applications for the U.S.
military.

Compressor

We contracted Coltec, Inc., a Columbus, Indiana engineering
firm, to fabricate the Rand Cam (TM) air conditioning compressor for buses. The
testing is to be conducted by Trans/Air Manufacturing Corporation, one of the
largest manufacturers of air conditioning units for buses, which has agreed to
jointly develop and manufacture the working model compressor. The prototype
compressor was delivered to Trans/Air in January 2001.

A special 3.2 SCFM air compressor has been designed and built
for a large fuel cell customer. The customer has reviewed the design and his
comments including type of drive motor, inlet and outlet piping arrangements and
mounting considerations were incorporated and final drawings were prepared.

In January, 2004, testing for the air conditioning compressor
for buses application had commenced by Trans Air Manufacturing. The new manifold
has been installed on the working prototype compressor and pressure testing has
commenced. Trans Air Manufacturing will first perform bench testing to baseline
speed, performance, and power consumption data before designing to install on a
vehicle for real world testing.

Based on the successful completion of the Joint Venture, being
the development and successful testing of a working prototype of the Bus
Compressor, Trans Air shall have the exclusive right and shall use its
reasonable efforts to market, merchandise, sell and exploit the Bus Compressor
within the markets or geographical areas in which Trans Air, in its sole option
and discretion, believes such efforts would be appropriate. Currently Brian
Cherry, our Vice President of Research and Development, is overseeing the
testing of the air conditioning compressor.

In August 2004, we completed compressor tests which displayed
encouraging results of up to 25 P.S.I. with only 800 R.P.M. The testing for the
compressor was completed on behalf of Trans Air Manufacturing for
air-conditioning in bus applications, and exceeded our expectations. We are
currently negotiating a license agreement for compressor applications, to be
announced when the terms and conditions are finalized.

Ceramic Rand CamTMEngine

In February, 2004 we announced that a REGI licensee for
unmanned vehicle system engines had completed testing of the prototype 42 H.P.
engine. Tests occurred at Adiabatics in Columbus, IN and at the U.S. Navy's test
facility at Patuxent River, MD. The initial test results demonstrated that the
first generation prototype engine generated pressure and temperature. The
licensee has started design of a second generation prototype. The documentation
and one of the completed 42 H.P. Rand Cam(tm) engines have been delivered to
REGI U.S., Inc. as part of the license agreement.

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On February 14, 2006 the 125 H.P. RadMax engine was received
by REGI from Radian Milparts and will be tested by the Companys rotary engine
specialist. The 125 H.P. RadMax engine is the improved version of the 42 H.P.
RadMax engine, which focused on eliminating leak paths and was designed for
maintainability.

In March 2006 we announced that final modifications, which were
successfully implemented on the 42 H.P Rand Cam, were being completed by Ebco
Industries, for the 125 H.P. version of the RadMax engine. The modifications
will be completed during 2006 and an extensive testing program will commence.
The 125 H.P. RadMax engine has been thoroughly designed with advanced sealing
methods by Radian Milparts, which will be the production model for presentation
to several major companies interested in licensing the technology from REGI
U.S., Inc. The testing will consist of endurance to determine wear and tear, and
maintenance factors /hydrocarbons /calculations and fuel efficiency using a
state-of-the-art computerized fuel injection system.

On June 20, 2006, the final modifications for the 125 H.P.
version of the RadMax engine were completed by Ebco Industries. The assembling
of the 125 H.P. engine has commenced and testing is planned for mid September.
The testing will consist of endurance to determine wear and tear, and
maintenance factors /hydrocarbons /calculations and fuel efficiency using a
state-of-the-art computerized fuel injection system. Biodiesel and ethanol
blended fuels will also be utilized in a series of tests.

In October, 2006 a preliminary series of tests had been
successfully completed on the 125 H.P. RadMax engine. The main objectives of
these tests were to eliminate oil leaks from entering the combustion chamber,
and to reduce compression losses. Based on several important modifications and
tests over the last 90 days on the 125 H.P. RadMax engine, the RadMax is ready
for the next advanced stage of completing the activities required for an
operating engine.

On January 3, 2007, we announced that we had successfully
completed a statement of work agreement with an engineering, prototyping, and
manufacturing services company to complete a working model RadMax pump.

The Phase I program is to design, demonstrate, and deliver a
prototype RadMax pump within 16 weeks. The goal for the work program is to
complete a pump suitable for supporting demonstration to potential customers and
to prove that the RadMax pump is a positive displacement device, capable of
processing approximately twice its internal volume every revolution, which means
that a production unit could be half the size and weight of any competitive
unit.

The Phase II program will be to design and demonstrate a
working model RadMax compressor to prove the same efficiency as the RadMax
pump, which will be half the size and weight of any competitive centrifugal
compressor.

On January 30, 2007 we announced the following RadMax product
development status:

- RadMax 125 hp engine design is currently being evaluated through computer
  modeling to determine mechanical, rotational and thermal stress; analysis
  contact forces; and engine resonant frequencies.
- 42 horsepower RadMax engine and compressor prototypes designed and
  concept tested.
- RadMax125 hp engine and pump prototypes designed and concept currently in
  testing stage.

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- RadMax 125 hp engine design is currently being scaled to produce other
  sizes of the engine.

Next testing steps include:

| |  | Construction of demonstration prototypes of RadMax pump
      and compressor configurations.                                             
| |  | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | Computer tests using advanced software for tests of
      RadMax 125 hp engine to determine and document:                                
| |  |                                                                                                                                           
| |  |                                                                                                                                           
| |  |                                                                                                                                           
| |  |                                                                                                                                           
| |  |                                                                                                                                           
| |  | After completion of computer analysis, build working
      model prototype of RadMax engines for end users and potential
      licensees.

On March 14, 2007, we announced RadMax product development
status:

- RadMax®125 hp prototype pump fabrication complete. Assembly and testing
  underway.
- RadMax®125 hp prototype radial shaft seals have been integrated to
  eliminate leakage between rotors and cams.
- RadMax® engine design is currently being scaled to produce other sizes of
  the engine, including smaller, air-cooled versions up to 10 horsepower for UAV
  applications.

Our next testing steps include:

- Performance measurements of prototypes of RadMax pump
- Validation of radial shaft seals performance for pump and compressor
- Pump durability and performance benchmarking

In July we completed the pump testing and announced the
following product development:

- Performance measurements of prototype of RadMax® pump completed.
- Axial Vane Positive Displacement Pump efficiency validated greater than
  80%.
- Proprietary RadMax® radial shaft seals have been qualified for all low
  temperature applications (pumps, compressors).
- Validated ability to run dry, self-prime, and re-acquire prime.
- Measured suction to exceed 20 feet, lift (head) more than 80 feet.
- RadMax® 10-inch diameter prototype compressor fabrication is underway.
- Proprietary material will coat internal surfaces to facilitate safe
  run-dry operation.
- RadMax® Compressor includes many components common to RadMax® Pump, which
  reduces production unit cost.
- RadMax® Compressor designed for any gaseous use (air, refrigerant, carbon
  dioxide, etc.)

Planned testing steps include:

- Performance measurements of prototype RadMax® compressor
- Validation of seals performance for compressor environment
- Compressor durability and performance benchmarking including volume per
  revolution, compression ratio, and temperature increase due to compression.

Our RadMax® technology compressors are one of the most
efficient designed and are an important part of our business model. Validation
of prototype design specifications, during this test period, will allow us to
quickly move forward to negotiate potential revenue opportunities

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related to global refrigeration, air conditioning, industrial
processes, and portable compressor applications.

Rand Cam Generator and Fuel Cell Technology

In April, 2005 we completed several successful, continuous
combustion tests for the Rand Cam engine using gasoline fuel. The series of
tests took place at SNKs facilities, in Richmond, BC, on April 14, 2005, with
starter speed of up to 490 RPM, utilizing a unique vane design that does not
require vane tip seals. Eliminating the need for vane tip seals will reduce the
manufacturing and maintenance costs significantly, therefore, resulting in a
breakthrough with the technology. The Rand Cam engine design will be further
tested for generator and hybrid car applications.

The Company entered into a Distributors Agreement dated June
29, 2005, with ANUVU Incorporated with an option to acquire exclusive rights to
distribute the ANUVU Fuel Cell technology for Canada and Europe. The Companys
affiliate, REG, paid $200,000 to exercise a portion of the option agreement and
acquire the Canadian rights on behalf of the Company. During the year ended
April 30, 2006 , the Company assigned the distribution rights to Reg Tech and
recovered $200,000 of research and development expenses.

Corporate

On May 1, 2006, our shares began trading on the Frankfurt Stock
Exchange under the symbol (RGJ). International Security Identification Number
(ISIN/CUSIP) number is US7589431045. Because the Frankfurt exchange is the
third-largest organized exchange-trading market in the world (just behind the
NYSE and Nasdaq exchanges), in terms of turnover and dealings in securities, we
anticipate a much wider, international market access for our shares. The listing
on the Frankfurt Stock Exchange provides us with increased exposure to worldwide
capital markets and will enable us to attract European institutional and
individual investors to trade our common stock in euros.

In November 2006, the Company's board of directors appointed
Lynn Petersen as Vice President of Marketing for the RadMax / Rand Cam
technology. Mr. Petersen has been involved with marketing management for over 12
years. Most recently he was Marketing Manager for three years at Jetseal, Inc.,
which manufactures high tech seals for aerospace, military, semi conductor, and
nuclear industries. Mr. Petersen will be responsible for managing marketing
activities, and making presentations for the RadMax and Rand Cam technology,
to major potential end users. He will also be researching, defining and
optimizing new business markets for REGI U.S., Inc.

In April, 2007 a wholly-owned US subsidiary, RadMax
Technologies, Inc, a Washington Corporation, was formed with the initial
focus on winning U.S. military contracts for custom versions of RadMax®
products, as well as research and development funding to tailor RadMax® products
to meet specific requirements defined by the U.S. military services. RadMax®
products include RadMax® internal and external combustion diesel engines,
RadMax® pumps, and RadMax® compressors.

James Vandeberg, a director and Chief Financial Officer of REGI
U.S., Inc., was been appointed as the new company's president and sole director.
The headquarters for the corporation is located at 601 Union Street, Suite 4500,
Seattle, WA 98101.

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On April 30, 2007, the Board of Directors appointed Robert
Grisar as Vice President of Engineering for the RadMax® / Rand Cam technology.
In this role, he will report to James Vandeberg, president of RadMax
Technologies, Inc., a wholly owned REGI U.S., Inc. subsidiary.

In this position, Mr. Grisar will focus on obtaining commercial
and U.S. military contracts for custom versions of RadMax® products, as well as
research and development funding to tailor RadMax® products to meet specific
requirements by potential end users. RadMax® products include RadMax® internal
and external combustion diesel engines, RadMax® pumps, and RadMax®
compressors.

Mr. Grisar has more than 30 years of progressive engineering
experience designing and implementing electronic and mechanical systems for the
US Department of Defense and related agencies. This includes: airborne radar for
fixed and rotary wing aircraft, shipboard-submarine-and torpedo sonar, and
line-of-sight, meteor burst, and satellite communications systems. His
commercial experience includes designing and implementing the user interface and
software for medical imaging and diagnostic systems. Prior, he was responsible
for the Astrospace design, fabrication, test, and implementation of the thermal
protection system for Space Shuttle solid rocket boosters. Most recently, Mr.
Grisar directed MILPARTS (Military Parts Reinvention Network), which continues
to reinvent, produce, and deliver military system repair and spare parts for
legacy defense systems.

MARKETING

We intend to pursue the development of the RC/DC Engine and the
air pump, compressor and other products by entering into licensing and/or joint
venture arrangements with other larger companies, which have the financial
resources to maximize the potential of the technology. We have signed license
agreements with Advanced Ceramics Research, Inc., Radian, Inc. and Rotary Power
Generation, Incorporated. We have no current plans to become actively involved
in either manufacturing or marketing any engine or other product which it may
ultimately develop to the point of becoming a commercial product.

Our current objective is to complete and test the various
compressor, pump and engine prototypes. Based on the successful testing, the
prototypes will be used for presentation purposes to potential license and joint
venture partners.

We expect revenue from license agreements with the potential
end users based on the success of the design from the compressor, pump, and
diesel engine prototypes. Based on of successful testing of the Rand Cam
prototypes, we expect to have joint venture or license agreements finalized,
which would result in royalties to us. However, there is no assurance that the
tests will be successful or that we will ever receive any such royalties.

COMPETITION

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We currently face and will continue to face competition in the
future from established companies engaged in the business of developing,
manufacturing and marketing engines and other products. While not a highly
competitive business in terms of numbers of competitors, the business of
developing engines of a new design and attempting to either license or produce
them is nonetheless difficult because most existing engine producers are large,
well financed companies which are very concerned about maintaining their market
position. Such competitors are already well established in the market and have
substantially greater resources than us. Internal combustion engines are
produced by automobile manufacturers, marine engine manufacturers, heavy
equipment manufacturers and specialty aircraft and industrial engine
manufacturers. We expect that our engine would be used mainly in industrial and
marine applications.

Except for the Wankel rotary engine built by Mazda of Japan, no
competitor, that we are aware of, presently produces in a commercial quantity
any rotary engine similar to the engines we are developing. The Wankel rotary
engine is similar only in that it is a rotary engine rather than a reciprocating
piston engine. Without substantially greater financial resources than is
currently available to us, however, it is very possible that it may not be able
to adequately compete in the engine business. One competitor, Rotary Power
International, is presently producing the first production SCORE rotary (Wankel
type) engines. Our RC\DC Engine is calculated to be, smaller, quieter, costs
less to produce and maintain.

We believe that if and when our engine is completely developed,
in order to be successful in meeting or overcoming competition which currently
exists or may develop in the future, our engine will need to offer superior
performance and/or cost advantages over existing engines used in various
applications.

RAW MATERIALS AND PRINCIPAL SUPPLIERS

Since we are not in production and there are no plans at this
time for us to enter the actual engine manufacturing business, raw materials are
not of present concern. At this time, however, there does not appear to be any
foreseeable problem with obtaining any materials or components, which may be
required in the manufacture of its potential products.

PATENTS, TRADEMARKS, LICENCES, FRANCHISES, CONCESSIONS, ROYALTY
AGREEMENTS, LABOR CONTRACTS, INCLUDING DURATION

Patents

U.S. patent No. 5,429,084 was granted on July 4, 1995, to the
inventor, Brian Cherry, Patrick Badgley and four other individuals for various
improvements incorporated in the RC/DC Engine. The patent has been assigned to
us. U.S. Patent 4,401,070 for the Original Engine was issued on August 30, 1983,
to James McCann and RAND holds the marketing rights.

The RC/DC Engine is composed basically of a disk shaped rotor
with drive shaft, which turns, and the housing or stator, which remains
stationary. The rotor has two or more vanes that are mounted perpendicular to
the direction of rotation and slide back and forth through it. As the rotor
turns, the ends of the vanes ride along the insides of the stator housing which
have wave-like depressions, causing the vanes to slide back and forth. In the
process of turning and sliding, combustion chambers are formed between the
rotor, stator walls and vanes where the fuel/air mixture is injected,
compressed, burned and exhausted.

Two additional patents have been issued for improvements to the
engine including: U.S. Patents 5,509,793 Rotary Device with Slidable Vane
Supports) issued April 24, 1996 and 5,551,853

12

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Axial Vane Rotary Device and Sealing System Therefor) issued
September 3, 1996. The Company has submitted additional Rand Cam improvements
for a patent in the month of July.

On November 3, 2004 we announced that the Canadian Patent was
issued for the Rand Cam Rotary Engine effective October 5, 2004. The term of
the patent is twenty years from the date of the filing on December 11, 1992.

On November 29, 2004, we announced that a world wide license
agreement, excluding the rights for the United States of America that are held
by REGI U.S. for the Rand Cam technology has been successfully completed with
Rand Energy Group Inc. Reg Technologies, Inc., our parent company, has agreed to
pay a 5% net profit interest and make annual payments of $50,000. Reg
Technologies, Inc. will be responsible for 50% of the costs for development and
production of the Rand Cam technology.

In December 2005, we completed an agreement to obtain the
rights to the RadMax technology preliminary patent application, the RadMax
trademark, including study notes, drawings and parts list from Radian Inc.

In exchange for these property rights, we will provide an
unconditional release to Radian for all obligations under the UAV license
agreement dated April 24, 2002 and modified May 14, 2004. Completing this
agreement will allow us to own 100% interest in the rights to the new RadMax
rotary design. Radian agrees to provide all the work completed to date,
including preliminary patent applications and all hardware.

The world wide patents cover Canada and several countries in
Europe, namely, Germany, France, Great Britain, and Italy. Reg Technologies,
Inc., together with REGI U.S., Inc., is in the process of testing a Rand Cam
diesel engine for a generator application for hybrid electric cars.
Additionally, our licensee for the 42 H.P. production model diesel Rand Cam is
currently completing the engine for unmanned aerial applications for the U.S.
military.

