---

**UNITED STATESSECURITIES 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, 2006**

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)

1103 - 11871 HORSESHOE WAYRICHMOND, BRITISH
COLUMBIA V7A 5H5, 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              

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days.[X] Yes [   ] No

Check if disclosure of delinquent filers pursuant to Item 405
  of Regulation S-B is not contained 
  in this form, and no disclosure will be contained, to the best of the registrants
  knowledge, in 
  definitive proxy or information statements incorporated by reference in part
  III of this Form 
  10-KSB or any amendment to this Form 10-KSB. [X]

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

State the issuers revenues for its most recent fiscal year:
nil.

---

The aggregate market value of the voting stock held by
non-affiliates of the registrant on July 17, 2006, computed by reference to
the price at which the stock was sold on that date: $39,295,293.

The number of shares outstanding of the registrant's common
stock, no par value, as of July 17, 2006 was 25,900,375.

Documents incorporated by reference: See Exhibits.

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

2

---

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

|PART I     | 4                                                                                                                                    
|---------- | -------------------------------------------------------------------------------------------------------------------------------------
|           | ITEM 1. DESCRIPTION OF BUSINESS                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           |                                                                                                                                      
|           | ITEM 2. DESCRIPTION
      OF PROPERTY                                                                                                
|           | ITEM 3. LEGAL PROCEEDINGS                                                                                                            
|           | ITEM 4. SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                    
|PART II    | 17                                                                                                                                   
|           | ITEM 5. MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                                               
|           |                                                                                                                                      
|           |                                                                                                                                      
|           | ITEM 6: MANAGEMENT'S DISCUSSION
      AND ANALYSIS OR PLAN OF OPERATIONS                                                             
|           |                                                                                                                                      
|           | ITEM 7. FINANCIAL STATEMENTS                                                                                                         
|           | ITEM 8. CHANGES
      IN AND DISAGREEEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                                  
|           | ITEM 8A. CONTROLS AND PROCEEDURES.                                                                                                   
|           | ITEM 8B. OTHER
      INFORMATION.                                                                                                    
|PART III   | 21                                                                                                                                   
|           | ITEM 9. DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
      16 (a) OF THE EXCHANGE ACT.
|           | ITEM 10. EXECUTIVE
      COMPENSATION                                                                                                
|           | ITEM 11. SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
      MATTERS                  
|           | ITEM 12. CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS                                                                        
|           | ITEM 13. EXHIBITS.                                                                                                                   
|           | ITEM 14. PRINCIPAL
      ACCOUNTANT FEES AND SERVICES.                                                                               
|SIGNATURES | 29                                                                                                                                   

3

---

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 12% 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 1103-11871 Horseshoe Way,
Richmond, British Columbia V7A 5H5, 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.

4

---

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.

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.

5

---

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
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.

6

---

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.

In May 2004 the Company completed an amended Rand Cam UAV
engine license agreement with Radian, Inc. Radian, Inc. agrees to furnish REGI
U.S., Inc. with a second generation, application specific Rand Cam 42 H.P.
diesel engine at the conclusion of their Phase II study program. The Radian,
Inc. UAV product development program commenced early in 2004. The Phase I/ Study
Rand Cam 42 H.P. diesel engine demonstrated that the engine generates
sufficient pressure and temperature to proceed with the second generation diesel
engine.

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.

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.

7

---

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 July 2003, the RadMax TM Engine was announced at the AUVSI
Conference Association for Unmanned Vehicle Systems. (AUV) by our licensee
Radian MILPARTS. The announcement stated that plans are in place to start
calibration testing at the Naval Air Systems Command (NAVAIR) Patuxent River, MD
late in the summer. Procedures are written and in place to determine and
document the RadMax  Engines horsepower, its vibration and noise metrics, and
so forth. Following completion of the testing, to be conducted by engineers,
first production units will generally be available by the fall, followed by a
full production run next year.