Royalty Payments

The August 1992 Agreement calls for us to pay RAND
semi-annually a royalty of 5% of any net profits to be derived by us from
revenues received as a result of its license of the Original Engine. The August
1992 Agreement also calls for us to pay Brian Cherry a royalty of 1%
semi-annually any net profits derived by us from revenue received as a result of
our licensing the Original Engine.

Other provisions of the April 1993 Agreement call for is (a) to
pay to RAND a continuing royalty of 5% of the net profits derived from the
Technology by us and (b) to pay to Brian Cherry a continuing royalty of 1% of
the net profits derived by us from the Technology.

Pursuant to the letter of understanding dated December 13,
1993, among us, RAND, Reg Tech and WVURC, WVURC will receive 5% of all net
profits from sales, licenses, royalties or income derived from the patented
technology relating to the Original Engine and the RC/DC Engine.

No royalties are to be paid to Alliant or Adiabatics, Inc.

13

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RISK FACTORS

You should carefully consider the following risks and the other
information in this Report and our other filings with the SEC before you decide
to invest in us or to maintain or increase your investment.

The risks and uncertainties described below are not the only
ones facing us. Additional risks and uncertainties may also adversely impact and
impair our business. If any of the following risks actually occur, our business,
results of operations, or financial condition would likely suffer. In such case,
the trading price of our common stock could decline, and you may lose all or
part of your investment.

Developmental Stage Company. We were incorporated on July 27,
1992. We are a development stage company. In a development stage company,
management devotes most of its activities to establishing a new business.
Planned principal activities have not yet produced significant revenues and we
have suffered recurring operating losses as is normal in development stage
companies. These factors raise substantial doubt about our ability to continue
as a going concern. Our ability to emerge from the development stage with
respect to our planned principal business activity is dependent upon our
successful efforts to raise additional equity financing, receive funding from
affiliates and controlling shareholders, and develop a market for our
products.

Ability to develop product. We have no assurance at this time
that a commercially feasible design will ever be perfected, or if it is, that it
will become profitable. Our profitability and survival will depend upon our
ability to develop a technically and commercially feasible product which will be
accepted by end users. The RC/DC Engine which we are developing must be
technologically superior or at least equal to other engines that competitors
offer and must have a competitive price/performance ratio to adequately
penetrate its potential markets. If we are not able to achieve this condition or
if we do not remain technologically competitive, we may be unprofitable and our
investors could lose their entire investment. There can be no assurance that we
or potential licensees will be able to achieve and maintain end user acceptance
of our engine.

Negative Shareholders' Equity. We have a negative shareholders
equity as of the date of this 10-KSB. Our ability to continue as a going
business will be dependent upon our ability to raise additional capital and/or
generate revenues from operations.

Need for Additional Capital. We rely on our ability to raise
capital through the sale of our securities. Our the ultimate success will depend
upon our ability to raise additional capital or to have other parties bear a
portion of the required costs to further develop or exploit the potential market
for our products. REG Tech and REGI have agreed to provide the necessary funds
for the development of the RC/DC Diesel Engine prototypes and our other
operations until joint venture or license agreements can be completed.

Dependence on Consultants and Outside Manufacturing Facilities.
Since our present plans do not provide for a significant technical staff or the
establishment of manufacturing facilities, we will be primarily dependent on
others to perform these functions and to provide the requisite expertise and
quality control. There is no assurance that such persons or institutions will be
available when needed at affordable prices. It will likely cost more to have
independent companies do research and manufacturing than for us to handle these
resources.

Product/Market Acceptance. Our profitability and survival will
depend upon our ability to develop a technically and commercially feasible
product which will be accepted by end users. The RC/DC Engine and the AVFCS
which we are developing must be technologically superior or at least equal to
other engines which our competitors offer and must have a competitive

14

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price/performance ratio to adequately penetrate our potential
markets.A number of rotary engines have been designed over the past 70
years but only one, the Wankel, has been able to achieve mechanical practicality
and any significant market acceptance. If we are not able to achieve this
condition or if we do not remain technologically competitive, we may be
unprofitable and our investors could lose their entire investment. There can be
no assurance that we or our potential licensees will be able to achieve and
maintain end user acceptance of our engine or the AFVCS.

No Formal Market Survey. We have not conducted a formal market
survey but statistics available on the aircraft, marine and industrial markets
alone indicate an annual market potential of more than one hundred million
dollars.

Competition. While not a highly competitive business in terms
of numbers of competitors, the business of developing engines of a new design
and attempting to either license or produce them is nonetheless difficult
because most existing engine producers are large, well financed companies which
are very concerned about maintaining their market position. There is no
assurance that we will be successful in meeting or overcoming our current or
future competition.

Protection of Intellectual Property. Our business depends on
the protection of our intellectual property and may suffer if we are unable to
adequately protect our intellectual property. The success of our business
depends on our ability to patent our engine. Currently, we have been granted
several U.S. Patents. We cannot provide assurance that our patents will not be
invalidated, circumvented or challenged, that the rights granted under the
patents will give us competitive advantages or that our patent applications will
be granted.

History of Losses. We have a history of operating losses, and
an accumulated deficit, as of April 30, 2007, of $9,192,104.Our ability
to generate revenues and profits is subject to the risks and uncertainties
encountered by development stage companies.

Our future revenues and profitability are unpredictable. We
currently have no signed contracts that will produce revenue and we do not have
an estimate as to when we will be entering into such contracts. Furthermore, we
cannot provide assurance that management will be successful in negotiating such
contracts.

Rapid Technological Changes could Adversely Affect Our
Business. The market for our engines is characterized by rapidly changing
technology, evolving industry standards and changing customer demands.
Accordingly, if we are unable to adapt to rapidly changing technologies and to
adapt our product to evolving industry standards, our business will be adversely
affected.

Management and Conflicts of Interest. Our present officers and
directors have other unrelated full-time positions or part-time employment. Some
officers and directors will be available to participate in management decisions
on a part-time or as-needed basis only. Our management may devote time to other
companies or projects which may compete directly or indirectly with us.

Control by Current Insiders. 9,7515,886 common shares, not
including currently exercisable options or warrants, are owned by current
insiders representing control of approximately 35.86% of the total voting power.
Accordingly, the present insiders will continue to elect all of our directors
and generally control our affairs.

Need for Additional Key Personnel. At the present, we employ no
full time employees. Our success will depend, in part, upon the ability to
attract and retain qualified employees. We believe that we will be able to
attract competent employees, but no assurance can be given that we will be
successful in this regard. If we are unable to engage and retain the necessary
personnel, our business would be materially and adversely affected.

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Indemnification of Officers and Directors for Securities
Liabilities. Our Bylaws provide that we may indemnify any Director, Officer,
agent and/or employee as to those liabilities and on those terms and conditions
as are specified in the Oregon Business Corporation Act. Further, we may
purchase and maintain insurance on behalf of any such persons whether or not we
would have the power to indemnify such person against the liability insured
against. This could result in substantial expenditures by us and prevent any
recovery from such Officers, Directors, agents and employees for losses incurred
by us as a result of their actions. Further, we have been advised that in the
opinion of the Securities and Exchange Commission, indemnification is against
public policy as expressed in the 1933 Act and is therefore, unenforceable.

General Factors. Our areas of business may be affected from
time to time by such matters as changes in general economic conditions, changes
in laws and regulations, taxes, tax laws, prices and costs, and other factors of
a general nature which may have an adverse effect on our business.

Limited Public Market for the common stock. At present, only a
limited public market exists for the common stock on the over-the-counter
bulletin board maintained by the National Association of Securities Dealers and
there is no assurance that a more active trading market will develop, or, if
developed, that it will be sustained.

Estimates and Financial Statements. The information in this
Form 10-KSB consists of and relies upon evaluation and estimates made by
management. Even though management believes in good faith that such estimates
are reasonable, based upon market studies and data provided by sources
knowledgeable in the field, there can be no assurance that such estimates will
ultimately be found to be accurate or even based upon accurate evaluations.

No Foreseeable Dividends. We have not paid dividends on our
common stock and do not anticipate paying dividends on our common stock in the
foreseeable future.

Possible Volatility of Securities Prices. The market price for
our common stock traded on the over-the-counter bulletin board has been highly
volatile since it began trading and will likely to continue to behave in this
manner in the future. Factors such as our operating results and other
announcements regarding our development work and business operations may have a
significant impact on the market price of our securities. Additionally, market
prices for securities of many smaller companies have experienced wide
fluctuations not necessarily related to the operating performance of the
companies themselves.

GOVERNMENT REGULATIONS

Our engine products including the spark ignited engine, Diesel
engine and Cold Turbine engine will be subject to various exhaust emissions
standards depending upon the application and the country in which it is produced
and/or sold. As each product becomes ready for sale, it will be necessary to
have the engine certified according to the standards in effort at that time.

DEPENDENCE ON CERTAIN CUSTOMERS

Although we have no key customers at the present time, we
expect that if our development work is successful, we will likely become
dependent, at least initially, upon one or very few key customers. Such
dependence could prove to be risky in the event that one or more such potential
customers were to be lost and not replaced.

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RESEARCH AND DEVELOPMENT

The basic research and development work on the RC/DC Engine and
other products is being coordinated and funded by Reg Tech and REGI U.S., Inc.
and funded as to 50% each.

We plan to contract with outside individuals, institutions and
companies to perform most of the additional research and development work which
we may require to benefit from our rights to the RC/DC Engine and other
products.

During the last two fiscal years, we have incurred a total of
$196,565 in research and development expenses. During the last year, the
majority of the costs were paid directly toward the building of the 42
horsepower prototypes by Radian Milparts and by Advanced Ceramics for the 10
horsepower ceramic engine for unmanned aerial applied uses.

COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS

At the present time there is no direct financial or competitive
effect upon our business as a result of any need to comply with any federal,
state or local provisions which have been enacted or adopted regulating the
discharge of materials into the environment, or otherwise relating to the
protection of the environment.

NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL-TIME EMPLOYEES

We currently have two contractors directly involved in
technical development work on the RC/DC Engine. We expect to hire additional
employees for those positions which we deem necessary to fill, as needs arise.
Most additional employees are expected to be in technical and
licensing/marketing positions.

|ITEM 2. | DESCRIPTION OF PROPERTY
|------- | -----------------------

We own no properties. We currently utilize office space leased
by Reg Tech in a commercial business park building located in Richmond, British
Columbia, Canada, a suburb of Vancouver. The monthly rent for our portion of
this office space is $500.00. The present facilities are believed to be adequate
for meeting our needs for the immediate future. However we expect that we will
likely acquire separate space when the level of business activity requires us to
do so. We do not anticipate that we will have any difficulty in obtaining such
additional space at favorable rates.

On November 13, 2006, the Company entered into a rental
agreement for office space in Washington State for a term of one year at a cost
of $320 per month.

There are no current plans to purchase or lease any properties
in the near future.

|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

We are not a party to any legal proceedings or litigation, nor
are we aware that any litigation is presently being threatened or contemplated
against us or any officer, director or affiliate.

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

There was no matter submitted to a vote by our security holders
during the fourth quarter of our fiscal year ended April 30, 2007, through the
solicitation of proxies or otherwise.

17

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Subsequent to April 30, 2007, on May 24, 2007, at a special and
general meeting of the shareholders of the Company, the shareholders of the
Company approved the following changes to the Companys articles of
incorporation:

- The authorized capital was increased from 50,000,000 shares of common
  stock to 100,000,000 shares of common stock; and
- Reduction of the number of shares required to amend the articles of
  incorporation from two-thirds to a majority.

Additionally John G. Robertson, James L. Vandeberg, and
Jennifer Lorette were elected directors of the Company to hold office until the
next annual meeting of the shareholders and until their successors are elected
and qualified or until they resign or are removed from office.

The shareholders approved Smythe Ratcliffe LLP, Chartered
Accountants as auditor of the Company until the next Annual Meeting of
Shareholders.

The Oregon Secretary of State, Corporation Department, accepted
the amendment as filed May 30, 2007.

PART II

|ITEM 5. | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
      AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
|------- | -----------------------------------------------------------------------------------------------------------------------

There is a limited public market for our common stock which
currently trades on the OTC Bulletin Board under the symbol "RGUS.OB" where it
has been traded since September 21, 1994. The common stock has traded between
$0.035 and $6.75 per share since that date.

The following table sets forth the high and low prices for our
common stock as reported on the Bulletin Board for the quarters presented. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions, and may not reflect actual transactions.

|                               | Bid Price | Asked Price
|------------------------------ | --------- | -----------
|                               | High$     | Low $      
|Quarter Ended April 30, 2004   | .32       | .19        
|Quarter Ended July 31, 2004    | .27       | .15        
|Quarter Ended October 31, 2004 | .4        | .24        
|Quarter Ended January 31, 2005 | 2.21      | .33        
|Quarter Ended April 30, 2005   | 1.07      | .369       
|Quarter Ended July 31, 2005    | .82       | .35        
|Quarter Ended October 31, 2005 | .95       | .54        
|Quarter Ended January 31, 2006 | .85       | .41        
|Quarter Ended April 30, 2006   | 2.50      | .48        
|Quarter Ended July 31, 2006    | 2.58      | 1.17       
|Quarter Ended October 31, 2006 | 2.14      | 0.85       
|Quarter Ended January 31, 2007 | 1.59      | 0.91       
|Quarter Ended April 30, 2007   | 1.51      | 0.91       

(Information provided by The Over The Counter Bulletin Board.
The quotations reflect inter-dealer prices, without retail mark-up, markdown, or
commission and may not represent actual transactions.)

As of July 6, 2007, there were 27,011,208 shares of common
stock outstanding, held by 240 shareholders of record.

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DIVIDEND POLICY

To date we have not paid any dividends on our common stock and
do not expect to declare or pay any dividends on our common stock in the
foreseeable future. Payment of any dividends will be dependent upon future
earnings, if any, our financial condition, and other factors as deemed relevant
by our Board of Directors.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information about our common
stock that may be issued upon the exercise of options, warrants and rights under
all of our equity compensation plans as of April 30, 2007.

Plan Category
    Number of Shares To Be Issued Upon
      Exercise
    Weighted Average Exercise Price (3)
    Number of Securities Available for
      Issuance1993 Stock Option Plan (as amended December 5,
      2000) (1)
    850,000
    $0.55.
    109,0002007 Stock Option Plan (2)
    1,025,000
    $ 
    975,000


|(1) | The Company has a Stock Option Plan to issue up to
      2,500,000 shares to certain key directors and employees, approved April
      30, 1993 and amended December 5, 2000. Pursuant to the Plan, the Company
      has granted stock options to certain directors, consultants and
      employees.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The Company has a Stock Option Plan to issue up to
      2,000,000 shares to certain key directors and employees, approved April
      12, 2007.. Pursuant to the Plan, the Company has granted stock options to
      certain directors, consultants and employees.                                  
|(3) | The price reflects the weighted average exercise price of
      those options which are vested and exercisable.                                                                                                                                                                                       

The Company has a Stock Option Plan to issue up to 2,500,000
shares to certain key directors and employees, approved April 30, 1993 and
amended December 5, 2000. On April 12, 2007 the Company approved the 2007 Stock
Option Plan to issue up to 2,000,000 shares to certain key directors and
employees. Pursuant to the Plans, the Company has granted stock options to
certain directors, consultants and employees.

All options granted by the Company under the 2000 Plan have the
following vesting schedule:

|(i)   | Up to 25% of the option may be exercised at any time
      during the term of the option, such initial exercise is referred to as the
      First Exercise.                     
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(ii)  | The second 25% of the option may be exercised at any time
      after 90 days from the date of First Exercise, such second exercise is
      referred to as the Second Exercise.
|(iii) | The third 25% of the option may be exercised at any time
      after 90 days from the date of Second Exercise, such third exercise is
      referred to as the Third Exercise   
|(iv)  | The fourth and final 25% of the option may be exercised
      at any time after 90 days from the date of the Third Exercise.                                                      
|(v)   | The options expire sixty months from the date of
      grant.                                                                                                                     

All options granted to April 30, 2007 by the Company under the
2007 Plan have the following vesting schedule:

|(i)   | Up to 25% of the option may be exercised 90 days after
      the grant of the option.         
|----- | ----------------------------------------------------------------------------------------------
|(ii)  | The second 25% of the option may be exercised at any time
      after July 12, 2008.          
|(iii) | The third 25% of the option may be exercised at any time
      after July 12, 2009.           
|(iv)  | The fourth and final 25% of the option may be exercised
      at any time after July 12, 2010.
|(v)   | The options expire sixty months from the date of
      grant.                                 

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RECENT SALES OF UNREGISTERED SECURITIES

Set forth below is information regarding the issuance and sales
of our securities without registration during the last fiscal year. No such
sales involved the use of an underwriter. See Note 3 to our audited financial
statements for the fiscal year ended April 30, 2007 for more information on
recent sales of unregistered securities.

On November 17, 2006, the Company entered into a Securities
Purchase Agreement, whereby an investor agreed to purchase up to $10,000,000 of
the Companys common stock over a term of 36 months at the Companys discretion.
Each purchase will be for a minimum of $150,000 and up to a maximum of the
lesser of: $750,000, or 200% of the average weighted volume for the Companys
common stock for the 20 trading days prior to the date of purchase. Each
purchase will be at a 15% discount to the market price of the Companys common
stock over the 10 trading days prior to the purchase.

In connection with the equity line of credit, the Company
issued to the investor a warrant (Investor warrant) to purchase 1,000,000
shares of the Companys common stock at $1.30 per share (the Exercise Price)
for 5 years, and to an agent a warrant (Placement warrant) to purchase 640,000
shares of the Companys common stock at $1.30 per share for 5 years. If the
Company fails to register the shares issuable upon the exercise of the Investor
or Placement warrant, the holder is entitled to exercise the warrant and
receive, for no consideration, a certificate equal to the number of shares
obtained by subtracting the Exercise Price of the warrant for the volume
weighted average price on the trading day immediately preceding the date of such
election and multiplying that amount by the number of shares issuable upon the
exercise of the warrant. The issuance of the warrant was exempt under 4(2).

In the previous fiscal year, the Company received subscriptions
of $3,750 upon the exercise of stock options for 18,750 shares issued during the
year ended April 30, 2007.

During the year ended April 30, 2007, the Company issued
643,500 shares upon the exercise of stock options for proceeds of $140,188.

During the year ended April 30, 2007, the Company issued
255,833 shares at $0.80 per share upon the exercise of warrants for proceeds of
$204,666. This offering was exempt from registration under Rule 506 and Section
4(2) of the Securities Act of 1933, as amended (the "Act"). Each certificate
representing securities issued to the investors in this private placement bears
a legend restricting transfer. In addition, if the exemptions under Rule 506
under and Section 4(2) of the Act are not available, the sales to non-U.S.
residents were exempt pursuant to Regulation S under the Act. If the foregoing
exemptions are not available, we further believe that 255,833 shares were also
exempt under Regulation S under the Securities Act of 1933, as amended, due to
the foreign nationality of the relevant purchasers.

During the year ended April 30, 2007, the Company issued 13,000
shares at $1 per share upon the exercise of warrants for proceeds of $13,000.

During the year ended April 30, 2007, the Company issued 120,000
  shares at $1.00 per share pursuant to a private placement for cash proceeds
  of $116,496, net of issue costs of $3,504. This offering was exempt from registration
  under Rule 506 and Section 4(2) of the Securities Act of 1933, as amended (the
  "Act"). Each certificate representing securities issued to the investors in
  this private placement bears a legend restricting transfer. In addition, if
  the exemptions under Rule 506 under and Section 4(2) of the Act are not available,
  the sales to non-U.S. residents were exempt pursuant to Regulation S under the
  Act. If the foregoing exemptions are not available, we further believe that
  120,000 shares were also exempt under Regulation S under the Securities Act
  of 1933, as amended, due to the foreign nationality of the relevant purchasers.

20

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As of April 30, 2007, the Company had received subscriptions of
$10,000 upon the exercise of warrants of 12,500 shares issued subsequent to the
year end.

As of April 30, 2007, the Company had received subscriptions
pursuant to a private placement for proceeds of $249,027, net of subscription
costs of $13,673.

On July 14, 2006, the Company entered into a financial advisory
agreement with a consulting company for the provision of consulting services
from July 14, 2006 to July 14, 2007 in consideration for $10,000 upon the
signing of the agreement (paid), shares with a fair value of $60,000 (issued)
and $5,000 per month for ten months This offering was exempt from registration
under Section 4(2) of the Securities Act of 1933, as amended (the "Act").

|ITEM 6: | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATIONS
|------- | ----------------------------------------------------------------

The following contains forward-looking statements relating to
  revenues, expenditures and sufficiency of capital resources. Actual results
  may differ from those projected in the forward-looking statements for a number
  of reasons, including those described in this annual report.

We are a development stage company engaged in the business of
  developing and commercially exploiting an improved axial vane type rotary engine
  known as the Rand Cam/Direct Charge Engine (the "RC/DC Engine").

As a development stage company, we devote most of our
activities to establishing our business. Planned principal activities have not
yet produced significant revenues and we have a working capital deficit. We have
undergone mounting losses to date totaling $9,192,104 and further losses are
expected until we complete a licensing agreement with a manufacturer and
reseller. At April 30, 2007, we had working capital deficiency of $108,145. Our
only assets are cash totaling $163,909, prepaid expenses, totaling $41,648.
These factors raise substantial doubt about our ability to continue as a going
concern. Our ability to emerge from the development stage with respect to our
planned principal business activity is dependent upon our successful efforts to
raise additional equity financing, receive funding from affiliates and
controlling shareholders, and develop a market for our products.

During 2007, we raised $120,000 pursuant to a private placement
  of 120,000 units. The Units were issued at a purchase price of US$1 per Unit
  for cash proceeds of $116,496, net of issue costs of $3,504. Each Unit consisted
  of one share common stock of the Company and one warrant. Each warrant may be
  exercised to enable the investor to purchase one additional share of Common
  Stock at US$1.50 within five years of the date of issuance to the purchaser.
  During the fiscal year ended April 30, 2006, we raised $881,088, net of issue
  costs of $18,912 pursuant to a private placement of 1,500,000 units. The units
  were issued at a purchase price of US$0.60. Each Unit consisted of one share
  common stock of the Company and one half warrant. Each whole warrant may be
  exercised to enable the investor to purchase one additional share of Common
  Stock at US$0.80 within the first year of the date of issuance to the purchaser,
  and US$1.00 within the second year of the date of issuance to the purchaser.

During the year also, we raised $143,938 from the exercise of
643,500 stock options, and $217,666 from the exercise of 268,833 share purchase
warrants. During the fiscal year ended April 30, 2006, we raised $53,313 from
the exercise of 212,000 stock options, and $142,240 from the exercise of 406,400
share purchase warrants. These funds raised do not provide enough working
capital to fund ongoing operations for the next twelve months. We may also raise
additional funds through the exercise of warrants and stock options.

Results of operations for the year ended April 30, 2007 ("2007)
compared to the year ended April 30, 2006 ("2006")

21

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There were no revenues from product licensing during 2007 and
2006.

The net loss in 2007 increased by $357,936 to $1,413,294
compared to $1,055,358 in 2006. The increase was due to an increase of $238,181
in general and administrative expenses and an increase of $44,989 in research
and development expenses. The increase in administrative expenses was mainly due
to an increase in stock-based compensation of $135,777 to $260,569 in 2007 from
$124,793 in 2006, a decrease in consulting fees of $26,460 to $244,248 in 2007
from $270,708 in 2006, a decrease in investor relations expenses of $169,596 to
$297,413 in 2007 from $467,009 in 2006, an increase in professional fees of
$105,493 to $170,430, in 2007 from $64,938 in 2006, an increase in advertising
of $68,246 to $100,752 in 2007 from $32,506 in 2006, an increase in travel of
$26,424 to $ 74,730 in 2007 from $48,306 in 2006, and an increase in wages and
benefits of $96,620 from $nil in 2006. The majority of prototype construction
and testing costs continues to be borne by potential licensees and
manufacturers. See above progress reports for research and development activity
conducted during the year.

LIQUIDITY AND CAPITAL RESOURCES

During 2007, we financed our operations mainly through proceeds
of $357,854 from the exercise of stock options and share purchase warrants, as
well as net proceeds of $116,496 from a private placement offering.

We received funding in 2007 from our affiliated companies (common
  officers and directors) and our 11% shareholder, Rand Energy Group, Inc. (Rand)
  and Reg Technologies Inc., the controlling shareholder of Rand Energy Group,
  Inc. The total amount owing to related parties is $248,253 or 79% of total current
  liabilities as at April 30, 2007. The balances owing to related parties are
  non-interest bearing, unsecured and repayable on demand. Our affiliated companies
  have indicated that they will not be demanding repayment of these funds during
  the next fiscal year and will advance, or pay expenses on behalf of the Company
  if further funds are needed.

As at April 30, 2007, we had working capital deficiency of $108,145.
  We receive interim support from our ultimate parent company and will raise additional
  funds from equity financing which was negotiated. We also plan to raise funds
  through loans from a major shareholder (Rand). Rand owns 2,941,616 sharesand plans to sell shares as needed to meet our ongoing funding requirements
  if traditional equity sources of financing prove to be insufficient.

The audited financial statements have been prepared assuming
  that the Company will continue as a going-concern. As discussed in note 1 to
  the financial statements, the Company has no revenues and limited capital, which
  together raise substantial doubt about its ability to continue as a going-concern.
  Management plans in regard to these matters are also described in note 1. The
  financial statements do not include any adjustments that might result from the
  outcome of this uncertainty.

The Company plans to raise funds through loans from Rand Energy
  Group Inc. (“Rand”), a private company with officers and directors
  in common with the Company. Further, Rand owns approximately 11% of the shares
  of the Company, and may sell shares as needed to meet ongoing funding requirements
  if traditional equity sources of financing prove to be insufficient. The Company
  also receives interim support from affiliated companies and plans to raise additional
  capital through debt and/or equity financings. The Company has an equity line
  of credit whereby the investor agreed to purchase up to $10,000,000 of the Company’s
  common stock. (See Note 3(e) to our financial statements). The Company may also
  raise additional funds through the exercise of warrants and stock options, if
  exercised.

We have been successful in the past in acquiring capital through
  the issuance of shares of our Common Stock, and through advances from related
  parties.

Subsequent to the fiscal year ended April 30, 2007, we received subscriptions
  pursuant to a private placement for cash proceeds of $297,250. We anticipate
  that our cash requirements for the fiscal year ending April 30, 2008 will remain
  consistent with those for the fiscal year ended April 30, 2007.

|ITEM 7. | FINANCIAL STATEMENTS
|------- | --------------------

Our financial statements are included and begin immediately
following the signature page to this report. See Item 13 for a list of the
financial statements and financial statement schedules included.

|ITEM 8. | CHANGES IN AND DISAGREEEMENTS WITH ACCOUNTANTS
      ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | -------------------------------------------------------------------------------------------

None.

|ITEM 8A. | CONTROLS AND PROCEEDURES.
|-------- | -------------------------

We carried out an evaluation, under the supervision and with
the participation of our management, including the President, and the Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures [as defined in the Exchange Act Rule
13a-15(e)] as of the end of the period covered by this report. Based upon the
evaluation of

22

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the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this annual report, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of such date, the
disclosure controls and procedures were effective at the reasonable assurance
level with respect to such disclosure controls and procedures being designed to
ensure that information relating to the Registrant required to be disclosed by
the Company in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC.

There are inherent limitations to the effectiveness of any
system of disclosure controls and procedures, including the possibility of human
error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide
reasonable , and not absolute assurance, of achieving the desired control
objectives, and management necessarily was required to apply its judgement in
evaluating the cost-benefit relationship of possible controls and procedures.

There was no significant change in our internal control over
financial reporting that occurred during our most recently completed fiscal year
ended April 30, 2007 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting. Nor were there
any significant deficiencies or material weaknesses in our internal controls
requiring corrective actions.

Extension of Compliance Date for Managements Report on
Internal Control Over Financial Reporting

The Company is a non-accelerated filer as defined in Rule 12b-2
of the Act. On September 21, 2005, the Securities and Exchange Commission
extended the compliance dates for non-accelerated filers concerning the
provisions of Exchange Act Rule 13a-15(d) or 15d-15(d), whichever applies,
requiring an evaluation of changes to internal control over financial reporting
requirements with respect to the companys first periodic report due after the
first annual report that must include managements report on internal control
over financial reporting. A company that is a non-accelerated filer must begin
to comply with these requirements for its first fiscal year ending on or after
July 15, 2007. In addition, the compliance period was extended to the amended
portion of the introductory language in paragraph 4 of the certification
required by Exchange Act Rules 13a-14(a) and 15d-14(a) that refers to the
certifying officers responsibility for establishing and maintaining internal
control over financial reporting for the company, as well as paragraph 4(b). The
amended language must be provided in the first annual report required to contain
managements internal control report and in all periodic reports filed
thereafter. The extended compliance dates also apply to the amendments of
Exchange Act Rules 13a-15(a) and 15d-15(a) relating to the maintenance of
internal control over financial reporting.

Under the internal control reporting provisions of the Act,
Management will be responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rule 13a-15(f) under the
Exchange Act. Internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of
America.

The Companys internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and

23

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directors of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Companys assets that could have a material effect on
the financial statements.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

Prior to the extended deadline in 2007, management will conduct
an evaluation of the effectiveness of internal control over financial reporting
based on the framework in Internal Control  Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this
evaluation, management will determine whether the Companys internal control
over financial reporting is effective. Managements assessment of the
effectiveness of the Companys internal control over financial reporting will be
audited by an independent registered public accounting firm and stated in their
report which will be included in the Companys Form 10-KSB filing.

There were no changes in the Companys internal controls that
have materially affected, or are reasonably likely to materially affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|ITEM 8B. | OTHER INFORMATION.
|-------- | ------------------

On September 8, 2005, Manning Elliott agreed to resign as the
Companys principal auditor, effective as of such date. On September 8, 2005,
the Company appointed Smythe Ratcliffe LLP as the principal auditor of the
Company, effective as of such date. The resignation of Manning Elliott was
accepted and the appointment of Smythe Ratcliffe LLP was approved by the
Companys Audit Committee.

The reports of Manning Elliott on the Company's financial
statements for the two fiscal years 2005 and 2004 did not contain an adverse
opinion or a disclaimer of opinion on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope of procedure and
were not qualified or modified as to uncertainty, audit scope, or accounting
principles.

The Company has authorized Manning Elliott to respond fully to
questions of its successor independent auditors.

There were no disagreements with Manning Elliott for the past
two fiscal years any subsequent interim period preceding such resignation,
declination or dismissal on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope of procedure, which
disagreement, if not resolved to the satisfaction of Manning Elliott, would have
caused it to make reference to the subject matter of the disagreement in
connection with its report.

The Company has requested Manning Elliott to furnish it a
letter addressed to the SEC stating whether it agrees with the above statements.
A copy of that letter, dated September 13, 2005, was filed with our 8-K on
September 13, 2005.

24

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PART III

|ITEM 9. | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS, CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE
      EXCHANGE ACT .
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------

Directors and Executive Officers of the Registrant

The following table sets forth the name, age and position of
each of our Executive Officers and Directors:

|Name              | Age | Position                                                                                 
|----------------- | --- | -----------------------------------------------------------------------------------------
|                  |     |                                                                                          
|John G. Robertson | 66  | Director, Chairman of the Board
      of Directors, President and Chief Executive Officer
|Jennifer Lorette  | 35  | Director, Vice-President                                                                 
|James Vandeberg   | 63  | Director and Chief Operating
      Officer and Chief Financial Officer                   
|Brian Cherry      | 67  | Vice President, Rand Cam Engine Technology
      Projects                               
|Lynn Petersen     | 56  | Vice President of Marketing for
      the RadMax / Rand Cam Technology                 
|Robert Grisar     | 60  | Vice President, Engineering for the RadMax /
      Rand Cam Technology                 

BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION OF DIRECTORS,
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

Mr. Robertson has held his position since our formation in
July, 1992. All officers currently devote part-time services to our operation.

There are no family relationships between any director or
executive officer and any other director or executive officer.

The present and principal occupations of our directors and
executive officers during the last five years are set forth below:

John G. Robertson - Chairman of the Board of Directors,
President, Chief Executive Officer

Mr. Robertson has been our Chairman, President and Chief
Executive Officer since our formation. Since October 1984 Mr. Robertson has been
President and a Director of Reg Technologies Inc., a British Columbia
corporation listed on the TSX Venture Exchange that has financed the research on
the Rand Cam Engine since 1986. REGI U.S. is controlled by Rand Energy Group,
Inc., a British Columbia corporation of which Reg Technologies Inc. is the
majority shareholder. REGI U.S. owns the U.S. rights to the Rand Cam (TM)
technology and Rand Energy Group, Inc. owns the worldwide rights exclusive of
the U.S. Mr. Robertson is President, Principal Executive Officer and a member of
the Board of Directors of IAS Communications, Inc., an Oregon corporation traded
on the OTC bulletin board, which is developing a new type of antenna system.
Since June 1997 Mr. Robertson has been President, Principal Executive Officer
and a Director of Information-Highway.com, Inc., a Florida corporation which is
currently inactive, and its predecessor. He is also the President and Founder of
Teryl Resources Corp., a public company trading on the TSX Venture Exchange
involved in gold, diamond, and oil and gas exploration. He is also President of
Linux Gold Corp., a public

25

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company trading on the OTC Bulletin Board. Since May 1977 Mr.
Robertson has been President and a member of the Board of Directors of SMR
Investments Ltd., a British Columbia corporation engaged in the business of
management and investment consulting.