The announcement further stated that the RadMax  Engine, a
heavy fuel engine that is comprised of only 13 moving parts, is completely
balanced and on all speeds, loads and orientation angles. Without piston valves,
a crankshaft or camshaft it is inherently quiet at 60 dB at 1,500 feet.

We have entered into an agreement with Radian which grants an
exclusive license for the manufacture of the Rand Cam Diesel Engines within the
United States, for applications in

8

---

Unmanned Autonomous Vehicles (UAV'S) over 10 horsepower,
including non-exclusive rights to the worldwide sales for this application.

In February, 2004 we announced that a REGI licencee 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
licencee 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.

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.

Rand Cam Generator and Fuel Cell Technology

In September 2004 testing had commenced for the Rand Cam
generator application for hybrid electric cars, portable generator application,
and for back up power for family homes. Brian Cherry, our Vice President of the
Rand Cam engine projects and co-inventor of the Rand Cam technology, is
overseeing the development and testing in conjunction with two rotary engine
mechanics with over 10 years experience with the Mazda rotary engine.

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.

9

---

Corporate

In April 2004 the Company received an additional listing on the
Berlin Bremen Stock Exchange (www.berlinerboerse.de) under the symbol RGJ,
German Cusip Number S7589431045/786692. The Company retains the OTC Bulletin
Board listing Symbol: RGUS.OB.

REGI U.S., Inc.s market maker is Berliner Freiverkehr (Aktien)
AG, which is one of the largest German brokerage firms and acts as market maker
for the Unofficial Regulated Markets in Berlin and Frankfurt. The main advantage
for REGI U.S., Inc. to trade on the Berlin Bremen Stock Exchange, is that the
German investors, including small ones, can buy REGI U.S., Inc. shares in their
domestic currency, thus making transactions easier and less expensive.

In June 2004 Brian Cherry was appointed Vice President of the
Rand Cam engine technology projects. Brian Cherry is the inventor of the Direct
Charge Rand Cam engine patented in 1996 by REGI U.S., Inc. and is currently the
project manager in charge of developing a Rand Cam electric generator for
hybrid electric automobiles, and for residential uses in family homes. Mr.
Cherry will also be overseeing and preparing the current submission of a new
patent application on the Rand Cam technology. The generator can run on any
fuel including hydrogen and natural gas. The tests are to commence within 30
days utilizing an alternator as the electric output, and the Rand Cam engine as
the power source. REGI U.S., Inc. has signed an agreement with Brian Cherry to
develop the generator application and other applications for a period of two
years in consideration for 150,000 treasury shares of REGI U.S., Inc.

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.

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. At the present time, 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 diesel 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

10

---

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.

The Company is currently developing and testing the 42 HP
diesel engine and the 125 HP diesel engine. The following marketing activities
are all currently underway:

GENERATOR AND FUEL CELL - We entered into an exclusive
distributor agreement with Anuvu Incorporated to build a working fuel cell model
prototype for a vehicle for demonstration purposes in Canada and Europe for Reg
Technologies, Inc.

COMPETITION

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.

11

---

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 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.

12

---

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.

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

13

---

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
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, 2006, of $7,778,810.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 are
currently have no signed contracts that will produce revenue and we do not have
an estimate as to when we will be entering into such contracts. Furthermore, we
cannot provide assurance that management will be successful in negotiating such
contracts.

Rapid Technological Changes could Adversely Affect Our
Business. The market for our engines is characterized by rapidly changing
technology, evolving industry standards and changing

14

---

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. 6,637,976 common shares, not
including currently exercisable options or warrants, are owned by current
insiders representing control of approximately 25.6% 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.

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

15

---

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.

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
$148,251 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.

16

---

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. 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, 2006, through the
solicitation of proxies or otherwise.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

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.