Jennifer Lorette - Vice President

Ms. Lorette became a member of the board of directors in
January 2001. She has been our Vice President since June 1994, and was also
previously Chief Financial Officer. Since 2001 she has also been a director for
Reg Technologies, Inc., a British Columbia corporation listed on the TSX Venture
Exchange that has financed the research on the Rand Cam Engine since 1986. REGI
U.S. is controlled by Rand Energy Group, Inc., a British Columbia corporation of
which Reg Technologies Inc. is the majority shareholder. Since February 1995 Ms.
Lorette has been Secretary and a director of IAS Communications Inc., an Oregon
corporation traded on the OTC bulletin board. Since June 1997 Ms. Lorette has
been Executive Vice President and a Director of Information-Highway.com, Inc., a
Florida corporation traded which is currently inactive, and its predecessor.
Since November 2000 Ms. Lorette has also been a director of Linux Gold Corp.
Since February 2001 Ms. Lorette has been a director of Teryl Resources Corp., a
public company trading on the TSX Venture Exchange involved in gold, diamond,
and oil and gas exploration.

James L. Vandeberg - Chief Operating Officer and Chief
Financial Officer, and a Member of the Board of Directors

Mr. Vandeberg became a Director of the Company in November 1998
and its Chief Operating Officer in August 1999. Mr. Vandeberg is an attorney in
Seattle, Washington. He has served as our legal counsel since 1996. Mr.
Vandeberg's practice focuses on the corporate finance area, with an emphasis on
securities and acquisitions. Mr. Vandeberg was previously general counsel and
secretary of two NYSE companies and. He is a director of
Information-Highway.com, Inc., a Florida corporation traded on the Pink Sheets.
He is also a director of IAS Communications Inc. an Oregon corporation traded on
the OTC bulletin board. Mr. Vandeberg is also a director of Reg Technologies
Inc. which is traded on the OTC bulletin board. Mr. Vandeberg is also a director
of ASAP Show Inc. since 2005. He is a member and former director of the American
Society of Corporate Secretaries. He became a member of the Washington Bar
Association in 1969 and of the California Bar Association in 1973. Mr. Vandeberg
graduated cum laude from the University of Washington with a Bachelor of Arts
degree in accounting in 1966, and from New York University School of Law in
1969, where he was a Root-Tilden Scholar.

Brian Cherry - Vice President, Rand Cam Engine Technology
Projects

Mr. Cherry was Vice President and a Director of the Company
since its inception in July 1992, until January 2001 when he left the Company to
pursue personal interests. Mr. Cherry was appointed Vice President, Rand Cam
Engine Technology Projects in June 2004. He has spearheaded the development of
the next-generation RadMax® technology. He has earlier patented prior versions
of the technology in 1996. He is currently the project manager in charge of
developing a RadMax® electric generator for hybrid electric vehicles and for
residential uses. Mr. Cherry oversees and prepares submissions of new patent
applications for the RadMax® technology.

Lynn Petersen  Vice President, Marketing for the RadMax /
Rand Cam Technology

Mr. Petersen has over 25 years leadership experience in sales,
marketing, market research and business development management. An accomplished
marketer and new product strategist, his vision and expertise has driven notable
growth in the industrial chemical, computer and packaging equipment industries.
Most recently Mr. Petersen was Marketing Manager for three

26

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years at Jetseal, Inc., which manufactures high tech seals for
the aerospace, military, semi conductor, and nuclear industries. Mr. Petersen
received his Bachelor of Science degree in Mechanized Agriculture, and Master of
Science degree in Economics and Agricultural Engineering from South Dakota State
University. He was honorably discharged from the USAR where he served as an
Ordnance Corp officer for 14 years. Mr. Petersen is responsible for managing
marketing and business development activities, and making presentations for the
RadMax® and Rand Cam technology to major potential end users. He is also
responsible for researching, defining and optimizing new business markets for
REGI U.S., Inc.

Robert Grisar  Vice President, Engineering for the RadMax /
Rand Cam Technology

Mr. Grisar was appointed Vice President, Engineering for the
RadMax® / Rand Cam technology. He has more than 30 years of progressive
engineering experience designing and implementing electronic and mechanical
systems for the US Department of Defense and related agencies. This includes:
airborne radar for fixed and rotary wing aircraft, shipboard-submarine-and
torpedo sonar, and line-of-sight, meteor burst, and satellite communications
systems. His commercial experience includes designing and implementing the user
interface and software for medical imaging and diagnostic systems. Prior, he was
responsible for the Astrospace design, fabrication, test, and implementation of
the thermal protection system for Space Shuttle solid rocket boosters. Most
recently, Mr. Grisar directed MILPARTS (Military Parts Reinvention Network),
which continues to reinvent, produce, and deliver military system repair and
spare parts for legacy defense systems.

Audit Committee

Our Audit Committee consists of the entire Board of Directors
of the Company. None of the members of the Audit Committee are independent
directors.

We do not currently have a financial expert in our audit
committee due to our relatively small size. In 2007, we had no employees and we
relied upon the services of a chartered accounting firm in Vancouver, BC,
Canada, to prepare our interim unaudited quarterly consolidated financial
statements. Also, we retained the audit services of Smythe Ratcliffe LLP,
Chartered Accountants to perform the audit on our year-end consolidated
financial statements.

Moreover, the audit committee is comprised of seasoned business
professionals, whereby two members each have over 25 years of experience in the
investment business, are board members of several corporations and one of the
members is an attorney whose practice focuses on the corporate finance area,
with an emphasis on securities and acquisitions.

On these bases, we believe that the audit committee has
adequate resources available to it when financial expertise and advice are
necessary.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of Forms 3, 4 and 5 furnished to us,
other than Mr. Cherry who furnished us with no forms during the year, none of
our officers, directors or beneficial owners of more than ten percent of the
common stock failed to file on a timely basis reports required to be filed by
Section 16(a) of the Exchange Act during the most recent fiscal year.

27

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Code of Ethics

The Board of Directors does not have any committees. Our Board
of Directors has not adopted a code of ethics that applies to our principal
executive officer, principal financial officer. We believe that due to the small
size of the Company and existing systems we have in place that there is no real
benefit to having a formal code of ethics.

Directors are subject to the laws of the State of Oregon,
whereby they are required to act honestly, in good faith and in the best
interests of the Company.

|ITEM 10. | EXECUTIVE COMPENSATION
|-------- | ----------------------

Summary Compensation Table

The following table sets forth the aggregate cash compensation
paid for services rendered to the Company during the last three fiscal years by
the Company's Chief Executive Officer and the Company's most highly compensated
executive officers who served as such at the end of the last fiscal year. No
executive officer had an annual salary and bonus in excess of $100,000 during
such year.

Name and Principal Position
    Year
    Salary ($)
    Bonus ($)
    Stock Awards ($)
    Option Awards ($) (1)
    Non-Equity Incentive Plan
      Compensation ($)
    Nonqualified Deferred Compensation
      ($)
    All Other Compensa- tion ($)
    Total ($)John G. Robertson President, Chief
      Executive Officer
    2007 2006 2005
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    168,307 Nil Nil
      Nil
    Nil Nil Nil
    Nil Nil Nil
    30,000 30,000 36,000(2)
    Nil Nil Nil


(1) This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the year ended April 30,
2007 for the fair value of stock options granted to each of our named executive
officers calculated in accordance with SFAS 123R. For additional information on
the valuation assumptions with respect to these option grants, refer to Note3 of
our financial statements and related notes. These amounts reflect only our
accounting expense for these option grants and do not correspond to the actual
value that will be recognized by our named executive officers. See the
Outstanding Equity Awards at April 30, 2007 table below for more information on
options held by the named executive officers.

(2) Access Information Services, Inc., a Washington corporation
which is owned and controlled by the Robertson Family Trust, received or is to
receive $2,500 per month from us for management services provided to us. Mr.
Robertson is a trustee of the Robertson Family Trust.

We entered into the following contracts with related parties.
Related parties consist of companies controlled or significantly influenced by
the President of the Company.

On March 31, 1994, we entered into a management agreement with
  Access Information Services, Inc., a Washington corporation, which is owned
  and controlled by the Robertson Family Trust. A management fee of $2,500 per
  month is accrued for the provision certain management, administrative, and financial
  services

On November 27, 2006, a company with common directors transferred
  20,500 shares it holds of the Company to a consultant pursuant to a consulting
  agreement for services valued at $25,000.

The Company entered into an agreement with a professional law
  firm (the Law Firm) in which a partner of the firm is an Officer
  and Director of the Company. The Company agreed to pay a cash fee equal to 5%
  of any financings with parties introduced to the Company by the Law Firm.

28

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The Company also agreed to pay an equity fee equal to 5% of the
equity issued by the Company to parties introduced by the Law Firm, in the form
of options, warrants or common stock. During the year ended April 30, 2007, fees
in the aggregate of $116,598 (2006 - $12,201) for legal services have been paid
to the Law Firm.

During the year ended April 30, 2007, the value of consulting
services of $90,000 (2006 - $90,000) was contributed by the President, CEO and
Director of the Company, charged to operations and treated as donated capital.

During the year ended April 30, 2007, the value of consulting
services of $30,000 (2006 - $30,000) was contributed by the Vice President and
Director of the Company, charged to operations and treated as donated capital.

During the year ended April 30, 2007, the value of consulting
services of $30,000 (2006 - $30,000) was contributed by the CFO, COO and
Director of the Company, charged to operations and treated as donated capital.

During the year ended April 30, 2007, rent of $3,009 (2006 -
$4,797) was paid to a company having common officers and directors.

During the year ended April 30, 2007, project management fees
of $30,000 (2006 - $30,000) were paid to a company having common officers and
directors.

We may in the future create retirement, pension, profit
sharing, insurance and medical reimbursement plans covering our Officers and
Directors. At the present time, no such plans exist. No advances have been made
or are contemplated by us to any of our Officers or Directors. Directors receive
no compensation for their service as such. Compensation of officers and
directors is determined by our Board of Directors and is not subject to
shareholder approval.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table sets forth information about outstanding
equity awards held by our named executive officers as of April 30, 2007.

Option Awards (1)

Name
    Number of Securities Underlying
      Unexercised Options granted (#) 
        Exercisable
    Number of Securities Underlying
      Unexercised Options granted (#) 
        Unexercisable
    Equity Incentive Plan Awards:
      Number of Securities Underlying Unexercised Unearned
      Options (#)
    Option Exercise 
        Price ($)
    Option 
        Expiration dateJohn Robertson
    Nil
    500,000
    Nil
    $1.30
    April 12, 2012Jennifer Lorette
    75,000 Nil
    Nil 100,000
    Nil Nil
    $0.20 $1.30
    May 10, 2007 April 12, 2012Brian Cherry
    Nil
    Nil
    Nil
    Nil
    NilJames L. Vandeberg
    Nil
    500,000
    Nil
    $1.30
    April 12, 2012Lynn Petersen
    25,000
    75,000
    Nil
    $1.30
    April 12, 2012Robert Grisar
    Nil
    200,000
    Nil
    $1.30
    April 12, 2012


|(1) | There were no Stock Awards awarded to the named executive
      officers. Accordingly, this disclosure has been
omitted.
|--- | ------------------------------------------------------------------------------------------------------------------------

29

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Compensation of Directors

During the most recently completed financial year, the Company
paid no cash compensation (including salaries, fees, directors fees,
commissions, bonuses paid for services rendered during the most recently
completed fiscal year, bonuses paid during the most recently completed fiscal
year for services rendered in a previous year, and any compensation other than
bonuses earned during the most recently completed fiscal year the payment of
which was deferred) to the Directors for services rendered.

Executive Officers of the Company, who also act as Directors of
the Company, do not receive any additional compensation for services rendered in
such capacity other than as paid by the Company to such Executive Officers in
their capacity as Executive Officers (see Compensation of Executive Officers).

We do not have any Long Term Incentive Plans.

We do not have any employment contracts, termination of
employment and change of control arrangements.

|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------------

The following table sets forth, as of July 9, 2007, our
outstanding common stock owned of record or beneficially by each person who
owned of record, or was known by us to own beneficially, more than 5% of our
common stock and the name and shareholdings of each Executive Officer and
Director and all Executive Officers and Directors as a group. A person is deemed
to be the beneficial owner of securities that can be acquired by such person
within 60 days from the date of this report upon the exercise of warrants or
options. Each beneficial owner's percentage ownership is determined by assuming
that options that are held by such person and which are exercisable within 60
days from the date are exercised.

|Name                                                                       | Shares Owned | Percentage of
|-------------------------------------------------------------------------- | ------------ | -------------
|                                                                           |              | Shares Owned 
|John G. Robertson, Chairman of the Board of
      Directors, President and |              |              
|Director (1) (2) (3)(10_                                                   | 10,146,486   | 37.31%       
|James McCann (4)                                                           | 3,046,116    | 11.2%        
|Rand Energy Group Inc. (5)                                                 | 3,046,116    | 11.2%        
|Jennifer Lorette, Vice President and
      Director (6)                    | 255,400      | *            
|James Vandeberg, Chief Operating Officer and Director (7)                  | 175,000      | *            
|Brian Cherry, Vice President of the Rand
      Cam Engine Technology      | Nil          | *            
|Projects                                                                   |              |              
|Lynn Petersen, Vice President of Marketing
      for the RadMax / Rand    | 110,000      | *            
|Cam technology (8)                                                        |              |              
|Robert Grisar Vice President of Engineering
      for the RadMax® / Rand   | 200,000      | **           
|Cam technology (9)                                                        |              |              
|ALL EXECUTIVE OFFICERS & DIRECTORS AS A
      GROUP (FOUR                  | 9,751,886    | 35.86%       
|INDIVIDUALS) (11)                                                          |              |              

Except as noted below, all shares are held beneficially and of
record and each record shareholder has sole voting and investment power.

*Less than one percent of the issued and outstanding on July
17, 2006, which was 25,900,375

30

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(1) This individual may be deemed to be a "parent or founder"
of REGI as that term is defined in the Rules and Regulations promulgated under
the Securities Act of 1933.

(2) Includes 3,046,116 shares registered in the name of Rand
Energy Group Inc. See Note (5) below for an explanation of the beneficial
ownership of Rand Energy Group Inc. Mr. Robertson disclaims beneficial ownership
of these shares beyond the extent of his pecuniary interest. Also includes
500,000 options that are currently not exercisable. Mr. Robertson's address is
the same as the Company's.

(3) Includes 2,747,720 common shares registered in the name of
Access Information Services, Ltd., a corporation controlled by the Robertson
Family Trust, and 500,000 options that are currently not exercisable. Mr.
Robertson is one of three trustees of the Robertson Family Trust, which acts by
the majority vote of the three trustees. Mr. Robertson disclaims beneficial
ownership of the shares owned or controlled by the Robertson Family Trust. Mr.
Robertson's address is the same as REGIs address.

(4) Includes 3,046,116 shares registered in the name of Rand
Energy Group Inc. See Note (5) below for an explanation of the beneficial
ownership of Rand Energy Group Inc.

(5) Rand Energy Group Inc. is owned 51% by REG TECH and 49% by
Rand Cam Engine Corp. Under Rule 13d-3 under the Securities Exchange Act of
1934, both REG TECH and Rand Cam Engine Corp. could be considered the beneficial
owner of the 3,046,116 shares registered in the name of Rand Energy Group
Inc.

SMR Investment Ltd., a British Columbia corporation, holds a
controlling interest in REG TECH. Since May 1977 Mr. Robertson has been
President and a member of the Board of Directors of SMR Investments Ltd. Susanne
M. Robertson, Mr. Robertson's wife, owns SMR Investment Ltd. Accordingly, in
Note (2) above, beneficial ownership of the 2,941,616 shares registered in the
name of Rand Energy Group Inc. has been attributed to Mr. Robertson. We believe
it would be misleading and not provide clear disclosure to list as beneficial
owners in the table the other entities and persons discussed in this paragraph,
although a strict reading of Rule 13d-3 under the Securities Exchange Act of
1934 might require each such entity and person to be listed in the beneficial
ownership table.

Rand Cam Engine Corp. is a privately held company whose stock
is controlled by James McCann and by several other shareholders in minor
interest. We believe it would be misleading and not provide clear disclosure to
list as beneficial owners in the table the other entities and persons discussed
in this paragraph, although a strict reading of Rule 13d-3 under the Securities
Exchange Act of 1934 might require each such entity and person to be listed in
the beneficial ownership table.

(6) Includes 50,000 options that are currently exercisable and
100,000 that are not exercisable. Ms. Lorette's address is the same as the
Company's.

(7) Includes 100,000 options that are currently not
exercisable. Mr. Vandeberg's address is 601 Union Street, Suite 4500, Seattle,
WA 98101.

(8) Includes 100,000 options that are currently not
exercisable. Mr. Petersen's address is 665 N. Riverpoint Blvd., Suite 438,
Spokane, WA 99202-1648.

(9) Includes 200,000 options that are currently not
exercisable. Mr. Grisar's address is 8543 Hemlock Ridge Drive, Kirtland, OH
44094 USA.

31

---

(10) Includes 3,320,000 shares registered in the name of Reg
Technologies Inc. Reg Technologies Inc. is a publicly held British Columbia
corporation. Rand Energy Group Inc., holds approximately 11% of the common
shares of REGI, which, in turn, is controlled 51% by Reg Technologies Inc. Mr.
Robertson and Ms. Lorette are both directors and officers of Reg Technologies
Inc. SMR Investment Ltd., a British Columbia corporation, holds a controlling
interest in Reg Technologies Inc.. Since May 1977 Mr. Robertson has been
President and a member of the Board of Directors of SMR Investments Ltd. Susanne
M. Robertson, Mr. Robertson's wife, owns SMR Investment Ltd. Accordingly, in
Note (2) above, beneficial ownership of the 3,320,000 shares registered in the
name of Reg Technologies Inc. has been attributed to Mr. Robertson. We believe
it would be misleading and not provide clear disclosure to list as beneficial
owners in the table the other entities and persons discussed in this paragraph,
although a strict reading of Rule 13d-3 under the Securities Exchange Act of
1934 might require each such entity and person to be listed in the beneficial
ownership table.

(11) Includes 3,046,116 shares registered in the name of Rand
Energy Group Inc. whose beneficial ownership is attributed to Mr. Robertson as
set forth in Note (2) above. See Note (5) above for an explanation of the
beneficial ownership of Rand Energy Group Inc. Mr. Robertson disclaims
beneficial ownership of these shares beyond the extent of his pecuniary
interest. Also includes 500,000 options that are currently not exercisable.

CHANGES IN CONTROL

We know of no arrangements the operation of which may result in
a change of our control.

|ITEM 12. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
      AND DIRECTOR INDEPENDENCE
|-------- | -------------------------------------------------------------------------------

Pursuant to the August 1992 Agreement we issued 5,700,000
shares of our common stock at a deemed value of $0.01 per share to Rand Energy
Group Inc., a privately held British Columbia corporation ("RAND") in exchange
for certain valuable rights, technology, information, and other tangible and
intangible assets relating to the United States rights to the Original Engine.
RAND is owned 51% by Reg Technologies Inc., a British Columbia corporation
listed on the TSX Venture Exchange ("Reg Tech"), and 49% by Rand Cam Engine
Corp. Reg Tech's President is also our President and its Vice President is also
Vice President of the Company.

We also agreed to pay semi-annually to RAND a royalty of 5% of
any net profits to be derived by us from revenues received as a result of its
license of the Original Engine.

In the April 1993 Agreement, an amendment to a previous
Amendment Agreement dated November 23, 1992, between RAND, Reg Tech and Brian
Cherry (a former officer and director) and an original agreement dated July 30,
1992, between RAND, Reg Tech and Brian Cherry, Cherry agreed to: (a) sell,
transfer and assign to RAND all his right, title and interest in and to the
technology related to the RC/DC Engine, including all pending and future patent
applications in respect of the Technology for all countries except the United
States of America, together with any improvements, changes or other variations
to the Technology; (b) sell, transfer and assign to us (then called Sky
Technologies Inc.), all his right, title and interest in and to the Technology,
including all pending and future patent applications in respect of the
Technology for the United States of America, together with any improvements,
changes or other variations to the Technology.

Other provisions of the April 1993 Agreement call for us (a) to
pay to RAND a continuing royalty of 5% of the net profits derived from the
Technology by us and (b) to pay to Brian Cherry a continuing royalty of 1% of
the net profits derived from the Technology by us.

32

---

A final provision of the April 1993 Agreement assigns and
transfers ownership to us of any patents, inventions, copyrights, know-how,
technical data, and related types of intellectual property conceived, developed
or created by RAND or its associated companies either prior to or subsequent to
the date of the agreement, which results or derives from the direct or indirect
use of the Original Engine and/or RC/DC Engine technologies by RAND.

The terms of the agreements referenced above were negotiated by
the parties in non-arm's-length transactions but were deemed by the parties
involved to be fair and equitable under the circumstances existing at the time.

We are controlled by Rand Energy Group Inc., a privately held
British Columbia corporation ("RAND"), which, in turn, is controlled 51% by Reg
Technologies Inc., a publicly held British Columbia corporation ("Reg Tech") and
49% by Rand Cam Engine Corp. SMR Investment Ltd., a British Columbia
corporation, holds a controlling interest in Reg Technologies Inc. Since May
1977, Mr. Robertson has been President and a member of the Board of Directors of
SMR Investments Ltd. Susanne M. Robertson, Mr. Robertson's wife, owns SMR
Investment Ltd. Rand Cam Engine Corp. is a privately held company whose stock is
reportedly majority-owned and controlled by James McCann and the balance by
several other shareholders.

In April, 2007 a wholly-owned US subsidiary, RadMax
Technologies, Inc, a Washington Corporation, was formed with the initial
focus on winning U.S. military contracts for custom versions of RadMax®
products, as well as research and development funding to tailor RadMax® products
to meet specific requirements defined by the U.S. military services. RadMax®
products include RadMax® internal and external combustion diesel engines,
RadMax® pumps, and RadMax® compressors.

James Vandeberg, a director and Chief Financial Officer of REGI
U.S., Inc., was been appointed as the new company's president and sole director.
The headquarters for the corporation is located at 601 Union Street, Suite 4500,
Seattle, WA 98101.

Director Independence

Our common stock is traded on the over-the-counter bulletin
board. Therefore, the company is not required to have independent members of the
board of directors.

|ITEM 13. | EXHIBITS.
|-------- | ---------

|Number | Description                                                                                     |    
|------ | ----------------------------------------------------------------------------------------------- | ---
|3.1    | Articles of Incorporation                                                                       | (1)
|3.2    | Article of Amendment changing name to REGI U.S.,
      Inc                                      | (2)
|3.3    | By-Laws                                                                                         | (1)
|3.4    | Articles of Amendment
      Increasing Authorized Capital to 50,000,000 December 2003           | (7)
|4.1    | Specimen Share Certificate                                                                      | (1)
|4.2    | Specimen Warrant Certificate                                                                    | (1)
|10.1   | Consulting Agreement, dated December
      1, 1999, between Regi U.S., Inc. and Patrick Badgley | (3)
|10.2   | Special Service Proposal, dated December 21, 1999,
      between Regi U.S. and ColTec, Inc      | (3)
|10.3   | Agreement between Coltec and REGI
      dated October 2000                                      | (4)
|10.4   | Agreement between REGI and Advanced Ceramics Research
      dated March 20, 2002                | (5)

33

---

|10.5 | License Agreement
        between Rand Energy Group, Inc., and Reg Technologies, Inc. REGI U.S.,
        Inc. and Radian Incorporated made as of April 24, 2002                                                            | (5)
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---
|10.6 | Agreement between REGI U.S.,
        Inc. and Rotary Power Generation, Incorporated made as of April 22, 2002                                                                                                              | (6)
|10.7 | Amendment to
        Agreement between REGI U.S., Inc. and Rotary Power Generation, Incorporated
        made as of April 2, 2003                                                                                          | (6)
|21.1 | List
        of Subsidiaries                                                                                                                                                                                               | (7)
|23.1 | Consent
        of Independent Auditors                                                                                                                                                                                    | (7)
|23.2 | Consent of Independent Auditors                                                                                                                                                                                            | (7)
|31.1 | Certification
        of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                                                                         |    
|31.2 | Certification
        of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                                                                         |    
|32.1 | Certification
        of John G. Robertson, President (Principal Executive Officer), pursuant
        to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002              |    
|32.2 | Certification
        of James Vandeberg, Chief Financial Officer (Principal Financial Officer),
        pursuant to 18 U.S.C. Section 1350, as adopted  pursuant to Section
        906 of the Sarbanes-Oxley Act of 2002 |    

|(1) | Incorporated by reference from Form 10-SB Registration
      Statement filed April 26, 1994.
|--- | --------------------------------------------------------------------------------------------
|(2) | Incorporated by reference from 10-Q Report for the
      quarter ended 7-30-94.             
|(3) | Incorporated by reference from our 10-KSB for the fiscal
      year ended April 30, 2000.   
|(4) | Incorporated by reference from our 10-KSB for the fiscal
      year ended April 30, 2001    
|(5) | Incorporated by reference from our 10-KSB for the fiscal
      year ended April 30, 2002    
|(6) | Incorporated by reference from our 10-KSB for the fiscal
      year ended April 30, 2003    
|(7) | Incorporated herein.                                                                        

|Independent Report of Registered Public
      Accounting Firm | F-1        
|------------------------------------------------------------- | -----------
|Balance Sheets                                                | F-3        
|Statements of Operations                                      | F-4        
|Statements of Cash Flows                                      | F-5        
|Statement of Stockholders' Equity                             | F-6        
|Notes to the Financial Statements                             | F-8 to F-15

34

---

|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|-------- | ---------------------------------------

The following table discloses accounting fees and services
which we paid to our auditor, Smythe Ratcliffe during 2007 and 2006:

|                          | 2007        | 2006       
|------------------------- | ----------- | -----------
|Type of Services Rendered | Fiscal Year | Fiscal Year

(a) Audit Fees
    $
      43,460
    $10,700(b) Audit-Related
      Fees
    $Nil
    $Nil(c) Tax Fees
    $Nil
    $Nil(d) All Other Fees
    $Nil
    $Nil


35

---

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report or amendment to
be signed on its behalf by the undersigned, thereunto duly authorized.

| | REGI U.S., INC.                     
| | ------------------------------------
| |                                     
| |                                     
| | By:
      /s/ John G. Robertson     
| | John G. Robertson, President        
| | Chief Executive Officer and Director

Dated: July 27, 2007

In accordance with the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated below.

|Signature                   |  | Title                                | Date   
|--------------------------- |  | ------------------------------------ | -------
|                            |  |                                      |        
|/s/ John G.
      Robertson |  | President, Chief                     | 7/27/07
|(John G. Robertson)         |  | Executive Officer and Director       |        
|                            |  |                                      |        
|                            |  |                                      |        
|/s/James Vandeberg          |  | Chief Operating Officer              | 7/27/07
|(James Vandeberg)           |  | Chief Financial Officer and Director |        
|                            |  |                                      |        
|                            |  |                                      |        
|/s/ Jennifer
      Lorette  |  | Vice President and Director          | 7/27/07
|(Jennifer Lorette)          |  |                                      |        

36

---

EXHIBIT INDEX

|Number | Description                                                                                                                                                                                                                | Page
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|3.1    | Articles of Incorporation                                                                                                                                                                                                  | (1) 
|3.2    | Article of Amendment changing
        name to REGI U.S., Inc                                                                                                                                                               | (2) 
|3.3    | By-Laws                                                                                                                                                                                                                    | (1) 
|3.4    | Articles
        of Amendment Increasing Authorized Capital to 50,000,000 December 2003                                                                                                                                    | (7) 
|4.1    | Specimen Share
        Certificate                                                                                                                                                                                         | (1) 
|4.2    | Specimen Warrant Certificate                                                                                                                                                                                               | (1) 
|10.1   | Consulting Agreement,
        dated December 1, 1999, between Regi U.S., Inc. and Patrick Badgley                                                                                                                          | (3) 
|10.2   | Special Service Proposal, dated
        December 21, 1999, between Regi U.S. and ColTec, Inc                                                                                                                               | (3) 
|10.3   | Agreement between
        Coltec and REGI dated October 2000                                                                                                                                                               | (4) 
|10.4   | Agreement between REGI and Advanced
        Ceramics Research dated March 20, 2002                                                                                                                                         | (5) 
|10.5   | License Agreement
        between Rand Energy Group, Inc., and Reg Technologies, Inc. REGI U.S.,
        Inc. and Radian Incorporated made as of April 24, 2002                                                            | (5) 
|10.5   | Agreement between REGI U.S.,
        Inc. and Rotary Power Generation, Incorporated made as of April 22, 2002                                                                                                              | (6) 
|10.6   | Amendment to
        Agreement between REGI U.S., Inc. and Rotary Power Generation, Incorporated
        made as of April 2, 2003                                                                                          | (6) 
|21.1   | List
        of Subsidiaries                                                                                                                                                                                               | (7) 
|23.1   | Consent
        of Independent Auditors                                                                                                                                                                                    | (7) 
|23.2   | Consent of Independent Auditors                                                                                                                                                                                            | (7) 
|31.1   | Certification
        of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                                                                         |     
|31.2   | Certification
        of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                                                                         |     
|32.1   | Certification
        of John G. Robertson, President (Principal Executive Officer), pursuant
        to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002              |     
|32.2   | Certification
        of James Vandeberg, Chief Financial Officer (Principal Financial Officer),
        pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
        of the Sarbanes- Oxley Act of 2002 |     

|(1) | Incorporated by reference from Form 10-SB Registration
      Statement filed April 26, 1994.
|--- | --------------------------------------------------------------------------------------------
|(2) | Incorporated by reference from 10-Q Report for the
      quarter ended 7-30-94.             
|(3) | Incorporated by reference from our 10-KSB for the fiscal
      year ended April 30, 2000.   
|(4) | Incorporated by reference from our 10-KSB for the fiscal
      year ended April 30, 2001.   
|(5) | Incorporated by reference from our 10-KSB for the fiscal
      year ended April 30, 2002    
|(6) | Incorporated by reference from our 10-KSB for the fiscal
      year ended April 30, 2003    
|(7) | Incorporated herein.                                                                        

|Report of Independent Registered Public
      Accounting Firm | F-1
|------------------------------------------------------------- | ---
|Balance Sheets                                                | F-2
|Statements of Operations                                      | F-3
|Statement of Stockholders' Equity (Deficit)                   | F-4
|Statements of Cash Flows                                      | F-7
|Notes to the Financial Statements                             | F-8

---

|REGI U.S., Inc.              
|-----------------------------
|(A Development Stage Company)
|                             
|April 30, 2007               
|(Expressed in U.S. dollars)  

|                                                                | Index     
|--------------------------------------------------------------- | ----------
|Report of Independent Registered
      Public Accounting Firm   | F-1       
|Consolidated Balance Sheets                                     | F-2       
|Consolidated Statements
      of Operations                     | F-3       
|Consolidated Statements of Stockholders
      Equity (Deficit) | F-4 to F-7
|Consolidated Statements
      of Cash Flows                     | F-8       
|Notes to the Consolidated Financial Statements                  | F-9       

F-i

---



**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**TO THE DIRECTORS AND STOCKHOLDERS OF REGI U.S., INC.
  (A Development Stage Company)**

We have audited the accompanying consolidated balance sheets
  of REGI U.S., Inc. (A Development Stage Company) as at April 30, 2007 and 2006
  and the consolidated statements of operations, stockholders' equity (deficit)
  and cash flows for the years ended April 30, 2007 and 2006, and the period from
  July 27, 1992 (date of inception) to April 30, 2007. 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. The statements
  of operations, stockholders’ equity (deficit), and cash flows from July
  27, 1992 (date of inception) to April 30, 2005 were audited by other auditors
  whose report dated August 9, 2005 expressed an unqualified opinion, with an
  explanatory paragraph discussing the Company’s ability to continue as
  a going-concern. Our opinion on the statements of operations, stockholders’
  deficiency and cash flows from inception to April 30, 2007, insofar as it relates
  to amounts for prior periods through April 30, 2005, is solely based on the
  reports of other auditors.

We conducted our audits in accordance with the standards of
  the Public Company Accounting Oversight Board (United States of America). Those
  standards require that we plan and perform an audit to obtain reasonable assurance
  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, based on our audits and the reports of other
  auditors, the consolidated financial statements referred to above present fairly,
  in all material respects, the financial position of the Company as at April
  30, 2007 and 2006 and the results of its operations and its cash flows for the
  years ended April 30, 2007 and 2006 and the cumulative totals from July 27,
  1992 (date of inception) through April 30, 2007 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 discussed in Note 1 to
  the financial statements, the Company has no revenues and limited capital, which
  together raise substantial doubt about its ability to continue as a going-concern.
  Management plans in regard to these matters are also described in Note 1. These
  financial statements do not include any adjustments that might result from the
  outcome of this uncertainty.