17

---

Bid Price
      Asked PriceHigh $
      Low $
      High $
      Low $Quarter Ended April 30, 2003
      .09
      .04
      .11
      .05Quarter Ended July 31, 2003
      .23
      .045
      .27
      .06Quarter Ended October 31, 2003
      .43
      .12
      .46
      .18Quarter Ended January 31, 2004
      .45
      .25
      .47
      .25Quarter Ended April 30, 2004
      .32
      .19
      .37
      .20Quarter Ended July 31, 2004
      .27
      .15
      .29
      .16Quarter Ended October 31, 2004
      .4
      .24
      .425
      .285Quarter Ended January 31, 2005
      2.21
      .33
      2.28
      .34Quarter Ended April 30, 2005
      1.07
      .369
      1.1
      .04Quarter Ended July 31, 2005
      .82
      .35
      1.00
      .40Quarter Ended October 31, 2005
      .95
      .54
      .97
      .57Quarter Ended January 31, 2006
      .85
      .41
      .88
      .47Quarter Ended April 30, 2006
      2.50
      .48
      2.53
      .51


(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 17, 2006, there were 25,900,375 shares of common
stock outstanding, held by 240 shareholders of record.

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.

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 4 to our audited financial
statements for the fiscal year ended April 30, 2006 for more information on
recent sales of unregistered securities.

On December 24, 2004, the Company closed a private placement
offering for subscriptions of 1,032,800 units of the Company at a purchase price
of $0.25 per unit for total cash proceeds of $258,200. Each unit consisted of
one common stock of the Company and one-half non-transferable share purchase
warrant. Each whole warrant may be exercised within one year of the date of
issuance to the purchaser at a price of $0.35. 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.

On April 26, 2006 we closed private placement offering for
subscriptions of an aggregate of 1,500,000 Units at US$0.60 per Unit for total
cash proceeds of $900,000. Each Unit consisted of

18

---

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. 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.

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

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 $7,778,810 and further losses are
expected until we complete a licensing agreement with a manufacturer and
reseller. At April 30, 2006, we had working capital of $100,203. Our only assets
are cash totaling $240,137 prepaid expenses, totaling $60,139. 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 2006 and 2005, we raised a total of $1,158,200 pursuant
to two private placements of an aggregate of 2,532,800 units. 1,032,800 units of
the Company were issued at a purchase price of $0.25 per unit for total cash
proceeds of $258,200. Each unit contains one share and one-half warrant. Each
whole warrant may be exercised within one year of date of issuance to acquire
one additional share at $0.35 per share. 1,500,000 Units were issued at a
purchase price of US$0.60 per Unit for total cash proceeds of $900,000. 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, we also raised $53,313 from the exercise of
212,000 stock options, and $142,240 from the exercise of 406,400 share purchase
warrants. During the fiscal year ended April 30, 2005, we raised $29,750 from
the exercise of 133,750 stock options, and $34,624 from the exercise of 173,120
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, 2006 ("2006)
compared to the year ended April 30, 2005 ("2005")

There were no revenues from product licensing during 2006 and
2005.

19

---

The net loss in 2006 increased by $470,469 to $1,055,358
compared to $584,889 in 2005. The increase was due to an increase of $620,025 in
general and administrative expenses. The increase in administrative expenses was
mainly due to an increase in stock-based compensation of $101,489 to $124,793 in
2006 from $23,304 in 2005 and an increase in consulting fees of $153,220 to
$329,922 in 2006 from $176,702 in 2005, and an increase in investor relations
expenses of $381,890 to $467,009 in 2006 from $85,119 in 2005. 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 2006, we financed our operations mainly through proceeds
of $195,553 from the exercise of stock options and share purchase warrants, as
well as net proceeds of $881,088 from the completion of a private placement
offering.

We received funding in 2006 from our affiliated companies
(common officers and directors) and our 12% 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 $143,258 or 72% of
total current liabilities as at April 30, 2006. 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, further funds if needed.