*“Smythe Ratcliffe LLP” (signed)*

Chartered Accountants

Vancouver, British Columbia
  July 20, 2007

F-1

|7th Floor, Marine Building
      355 Burrard Street, Vancouver, BC
      Canada V6C 2G8 | Fax: 604.688.4675
      Telephone: 604.687.1231
      Web: SmytheRatcliffe.com | 
|--------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | 

---

|REGI U.S., Inc.              
|-----------------------------
|(A Development Stage Company)
|Consolidated Balance Sheets  
|(Expressed in U.S. dollars)  

|                                                                                   |  | April 30,  |   |  | April 30,  |  
|---------------------------------------------------------------------------------- |  | ---------- | - |  | ---------- | -
|                                                                                   |  | 2007       |   |  | 2006       |  
|                                                                                   |  | $          |   |  | $          |  
|ASSETS                                                                             |  |            |   |  |            |  
|Current Assets                                                                     |  |            |   |  |            |  
|Cash                                                                               |  | 163,909    |   |  | 240,137    |  
|Prepaid
      expenses (Note 3(c))                                                 |  | 41,648     |   |  | 60,139     |  
|Total Assets                                                                       |  | 205,557    |   |  | 300,276    |  
|                                                                                   |  |            |   |  |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                     |  |            |   |  |            |  
|Current Liabilities                                                                |  |            |   |  |            |  
|Accounts payable and accrued liabilities                                           |  | 65,449     |   |  | 56,815     |  
|Due to
      related parties (Note 4(a))                                           |  | 248,253    |   |  | 143,258    |  
|Total Liabilities                                                                  |  | 313,702    |   |  | 200,073    |  
|                                                                                   |  |            |   |  |            |  
|Stockholders Equity (Deficit)                                                     |  |            |   |  |            |  
|Common Stock (Note 3):                                                             |  |            |   |  |            |  
|50,000,000 shares authorized without
      par value; 26,919,208 shares issued and |  |            |   |  |            |  
|outstanding (April 30, 2006 - 25,839,125 shares)                                   |  | 5,892,176  |   |  | 6,915,482  |  
|Additional Paid-in Capital                                                         |  | 2,085,256  |   |  | 262,281    |  
|Subscriptions Received                                                             |  | 259,027    |   |  | 3,750      |  
|Donated Capital (Note 4)                                                           |  | 847,500    |   |  | 697,500    |  
|Deficit Accumulated
      During the Development Stage                             |  | (9,192,104 | ) |  | (7,778,810 | )
|Total Stockholders Equity (Deficit)                                               |  | (108,145   | ) |  | 100,203    |  
|Total Liabilities
      and Stockholders Equity (Deficit)                         |  | 205,557    |   |  | 300,276    |  

Commitments (Note 5)

Contingencies (Note 6)

Subsequent Events (Note 8)

|Approved by the Directors:  | 
|--------------------------- | 
|John Robertson            | 
|John Robertson - Director   | 
|Jennifer
      Lorette    | 
|Jennifer Lorette - Director | 

(The Accompanying Notes are an Integral Part of the Consolidated
  Financial Statements)

F-2

---

|REGI U.S., Inc.                      
|-------------------------------------
|(A Development Stage Company)        
|Consolidated Statements of Operations
|(Expressed in U.S. dollars)          

|                                                                |  | From                |  |  |                    |   |  |            |  
|--------------------------------------------------------------- |  | ------------------- |  |  | ------------------ | - |  | ---------- | -
|                                                                |  | July 27,1992        |  |  |                    |   |  |            |  
|                                                                |  | (Date of Inception) |  |  | For the Year Ended |  
|                                                                |  | to April 30,        |  |  | April 30,          |  
|                                                                |  | 2007                |  |  | 2007               |   |  | 2006       |  
|                                                                |  | $                   |  |  | $                  |   |  | $          |  
|                                                                |  |                     |  |  |                    |   |  |            |  
|Expenses                                                        |  |                     |  |  |                    |   |  |            |  
|                                                                |  |                     |  |  |                    |   |  |            |  
|Amortization                                                    |  | 130,533             |  |  |                   |   |  |           |  
|General and administrative (Notes 2(g), and 3(a)
      and (c)) |  | 5,224,100           |  |  | 1,292,517          |   |  | 1,054,336  |  
|Impairment loss                                                 |  | 72,823              |  |  |                   |   |  |           |  
|Research
      and development                                  |  | 3,954,299           |  |  | 120,777            |   |  | 75,788     |  
|                                                                |  |                     |  |  |                    |   |  |            |  
|Operating Loss                                                  |  | 9,381,755           |  |  | 1,413,294          |   |  | 1,130,124  |  
|                                                                |  |                     |  |  |                    |   |  |            |  
|Other Income                                                    |  |                     |  |  |                    |   |  |            |  
|                                                                |  |                     |  |  |                    |   |  |            |  
|Accounts
      payable written-off (Note 6)                     |  | 189,651             |  |  |                   |   |  | 74,766     |  
|                                                                |  |                     |  |  |                    |   |  |            |  
|Net and Comprehensive
      Loss for the Period                 |  | 9,192,104           |  |  | 1,413,294          |   |  | 1,055,358  |  
|                                                                |  |                     |  |  |                    |   |  |            |  
|                                                                |  |                     |  |  |                    |   |  |            |  
|Loss Per Share                                                  |  |                     |  |  | (0.05              | ) |  | (0.04      | )
|                                                                |  |                     |  |  |                    |   |  |            |  
|Weighted Average Number of Common Shares Outstanding            |  |                     |  |  | 26,128,000         |   |  | 24,240,000 |  

(The Accompanying Notes are an Integral Part of the Consolidated
  Financial Statements)

F-3

---

|REGI U.S., Inc.                                          
|---------------------------------------------------------
|(A Development Stage Company)                            
|Consolidated Statements of Stockholders Equity (Deficit)
|From July 27, 1992 (Date of Inception) to April 30, 2007 
|(expressed in U.S. dollars)                              

|                                    |           |  |           |  |         |  |            |  |         |  |              |  | Deficit     |   |               |  
|----------------------------------- | --------- |  | --------- |  | ------- |  | ---------- |  | ------- |  | ------------ |  | ----------- | - | ------------- | -
|                                    |           |  |           |  |         |  |            |  |         |  |              |  | Accumulated |   | Total         |  
|                                    |           |  |           |  |         |  | Common     |  |         |  |              |  | During the  |   | Stockholders |  
|                                    |           |  |           |  | Paid-in |  | Stock      |  | Donated |  | Deferred     |  | Development |   | Equity        |  
|                                    | Shares    |  | Amount    |  | Capital |  | Subscribed |  | Capital |  | Compensation |  | Stage       |   | (Deficit)     |  
|                                    | #         |  | $         |  | $       |  | $          |  | $       |  | $            |  | $           |   | $             |  
|Balance  July 27, 1992 (date of    |           |  |           |  |         |  |            |  |         |  |              |  |             |   |               |  
|inception)                          |          |  |          |  |        |  |           |  |        |  |             |  |            |   |              |  
|Stock issued for intellectual       |           |  |           |  |         |  |            |  |         |  |              |  |             |   |               |  
|property at $0.001 per share        | 5,700,000 |  | 57,000    |  |        |  |           |  |        |  |             |  |            |   | 57,000        |  
|Stock issued for cash               | 300,000   |  | 3,000     |  |        |  |           |  |        |  |             |  |            |   | 3,000         |  
|Net loss                            |          |  |          |  |        |  |           |  |        |  |             |  | (23,492     | ) | (23,492       | )
|Balance  April 30, 1993            | 6,000,000 |  | 60,000    |  |        |  |           |  |         |  |             |  | (23,492     | ) | 36,508        |  
|Stock issued for cash pursuant to a |           |  |           |  |         |  |            |  |         |  |              |  |             |   |               |  
|public offering                     | 500,000   |  | 500,000   |  |        |  |           |  |        |  |             |  |            |   | 500,000       |  
|Net loss                            |          |  |          |  |        |  |           |  |        |  |             |  | (394,263    | ) | (394,263      | )
|Balance  April 30, 1994            | 6,500,000 |  | 560,000   |  |        |  |           |  |         |  |             |  | (417,755    | ) | 142,245       |  
|Stock issued for cash pursuant to:  |           |  |           |  |         |  |            |  |         |  |              |  |             |   |               |  
|Options exercised                   | 10,000    |  | 1,000     |  |        |  |           |  |        |  |             |  |            |   | 1,000         |  
|Private placement                   | 250,000   |  | 562,500   |  |        |  |           |  |        |  |             |  |            |   | 562,500       |  
|Warrants exercised                  | 170,200   |  | 213,000   |  |        |  |           |  |        |  |             |  |            |   | 213,000       |  
|Net loss                            |          |  |          |  |        |  |           |  |        |  |             |  | (1,225,743  | ) | (1,225,743    | )
|Balance  April 30, 1995            | 6,930,200 |  | 1,336,500 |  |        |  |           |  |        |  |             |  | (1,643,498  | ) | (306,998      | )
|Stock issued for cash pursuant to:  |           |  |           |  |         |  |            |  |         |  |              |  |             |   |               |  
|Options exercised                   | 232,500   |  | 75,800    |  |        |  |           |  |        |  |             |  |            |   | 75,800        |  
|Warrants exercised                  | 132,200   |  | 198,300   |  |        |  |           |  |         |  |             |  |            |   | 198,300       |  
|A private offering                  | 341,000   |  | 682,000   |  |        |  |           |  |        |  |             |  |            |   | 682,000       |  
|Net loss                            |          |  |          |  |        |  |           |  |        |  |             |  | (796,905    | ) | (796,905      | )
|Balance  April 30,1996             | 7,635,900 |  | 2,292,600 |  |        |  |           |  |        |  |             |  | (2,440,403  | ) | (147,803      | )
|Stock issued for cash pursuant to:  |           |  |           |  |         |  |            |  |         |  |              |  |             |   |               |  
|Options exercised                   | 137,000   |  | 13,700    |  |        |  |           |  |        |  |             |  |            |   | 13,700        |  
|Warrants exercised                  | 185,400   |  | 278,100   |  |        |  |           |  |        |  |             |  |            |   | 278,100       |  
|Private placements                  | 165,000   |  | 257,500   |  |        |  |           |  |        |  |             |  |            |   | 257,500       |  
|Net loss                            |          |  |          |  |        |  |           |  |        |  |             |  | (510,184    | ) | (510,184      | )
|Balance  April 30, 1997            | 8,123,300 |  | 2,841,900 |  |        |  |           |  |        |  |             |  | (2,950,587  | ) | (108,687      | )
|Stock issued for cash pursuant to:  |           |  |           |  |         |  |            |  |         |  |              |  |             |   |               |  
|Options exercised                   | 50,000    |  | 5,000     |  |        |  |           |  |        |  |             |  |            |   | 5,000         |  
|A units offering                    | 500,000   |  | 500,000   |  |        |  |           |  |        |  |             |  |            |   | 500,000       |  
|Stock issued for acquisition of     |           |  |           |  |         |  |            |  |         |  |              |  |             |   |               |  
|AVFS rights                         | 400,000   |  | 288,251   |  |        |  |           |  |        |  |             |  |            |   | 288,251       |  
|Stock issued for financial          |           |  |           |  |         |  |            |  |         |  |              |  |             |   |               |  
|consulting services                 | 125,000   |  | 170,250   |  |        |  |           |  |        |  |             |  |            |   | 170,250       |  
|Stock issued to settle an accrued   |           |  |           |  |         |  |            |  |         |  |              |  |             |   |               |  
|liability                           | 50,000    |  | 25,000    |  |        |  |           |  |        |  |             |  |            |   | 25,000        |  
|Net loss                            |          |  |          |  |        |  |           |  |        |  |             |  | (580,901    | ) | (580,901      | )
|Balance  April
      30, 1998      | 9,248,300 |  | 3,830,401 |  |        |  |           |  |        |  |             |  | (3,531,488  | ) | 298,913       |  

(The Accompanying Notes are an Integral Part of the Consolidated
  Financial Statements)

F-4

---

|REGI U.S., Inc.                                          
|---------------------------------------------------------
|(A Development Stage Company)                            
|Consolidated Statements of Stockholders Equity (Deficit)
|From July 27, 1992 (Date of Inception) to April 30, 2007 
|(expressed in U.S. dollars)                              

|                                    |            |  |           |   |         |  |            |   |         |  |              |  | Deficit     |   |               |  
|----------------------------------- | ---------- |  | --------- | - | ------- |  | ---------- | - | ------- |  | ------------ |  | ----------- | - | ------------- | -
|                                    |            |  |           |   |         |  |            |   |         |  |              |  | Accumulated |   | Total         |  
|                                    |            |  |           |   |         |  | Common     |   |         |  |              |  | During the  |   | Stockholders |  
|                                    |            |  |           |   | Paid-in |  | Stock      |   | Donated |  | Deferred     |  | Development |   | Equity        |  
|                                    | Shares     |  | Amount    |   | Capital |  | Subscribed |   | Capital |  | Compensation |  | Stage       |   | (Deficit)     |  
|                                    | #          |  | $         |   | $       |  | $          |   | $       |  | $            |  | $           |   | $             |  
|Balance  April 30, 1998            | 9,248,300  |  | 3,830,401 |   |        |  |           |   |        |  |             |  | (3,531,488  | ) | 298,913       |  
|Stock issued for financial          |            |  |           |   |         |  |            |   |         |  |              |  |             |   |               |  
|consulting services                 | 100,000    |  | 71,046    |   |        |  |           |   |        |  |             |  |            |   | 71,046        |  
|Net loss                            |           |  |          |   |        |  |           |   |        |  |             |  | (397,924    | ) | (397,924      | )
|Balance  April 30, 1999            | 9,348,300  |  | 3,901,447 |   |        |  |           |   |        |  |             |  | (3,929,412  | ) | (27,965       | )
|Stock issued for cash pursuant to:  |            |  |           |   |         |  |            |   |         |  |              |  |             |   |               |  
|A private placement                 | 852,101    |  | 639,075   |   |        |  |           |   |        |  |             |  |            |   | 639,075       |  
|Cash commission paid                |           |  | (47,607   | ) |        |  |           |   |        |  |             |  |            |   | (47,607       | )
|Warrants exercised                  | 17,334     |  | 17,334    |   |        |  |           |   |        |  |             |  |            |   | 17,334        |  
|Stock-based compensation            |           |  |          |   | 15,417  |  |           |   |        |  |             |  |            |   | 15,417        |  
|Net loss                            |           |  |          |   |        |  |           |   |        |  |             |  | (413,495    | ) | (413,495      | )
|Balance  April 30, 2000            | 10,217,735 |  | 4,510,249 |   | 15,417  |  |           |   |        |  |             |  | (4,342,907  | ) | 182,759       |  
|Stock issued for cash pursuant to   |            |  |           |   |         |  |            |   |         |  |              |  |             |   |               |  
|warrants exercised                  | 4,000      |  | 2,000     |   |        |  |           |   |        |  |             |  |            |   | 2,000         |  
|Stock-based compensation            |           |  |          |   | 18,500  |  |           |   |        |  |             |  |            |   | 18,500        |  
|Stock to be issued                  |           |  |          |   |        |  | 72,000     |   |        |  |             |  |            |   | 72,000        |  
|Net loss                            |           |  |          |   |        |  |           |   |        |  |             |  | (808,681    | ) | (808,681      | )
|Balance  April 30, 2001            | 10,221,735 |  | 4,512,249 |   | 33,917  |  | 72,000     |   |        |  |             |  | (5,151,588  | ) | (533,422      | )
|Stock issued for cash pursuant to a |            |  |           |   |         |  |            |   |         |  |              |  |             |   |               |  
|private placement                   | 1,066,200  |  | 266,550   |   |        |  | (72,000    | ) |        |  |             |  |            |   | 194,550       |  
|Amount receivable                   |           |  | (3,000    | ) |        |  |           |   |        |  |             |  |            |   | (3,000        | )
|Stock-based compensation            |           |  |          |   | 3,083   |  |           |   |        |  |             |  |            |   | 3,083         |  
|Net loss                            |           |  |          |   |        |  |           |   |        |  |             |  | (156,090    | ) | (156,090      | )
|Balance - April 30, 2002            | 11,287,935 |  | 4,775,799 |   | 37,000  |  |           |   |        |  |             |  | (5,307,678  | ) | (494,879      | )
|Stock issued to settle debt         | 6,100,000  |  | 305,000   |   |        |  |           |   |        |  |             |  |            |   | 305,000       |  
|Stock issued for services           | 250,000    |  | 16,500    |   |        |  |           |   |        |  |             |  |            |   | 16,500        |  
|Stock issued for convertible        |            |  |           |   |         |  |            |   |         |  |              |  |             |   |               |  
|debenture                           | 50,000     |  | 5,000     |   |        |  |           |   |        |  |             |  |            |   | 5,000         |  
|Stock to be issued                  |           |  |          |   |        |  | 25,968     |   |        |  |             |  |            |   | 25,968        |  
|Donated consulting services         |           |  |          |   |        |  |           |   | 187,500 |  |             |  |            |   | 187,500       |  
|Net loss                            |           |  |          |   |        |  |           |   |        |  |             |  | (220,972    | ) | (220,972      | )
|Balance  April
      30, 2003      | 17,687,935 |  | 5,102,299 |   | 37,000  |  | 25,968     |   | 187,500 |  |             |  | (5,528,650  | ) | (175,883      | )

(The Accompanying Notes are an Integral Part of the Consolidated
  Financial Statements)

F-5

---

|REGI U.S., Inc.                                          
|---------------------------------------------------------
|(A Development Stage Company)                            
|Consolidated Statements of Stockholders Equity (Deficit)
|From July 27, 1992 (Date of Inception) to April 30, 2007 
|(expressed in U.S. dollars)                              

|                                    |            |  |           |  |         |   |            |   |         |  |              |   | Deficit     |   |               |  
|----------------------------------- | ---------- |  | --------- |  | ------- | - | ---------- | - | ------- |  | ------------ | - | ----------- | - | ------------- | -
|                                    |            |  |           |  |         |   |            |   |         |  |              |   | Accumulated |   | Total         |  
|                                    |            |  |           |  |         |   | Common     |   |         |  |              |   | During the  |   | Stockholders |  
|                                    |            |  |           |  | Paid-in |   | Stock      |   | Donated |  | Deferred     |   | Development |   | Equity        |  
|                                    | Shares     |  | Amount    |  | Capital |   | Subscribed |   | Capital |  | Compensation |   | Stage       |   | (Deficit)     |  
|                                    | #          |  | $         |  | $       |   | $          |   | $       |  | $            |   | $           |   | $             |  
|Balance  April 30, 2003            | 17,687,935 |  | 5,102,299 |  | 37,000  |   | 25,968     |   | 187,500 |  |             |   | (5,528,650  | ) | (175,883      | )
|Donated consulting services         |           |  |          |  |        |   |           |   | 210,000 |  |             |   |            |   | 210,000       |  
|Stock issued for cash pursuant to a |            |  |           |  |         |   |            |   |         |  |              |   |             |   |               |  
|private placement                   | 173,120    |  | 25,968    |  |        |   | (25,968    | ) |        |  |             |   |            |   |              |  
|Stock issued for cash pursuant to:  |            |  |           |  |         |   |            |   |         |  |              |   |             |   |               |  
|Warrants exercised                  | 550,000    |  | 86,000    |  |        |   |           |   |        |  |             |   |            |   | 86,000        |  
|Stock options exercised             | 100,000    |  | 20,000    |  |        |   |           |   |        |  |             |   |            |   | 20,000        |  
|Stock-based compensation            |           |  |          |  | 78,184  |   |           |   |        |  | (78,184      | ) |            |   |              |  
|Stock issued for services           | 400,000    |  | 92,000    |  |        |   |           |   |        |  | (92,000      | ) |            |   |              |  
|Stock issued to settle debt         | 3,320,000  |  | 166,000   |  |        |   |           |   |        |  |             |   |            |   | 166,000       |  
|Deferred compensation               |           |  |          |  |        |   |           |   |        |  | 142,355      |   |            |   | 142,355       |  
|Net loss                            |           |  |          |  |        |   |           |   |        |  |             |   | (609,913    | ) | (609,913      | )
|Balance  April 30, 2004            | 22,231,055 |  | 5,492,267 |  | 115,184 |   |           |   | 397,500 |  | (27,829      | ) | (6,138,563  | ) | (161,441      | )
|Stock issued for services           | 150,000    |  | 24,000    |  |        |   |           |   |        |  | (24,000      | ) |            |   |              |  
|Stock issued for cash pursuant to:  |            |  |           |  |         |   |            |   |         |  |              |   |             |   |               |  
|Options exercised                   | 133,750    |  | 29,750    |  |        |   |           |   |        |  |             |   |            |   | 29,750        |  
|Warrants exercised                  | 173,120    |  | 34,624    |  |        |   |           |   |        |  |             |   |            |   | 34,624        |  
|Private placement                   | 1,032,800  |  | 258,200   |  |        |   |           |   |        |  |             |   |            |   | 258,200       |  
|Stock-based compensation            |           |  |          |  | 23,304  |   |           |   |        |  |             |   |            |   | 23,304        |  
|Donated consulting services         |           |  |          |  |        |   |           |   | 150,000 |  |             |   |            |   | 150,000       |  
|Deferred compensation               |           |  |          |  |        |   |           |   |        |  | 38,829       |   |            |   | 38,829        |  
|Net loss                            |           |  |          |  |        |   |           |   |        |  |             |   | (584,889    | ) | (584,889      | )
|Balance - April 30, 2005            | 23,720,725 |  | 5,838,841 |  | 138,488 |   |           |   | 547,500 |  | (13,000      | ) | (6,723,452  | ) | (211,623      | )
|Re-class deferred compensation to   |            |  |           |  |         |   |            |   |         |  |              |   |             |   |               |  
|additional paid in capital          |           |  |          |  | (13,000 | ) |           |   |        |  | 13,000       |   |            |   |              |  
|Stock issued for cash pursuant to:  |            |  |           |  |         |   |            |   |         |  |              |   |             |   |               |  
|Options exercised                   | 212,000    |  | 53,313    |  |        |   |           |   |        |  |             |   |            |   | 53,313        |  
|Warrants exercised                  | 406,400    |  | 142,240   |  |        |   |           |   |        |  |             |   |            |   | 142,240       |  
|Private placement                   | 1,500,000  |  | 881,088   |  |        |   |           |   |        |  |             |   |            |   | 881,088       |  
|Common stock subscribed             |           |  |          |  |        |   | 3,750      |   |        |  |             |   |            |   | 3,750         |  
|Stock-based compensation            |           |  |          |  | 124,793 |   |           |   |        |  |             |   |            |   | 124,793       |  
|Deferred compensation               |           |  |          |  | 12,000  |   |           |   |        |  |             |   |            |   | 12,000        |  
|Donated consulting services         |           |  |          |  |        |   |           |   | 150,000 |  |             |   |            |   | 150,000       |  
|Net loss                            |           |  |          |  |        |   |           |   |        |  |             |   | (1,055,358  | ) | (1,055,358    | )
|Balance  April 30, 2006            | 25,839,125 |  | 6,915,482 |  | 262,281 |   | 3,750      |   | 697,500 |  |             |   | (7,778,810  | ) | 100,203       |  

(The Accompanying Notes are an Integral Part of the Consolidated
  Financial Statements)

F-6

---

|REGI U.S., Inc.                                          
|---------------------------------------------------------
|(A Development Stage Company)                            
|Consolidated Statements of Stockholders Equity (Deficit)
|From July 27, 1992 (Date of Inception) to April 30, 2007 
|(expressed in U.S. dollars)                              

|                                   |            |  |            |   |           |  |            |   |         |  |              |  | Deficit     |   |               |  
|---------------------------------- | ---------- |  | ---------- | - | --------- |  | ---------- | - | ------- |  | ------------ |  | ----------- | - | ------------- | -
|                                   |            |  |            |   |           |  |            |   |         |  |              |  | Accumulated |   | Total         |  
|                                   |            |  |            |   |           |  | Common     |   |         |  |              |  | During the  |   | Stockholders |  
|                                   |            |  |            |   | Paid-in   |  | Stock      |   | Donated |  | Deferred     |  | Development |   | Equity        |  
|                                   | Shares     |  | Amount     |   | Capital   |  | Subscribed |   | Capital |  | Compensation |  | Stage       |   | (Deficit)     |  
|                                   | #          |  | $          |   | $         |  | $          |   | $       |  | $            |  | $           |   | $             |  
|                                   |            |  |            |   |           |  |            |   |         |  |              |  |             |   |               |  
|Balance  April 30, 2006           | 25,839,125 |  | 6,915,482  |   | 262,281   |  | 3,750      |   | 697,500 |  |             |  | (7,778,810  | ) | 100,203       |  
|                                   |            |  |            |   |           |  |            |   |         |  |              |  |             |   |               |  
|Stock issued for cash pursuant to: |            |  |            |   |           |  |            |   |         |  |              |  |             |   |               |  
|Options exercised                  | 662,250    |  | 143,938    |   |          |  | (3,750     | ) |        |  |             |  |            |   | 140,188       |  
|Warrants exercised                 | 268,833    |  | 217,666    |   |          |  |           |   |        |  |             |  |            |   | 217,666       |  
|Private placement                  | 120,000    |  | 120,000    |   |          |  |           |   |        |  |             |  |            |   | 120,000       |  
|Private placement costs            |           |  | (3,504     | ) |          |  | (13,673    | ) |        |  |             |  |            |   | (17,177       | )
|Common stock subscribed            |           |  |           |   |          |  | 272,700    |   |        |  |             |  |            |   | 272,700       |  
|Stock issued for services          | 29,000     |  | 60,000     |   |          |  |           |   |        |  |             |  |            |   | 60,000        |  
|Warrants issued for equity line of |            |  |            |   |           |  |            |   |         |  |              |  |             |   |               |  
|credit                             |           |  | (1,561,406 | ) | 1,561,406 |  |           |   |        |  |             |  |            |   |              |  
|                                   |            |  |            |   |           |  |            |   |         |  |              |  |             |   |               |  
|Stock-based compensation           |           |  |           |   | 260,569   |  |           |   |        |  |             |  |            |   | 260,569       |  
|Deferred compensation              |           |  |           |   | 1,000     |  |           |   |        |  |             |  |            |   | 1,000         |  
|Donated consulting services        |           |  |           |   |          |  |           |   | 150,000 |  |             |  |            |   | 150,000       |  
|                                   |            |  |            |   |           |  |            |   |         |  |              |  |             |   |               |  
|Net loss                           |           |  |           |   |          |  |           |   |        |  |             |  | (1,413,294  | ) | (1,413,294    | )
|Balance  April
      30, 2007     | 26,919,208 |  | 5,892,176  |   | 2,085,256 |  | 259,027    |   | 847,500 |  |             |  | (9,192,104  | ) | (108,145      | )

(The Accompanying Notes are an Integral Part of the Consolidated
  Financial Statements)

F-7

---

|REGI U.S., Inc.                      
|-------------------------------------
|(A Development Stage Company)        
|Consolidated Statements of Cash Flows
|(Expressed in U.S. dollars)          

|                                                          |  | From          |   |  |                    |   |  |            |  
|--------------------------------------------------------- |  | ------------- | - |  | ------------------ | - |  | ---------- | -
|                                                          |  | July 27, 1992 |   |  |                    |   |  |            |  
|                                                          |  | (Date of      |   |  |                    |   |  |            |  
|                                                          |  | Inception)    |   |  | For the Year Ended |  
|                                                          |  | to April 30,  |   |  | April 30,          |  
|                                                          |  | 2007          |   |  | 2007               |   |  | 2006       |  
|                                                          |  | $             |   |  | $                  |   |  | $          |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Operating Activities                                      |  |               |   |  |                    |   |  |            |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Net loss                                                  |  | (9,192,104    | ) |  | (1,413,294         | ) |  | (1,055,358 | )
|                                                          |  |               |   |  |                    |   |  |            |  
|Adjustments to reconcile net loss
      to net cash used  |  |               |   |  |                    |   |  |            |  
|in operating activities                                   |  |               |   |  |                    |   |  |            |  
|Accounts
      payable written-off                        |  | (189,651      | ) |  |                   |   |  | (74,766    | )
|Amortization                                              |  | 130,533       |   |  |                   |   |  |           |  
|Impairment
      loss                                     |  | 72,823        |   |  |                   |   |  |           |  
|Stock-based compensation (Note 3)                         |  | 523,850       |   |  | 260,569            |   |  | 124,793    |  
|Amortization of
      deferred compensation               |  | 373,795       |   |  | 1,000              |   |  | 12,000     |  
|Donated services                                          |  | 847,500       |   |  | 150,000            |   |  | 150,000    |  
|Intellectual property
      written-off                   |  | 578,509       |   |  |                   |   |  |           |  
|Shares issued for services (Note
      3(c))              |  | 47,500        |   |  | 47,500             |   |  |           |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Changes in operating assets and liabilities               |  |               |   |  |                    |   |  |            |  
|Accounts
      receivable                                 |  | (3,000        | ) |  |                   |   |  |           |  
|Prepaid expenses (Note 3(c))                              |  | (29,148       | ) |  | 30,991             |   |  | (42,925    | )
|Accounts payable and accrued
      liabilities            |  | 263,256       |   |  | 8,634              |   |  | 43,908     |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Cash Used in Operating Activities                         |  | (6,576,137    | ) |  | (914,600           | ) |  | (842,348   | )
|                                                          |  |               |   |  |                    |   |  |            |  
|Investing Activities                                      |  |               |   |  |                    |   |  |            |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Patent protection costs                                   |  | (38,197       | ) |  |                   |   |  |           |  
|Purchase
      of property, plant and equipment           |  | (198,419      | ) |  |                   |   |  |           |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Cash Used in Investing
      Activities                   |  | (236,616      | ) |  |                   |   |  |           |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Financing Activities                                      |  |               |   |  |                    |   |  |            |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Bank indebtedness                                         |  |              |   |  |                   |   |  | (3,514     | )
|Advance from related parties                              |  | 536,100       |   |  | 104,995            |   |  | 5,608      |  
|Proceeds from convertible debenture                       |  | 5,000         |   |  |                   |   |  |           |  
|Proceeds from the sale of common
      stock              |  | 6,146,817     |   |  | 474,350            |   |  | 1,076,641  |  
|Subscriptions
      received                              |  | 288,745       |   |  | 259,027            |   |  | 3,750      |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Cash Provided by Financing
      Activities               |  | 6,976,662     |   |  | 838,372            |   |  | 1,082,485  |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Increase (Decrease) In Cash                               |  | 163,909       |   |  | (76,228            | ) |  | 240,137    |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Cash  Beginning
      of Period                          |  |              |   |  | 240,137            |   |  |           |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Cash - End of Period                                      |  | 163,909       |   |  | 163,909            |   |  | 240,137    |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Non-Cash Investing and Financing Activities               |  |               |   |  |                    |   |  |            |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Warrants issued for equity line of credit                 |  | 1,561,406     |   |  | 1,561,406          |   |  |           |  
|Shares issued to settle debt                              |  | 496,000       |   |  |                   |   |  |           |  
|Shares issued for convertible debenture                   |  | 5,000         |   |  |                   |   |  |           |  
|Shares issued for intellectual
      property             |  | 345,251       |   |  |                   |   |  |           |  
|Shares issued for services                                |  | 60,000        |   |  | 60,000             |   |  |           |  
|Consulting services reflected
      as donated capital    |  | 847,500       |   |  | 150,000            |   |  | 150,000    |  
|Affiliates
      shares issued for intellectual property |  | 200,000       |   |  |                   |   |  |           |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Supplemental Disclosures                                  |  |               |   |  |                    |   |  |            |  
|                                                          |  |               |   |  |                    |   |  |            |  
|Interest paid                                             |  |              |   |  |                   |   |  |           |  
|Income tax paid                                           |  |              |   |  |                   |   |  |           |  

(The Accompanying Notes are an Integral Part of the Consolidated
  Financial Statements)

F-8

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|1. | NATURE OF OPERATIONS AND CONTINUANCE OF
        BUSINESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company was incorporated in the State
        of Oregon, U.S.A., on July 27, 1992.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company is a development stage company
        engaged in the business of developing and commercially exploiting an improved
        axial vane type rotary engine known as the Rand Cam/Direct Charge Engine
        (the “RC/DC Engine”) in the U.S. The world-wide marketing
        and intellectual rights, other than in the U.S., are held by Reg Technologies,
        Inc. (“Reg”), a major shareholder, which owns 12% of the Company’s
        issued and outstanding stock, and controls the Company by way of a voting
        trust arrangement. The Company owns the U.S. marketing and intellectual
        rights and has a project cost sharing agreement, whereby it will fund
        50% of the further development of the RC/DC Engine and Reg will fund 50%.                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company formed a wholly-owned subsidiary,
        Rad Max Technologies, Inc. (Rad Max) on April 10, 2007 in
        the State of Washington. Rad Max hopes to win military contracts for custom
        versions of the RC/DC Engine. The accounts of the subsidiary are incorporated
        in the accounts of the Company as at April 30, 2007. All inter- company
        balances have been eliminated upon consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In a development stage company, management
        devotes most of its activities to establishing a new business. Planned
        principal activities have not yet produced any revenues and the Company
        has suffered recurring operating losses as is normal in development stage
        companies. The Company has accumulated losses of $9,192,104 since inception.
        These factors raise substantial doubt about the Companys ability
        to continue as a going-concern. The ability of the Company to emerge from
        the development stage with respect to its planned principal business activity
        is dependent upon its successful efforts to raise additional equity financing,
        receive funding from affiliates and controlling shareholders, and develop
        a market for its products.                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company plans to raise funds through loans
        from Rand Energy Group Inc. (“Rand”), a private company with
        officers and directors in common with the Company. Further, Rand owns
        approximately 11% of the shares of the Company, and may sell shares as
        needed to meet ongoing funding requirements if traditional equity sources
        of financing prove to be insufficient. The Company also receives interim
        support from affiliated companies and plans to raise additional capital
        through debt and/or equity financings. The Company has an equity line
        of credit whereby the investor agreed to purchase up to $10,000,000 of
        the Company’s common stock (See Note 3(e)). There continues to be
        insufficient funds to provide enough working capital to fund ongoing operations
        for the next twelve months. The Company may also raise additional funds
        through the exercise of warrants and stock options, if exercised.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-9

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | (d)                                                  
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   | (e)                                                  
|   |                                                      
|   |                                                      
|   |                                                      
|   | (f)                                                  
|   |                                                      
|   |                                                      
|   |                                                      
|   | (g)                                                  
|   |                                                      
|   |                                                      

F-10

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | (g)                                                  
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      

| |                                 | April 30, 2007 | April 30, 2006
| | ------------------------------- | -------------- | --------------
| |                                 |                |               
| | Expected dividend yield         | 0%             | 0%            
| | Risk-free interest rate         | 4.54%          | 3.89%         
| | Expected volatility             | 142%           | 123%          
| | Expected option life (in years) | 2.50           | 2.04          

Option pricing models require the input
  of highly subjective assumptions including the expected price volatility. The
  subjective input assumptions can materially affect the fair value estimate.

| | (h) | Basic and Diluted Income (Loss) per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The Company computes income (loss) per share in accordance
        with SFAS No. 128, Earnings per Share. SFAS No. 128
        requires presentation of both basic and diluted earnings per share (EPS)
        on the face of the income statement. Basic EPS is computed by dividing
        net income (loss) available to common shareholders (numerator) by the
        weighted average number of common shares outstanding (denominator) during
        the period. Diluted EPS gives effect to all dilutive potential common
        shares outstanding during the period including stock options, using the
        treasury stock method, and convertible preferred stock, using the if-
        converted method. In computing diluted EPS, the average stock price for
        the period is used in determining the number of common shares assumed
        to be purchased from the exercise of stock options or warrants. Diluted
        EPS excludes all dilutive potential common shares if their effect is anti-dilutive.                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (i) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | In February 2007, the Financial Accounting Standards
        Board (FASB) issued SFAS No. 159, The Fair Value Option for Financial
        Assets and Financial Liabilities  Including an Amendment of FASB
        Statement No. 115. This statement permits entities to choose to
        measure many financial instruments and certain other items at fair value.
        Most of the provisions of SFAS No. 159 apply only to entities that elect
        the fair value option. However, the amendment to SFAS No. 115, Accounting
        for Certain Investments in Debt and Equity Securities, applies
        to all entities with available-for-sale and trading securities. SFAS No.
        159 is effective as of the beginning of an entitys first fiscal
        year that begins after November 15, 2007. Early adoption is permitted
        as of the beginning of a fiscal year that begins on or before November
        15, 2007, provided the entity also elects to apply the provision of SFAS
        No. 157, Fair Value Measurements.The adoption of this
        statement is not expected to have a material effect on the Company's financial
        statements.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | In September 2006, the Securities and Exchange Commission
        issued Staff Accounting Bulletin (SAB) No. 108, Considering
        the Effects of Prior Year Misstatements when Quantifying Misstatements
        in Current Year Financial Statements.SAB No. 108 addresses
        how the effects of prior year uncorrected misstatements should be considered
        when quantifying misstatements in current year financial statements. SAB
        No. 108 requires companies to quantify misstatements using a balance sheet
        and income statement approach and to evaluate whether either approach
        results in quantifying an error that is material in light of relevant
        quantitative and qualitative factors. SAB No. 108 is effective for fiscal
        years ending after November 15, 2006. The adoption of SAB No. 108 did
        not have a material effect on its financial statements.                                                                                                                                                                                                                                                               

F-11

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|2. | Summary of Significant Accounting Policies(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | (i)                                                  
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      

F-12

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|3. | COMMON STOCK
|-- | ------------
|   |             
|   | (a)         
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             
|   |             

F-13

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|3. | COMMON STOCK(Continued)
|-- | -----------------------
|   |                        
|   | (a)                    
|   |                        
|   |                        
|   |                        
|   |                        
|   |                        
|   |                        
|   |                        
|   |                        

| |                             |  |           |   |  | Weighted       | 
| | --------------------------- |  | --------- | - |  | -------------- | 
| |                             |  |           |   |  | average        | 
| |                             |  | Shares    |   |  | exercise price | 
| |                             |  | #         |   |  | $              | 
| |                             |  |           |   |  |                | 
| | Outstanding, April 30, 2005 |  | 1,612,750 |   |  | 0.26           | 
| | Granted                     |  | 770,000   |   |  | 0.44           | 
| | Expired                     |  | (645,000  | ) |  | 0.20           | 
| | Exercised                   |  | (212,000  | ) |  | 0.25           | 
| | Cancelled                   |  | (350,000  | ) |  | 0.36           | 
| |                             |  |           |   |  |                | 
| | Outstanding, April 30, 2006 |  | 1,175,750 |   |  | 0.37           | 
| | Granted                     |  | 1,375,000 |   |  | 1.32           | 
| | Exercised                   |  | (662,250  | ) |  | 0.22           | 
| |                             |  |           |   |  |                | 
| | Outstanding, April 30, 2007 |  | 1,888,500 |   |  | 1.12           | 

F-14

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|3. | COMMON STOCK(Continued)
|-- | -----------------------
|   |                        
|   | (a)                    
|   |                        
|   |                        

| | Options Outstanding | 
| | ------------------- | 
| | Expiry Date         | 
| |                     | 
| |                     | 
| |                     | 
| |                     | 
| |                     | 
| |                     | 
| | May 10, 2007        | 
| | September 10, 2008  | 
| | December 2, 2008    | 
| | May 25, 2009        | 
| | September 30, 2009  | 
| | May 27, 2010        | 
| | April 21, 2011      | 
| | June 29, 2011       | 
| | November 1, 2011    | 
| | January 30, 2012    | 
| | April 12, 2012      | 
| |                     | 
| | Options outstanding | 

| | Options Exercisable | 
| | ------------------- | 
| | Expiry Date         | 
| |                     | 
| |                     | 
| |                     | 
| |                     | 
| |                     | 
| |                     | 
| | May 10, 2007        | 
| | September 10, 2008  | 
| | December 2, 2008    | 
| | May 25, 2009        | 
| | September 30, 2009  | 
| | May 27, 2010        | 
| | April 21, 2011      | 
| | June 29, 2011       | 
| | November 1, 2011    | 
| | January 30, 2012    | 
| |                     | 
| | Options exercisable | 

F-15

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|3. | COMMON STOCK(Continued)
|-- | -----------------------
|   |                        
|   | (a)                    
|   |                        
|   |                        

| |                              |  |           |   |  | Weighted-Average | 
| | ---------------------------- |  | --------- | - |  | ---------------- | 
| |                              |  |           |   |  | Grant-Date       | 
| | Non-vested shares            |  | Shares    |   |  | Fair Value       | 
| |                              |  | #         |   |  | $                | 
| |                              |  |           |   |  |                  | 
| | Non-vested at May 1, 2006    |  | 554,500   |   |  | 0.57             | 
| | Granted                      |  | 1,375,000 |   |  | 0.87             | 
| | Vested                       |  | (546,250  | ) |  | 0.48             | 
| |                              |  |           |   |  |                  | 
| | Non-vested at April 30, 2007 |  | 1,383,250 |   |  | 0.90             | 

| | (b) | Performance Stock Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The Company has allotted 2,500,000 shares to be issued
        pursuant to a Performance Stock Plan approved and registered on June 27,
        1997, and amended in June 2004. On April 27, 2007, the Company further
        amended the Plan so that the term of the Plan is extended to the twentieth
        anniversary of the effective date.                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (c) | Non-Cash Consideration                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Shares issued for non-cash consideration to third parties
        were valued based on the fair market value of the services provided. During
        the year ended April 2005, the Company issued a total of 150,000 shares
        of common stock for consulting services. These shares were issued at an
        aggregate fair value of $24,000 for services to be rendered over a two-year
        period. The Company charged $1,000 (2006 - $12,000) to operations for
        the pro-rata portion of services performed during the year ended April
        30, 2007.                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | During the year ended April 30, 2007, the Company entered
        into a Financial Advisory Agreement valued at $120,000 for services to
        be rendered over a one-year period. Part of this agreement stated that
        $60,000 was to be paid by issuance of the Companys shares of common
        stock. At the date of this obligation, 29,000 shares were issued when
        the value of the Companys stock was $2.07 per share. The Company
        charged $47,500 (2006  $nil) to operations for the pro-rata portion
        of services performed during the year ended April 30, 2007 and $12,500
        as prepaid expenses.

F-16

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|3. | COMMON STOCK(Continued)
|-- | -----------------------
|   |                        
|   | (d)                    
|   |                        
|   |                        

| |                         |  |           |   |  | Weighted average | 
| | ----------------------- |  | --------- | - |  | ---------------- | 
| |                         |  | Number of |   |  | exercise price   | 
| |                         |  | Shares    |   |  | $                | 
| |                         |  |           |   |  |                  | 
| | Balance, April 30, 2005 |  | 516,400   |   |  | 0.35             | 
| | Issued                  |  | 750,000   |   |  | 0.80             | 
| | Exercised               |  | (406,400  | ) |  | 0.35             | 
| | Expired                 |  | (110,000  | ) |  | 0.35             | 
| | Balance, April 30, 2006 |  | 750,000   |   |  | 0.80             | 
| | Exercised               |  | (255,833  | ) |  | 0.80             | 
| | Exercised               |  | (13,000   | ) |  | 1.00             | 
| | Granted                 |  | 2,252,000 |   |  | 1.03             | 
| | Balance, April 30, 2007 |  | 2,733,167 |   |  | 1.02             | 

At April 30, 2007, the following share
  purchase warrants were outstanding:

| |                      |  | Exercise |  |  | April 30, |  |  | April 30, | 
| | -------------------- |  | -------- |  |  | --------- |  |  | --------- | 
| | Expiry Date          |  | Price    |  |  | 2007      |  |  | 2006      | 
| |                      |  | $        |  |  | #         |  |  | #         | 
| |                      |  |          |  |  |           |  |  |           | 
| | November 30, 2007    |  | 1.00     |  |  | 252,500   |  |  | 325,000   | 
| | April 26, 2008       |  | 1.00     |  |  | 241,667   |  |  | 425,000   | 
| | November 17, 2011    |  | 1.00     |  |  | 2,119,000 |  |  |          | 
| | February 21, 2012    |  | 1.50     |  |  | 120,000   |  |  |          | 
| |                      |  |          |  |  |           |  |  |           | 
| | Warrants outstanding |  |          |  |  | 2,733,167 |  |  | 750,000   | 

| | (e) | On November 17, 2006, the Company entered into a Securities
        Purchase Agreement (equity line of credit), whereby an investor
        agreed to purchase up to $10,000,000 of the Companys common stock
        over a term of 36 months at the Companys discretion. Each purchase
        will be for a minimum of $150,000 and up to a maximum of the lessor of
        $750,000, or 200% of the average weighted volume for the Companys
        common stock for the 20 trading days prior to the date of purchase. Each
        purchase will be at a 15% discount to the market price of the Companys
        common stock over the 10 trading days prior to the purchase.                                                                                                                                                                                                                                                                                                 
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | In connection with the equity line of credit, the Company
        issued to the investor a warrant (Investor warrant) to purchase
        1,000,000 shares of the Companys common stock at $1.30 per share
        (the Exercise Price) for five years, and to an agent a warrant
        (Placement warrant) to purchase 640,000 shares of the Companys
        common stock at $1.30 per share for five years. If the Company fails to
        register the shares issuable upon the exercise of the Investor or Placement
        warrant, the holder is entitled to exercise the warrant and receive, for
        no consideration, a certificate equal to the number of shares obtained
        by subtracting the Exercise Price of the warrant for the volume weighted
        average price on the trading day immediately preceding the date of such
        election and multiplying that amount by the number of shares issuable
        upon the exercise of the warrant.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | The Company filed an SB-2 Registration Statement with
        the United States Securities and Exchange Commission that was declared
        effective February 9, 2007, to register shares of common stock potentially
        issuable under this equity line of credit (6,160,000 shares) and the related
        warrants (1,640,000 shares).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Pursuant to the agreement, if the Company issues any
        common stock, or rights to acquire common stock at a price less than the
        Exercise Price, the Exercise Price will be adjusted to the lower price.
        In addition, the number of shares issuable will be increased such that
        the aggregate exercise price after adjustment is equal to the aggregate
        exercise price prior to adjustment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Subsequent to the issuance of the warrants, the Company
        completed an equity financing at $1 per share. The issuance of the Companys
        common shares lowered the Exercise Price of the Investor warrants to $1
        and increased the number of shares issuable upon exercise of the warrants
        to 2,132,000 shares, of which 13,000 have been exercised. The Company
        recognized the change in fair value of the warrants of $222,681 as share
        issuance costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

F-17

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|3. | COMMON STOCK(Continued)   
|-- | --------------------------
|   |                           
|   | (e)                       
|   |                           
|   |                           
|   |                           
|   | (f)                       
|   |                           
|   | (g)                       
|   |                           
|   | (h)                       
|   |                           
|   | (i)                       
|   |                           
|   | (j)                       
|   |                           
|   | (k)                       
|   |                           
|   | (l)                       
|   |                           
|4. | RELATED PARTY TRANSACTIONS
|   |                           
|   | (a)                       
|   |                           
|   | (b)                       
|   |                           
|   | (c)                       
|   |                           
|   | (d)                       
|   |                           
|   | (e)                       
|   |                           
|   | (f)                       
|   |                           
|   | (g)                       
|   |                           
|   | (h)                       

F-18

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|4. | RELATED PARTY TRANSACTIONS(Continued)                                                                                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                              
|   | (i)                                                                                                                                                                                                          
|   |                                                                                                                                                                                                              
|   | (j)                                                                                                                                                                                                          
|   |                                                                                                                                                                                                              
|   | (k)                                                                                                                                                                                                          
|   |                                                                                                                                                                                                              
|   | (l)                                                                                                                                                                                                          
|   |                                                                                                                                                                                                              
|   | (m)                                                                                                                                                                                                          
|   |                                                                                                                                                                                                              
|   | (n)                                                                                                                                                                                                          
|   |                                                                                                                                                                                                              
|5. | COMMITMENTS                                                                                                                                                                                                  
|   |                                                                                                                                                                                                              
|   | (a)                                                                                                                                                                                                          
|   |                                                                                                                                                                                                              
|   | (b)                                                                                                                                                                                                          
|   |                                                                                                                                                                                                              
|   | (c)                                                                                                                                                                                                          
|   |                                                                                                                                                                                                              
|   | (d)                                                                                                                                                                                                          
|   |                                                                                                                                                                                                              
|   | (e)                                                                                                                                                                                                          
|   |                                                                                                                                                                                                              
|   | (f)                                                                                                                                                                                                          
|   |                                                                                                                                                                                                              
|6. | CONTINGENCIES                                                                                                                                                                                                
|   |                                                                                                                                                                                                              
|   | Long outstanding accounts payable in the amount
        of $74,766 were determined to be no longer payable and were written-off
        during the 2006 year. Since inception, $189,651 has been written-off.

F-19

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|7. | INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Potential benefits of income tax losses are not recognized
        in the accounts until realization is more likely than not. The Company
        has net operating losses of $7,745,000, which commence expiring in 2013.
        Pursuant to SFAS No. 109, the Company is required to compute tax asset
        benefits for net operating losses carried forward. The potential benefit
        of net operating losses has not been recognized in these financial statements
        because the Company cannot be assured it more likely than not will utilize
        the net operating losses carried forward in future years. For the years
        ended April 30, 2007 and 2006, the valuation allowance established against
        the deferred tax assets increased by $350,700 and $273,100, respectively.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The components of the net deferred tax asset at April
        30, 2007 and 2006 and the statutory tax rate, the effective tax rate and
        the elected amount of the valuation allowance are scheduled below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

| |                        |  | April 30,  |   |  | April 30,  |  
| | ---------------------- |  | ---------- | - |  | ---------- | -
| |                        |  | 2007       |   |  | 2006       |  
| |                        |  | $          |   |  | $          |  
| | Net Operating Losses   |  | 7,745,000  |   |  | 6,743,000  |  
| | Statutory Tax Rate     |  | 35%        |   |  | 35%        |  
| | Effective Tax Rate     |  |           |   |  |           |  
| | Deferred Tax Asset     |  | 2,710,800  |   |  | 2,236,100  |  
| | Valuation Allowance    |  | (2,710,800 | ) |  | (2,236,100 | )
| | Net Deferred Tax Asset |  |           |   |  |           |  

Pursuant to SFAS No. 109, the Company
  is required to compute tax asset benefits for non-capital losses carried forward.
  Potential benefit of non-capital losses has not been recognized in these financial
  statements because the Company cannot be assured it is more likely than not
  it will utilize the losses carried forward in future years. The reconciliation
  of income tax attributable to continuing operations computed at the statutory
  tax rates to income tax expense is:

| |                                                           |  | April 30, |   |  | April 30, |  
| | --------------------------------------------------------- |  | --------- | - |  | --------- | -
| |                                                           |  | 2007      |   |  | 2006      |  
| |                                                           |  | $         |   |  | $         |  
| | Income tax benefit computed at U.S. statutory
      rates |  | 494,653   |   |  | 369,375   |  
| | Stock-based compensation                                  |  | (91,199   | ) |  | (43,678   | )
| | Compensation recognized as donated capital                |  | (52,500   | ) |  | (52,500   | )
| | Non-deductible write-off of accounts payable              |  |          |   |  | 26,168    |  
| | Non-deductible meals and entertainment                    |  | (225      | ) |  | (354      | )
| | Unrecognized tax losses                                   |  | (350,729  | ) |  | (246,676  | )
| | Future income tax benefit                                 |  |          |   |  |          |  

F-20

---

|REGI U.S., Inc.                               
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(Expressed in U.S. dollars)                   

|8. | SUBSEQUENT EVENTS
|-- | -----------------
|   |                  
|   | (a)              
|   |                  
|   | (b)              
|   |                  
|   | (c)              
|   |                  
|   | (d)              
|   |                  
|   | (e)              
|   |                  
|   | (f)              

F-21

---