As at April 30, 2006, we had working capital of $100,203. We
receive interim support from our ultimate parent company and plan to raise
additional funds from equity financing which is yet to be negotiated. We also
plan to raise funds through loans from a major shareholder (Rand). Rand owns
3,205,986 sharesand plans to sell shares as needed to meet our ongoing
funding requirements if traditional equity sources of financing prove to be
insufficient.

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.

(a) Evaluation of disclosure controls and procedures.

As required by Rule 13a-15 under the Exchange Act, as of the
end of the period covered by this annual report, being April 30, 2006, we have
carried out an evaluation of the effectiveness of the design and operation of
our company's disclosure controls and procedures. This evaluation was carried
out under the supervision and with the participation of our company's
management, including our President and our Chief Financial Officer. Based upon
that evaluation, our President and our Chief Financial Officer concluded that
our company's

20

---

disclosure controls and procedures are effective. There have
been no changes in our company's internal controls or in other factors, which
could significantly affect internal controls subsequent to the date we carried
out our evaluation.

Disclosure controls and procedures and other procedures that
are designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time period specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management, including our President and our
Chief Financial Officer as appropriate, to allow timely decisions regarding
required disclosure.

(b) Changes in internal controls.

Subsequent to the date of their evaluation, there were no
corrective actions taken by our Company or other changes made to these internal
controls. Our Company's management does not believe there were changes in other
factors that could affect these controls subsequent to the date of the
evaluation.

ITEM 8B. OTHER INFORMATION.

None.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; 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 | 65  | Director, Chairman of the Board of Directors, President
      and Chief Executive Officer
|Jennifer Lorette  | 34  | Director, Vice-President                                                                 
|James Vandeberg   | 62  | Director and Chief Operating Officer and Chief Financial
      Officer                   
|Brian Cherry      | 66  | Vice President, Rand Cam Engine Technology Projects                                     

21

---

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 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.

22

---

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.

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.

ITEM 10. EXECUTIVE COMPENSATION

No executive officer had an annual salary and bonus in excess
of $100,000 during the past fiscal year. Mr. Robertson received no compensation
from us in fiscal year 2006.

Name and Principal
      Position
      Year
      Annual Compensation
      Long-Term CompensationAwards
      PayoutsSalary ($)
      Bonus ($)
      Other Annual Compensation ($)
      Restricted Stock Award(s) (#)
      Securities 
        Under- lying Options/
      SARs (#)
      LTIP (2)Payout ($)
      All Other Compensation ($)John G. Robertson, President
      and CEO
    2006 2005
      2004
    Nil Nil Nil
    Nil Nil Nil
    30,000 30,000 36,000(3)
    Nil Nil Nil
    570,000 Nil Nil
    Nil Nil Nil
    Nil Nil Nil


|(1) | "SARS"or "stock appreciation right"means
      a right granted by US, as compensation for services rendered, to receive a
      payment of cash or an issue or transfer of securities based wholly or in
      part on changes in the trading price of our publicly traded
    securities.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23

---

|(2) | "LTIP"or "long term incentive plan"means
      any plan which provides compensation intended to serve as incentive for
      performance to occur over a period longer than one financial year, but
      does not include option or stock appreciation right plans or plans for
      compensation through restricted shares or restricted share
units.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                         
|(3) | 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.                                                   

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. We retained Access at the rate of
$2,500 per month to provide certain management, administrative, and financial
services

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.

The following table sets forth certain information with respect
to options exercised during the fiscal year ended April 30, 2006 by our Chief
Executive Officer, and with respect to unexercised options held by our Chief
Executive Officer at the end of fiscal 2006.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END
OPTION VALUES

Name
    Shares
      Acquired On Exercise (#)
    Value
      realized ($)
    Number of Unexercised
      Options at Years End Exercisable / Unexercisable
    Value of Unexercised
      Options at Year End (1) Exercisable / UnexercisableJohn G. Robertson
    -0-
    -0-
    570,000 / 0
    $1,088,700 / -0-


(1) The calculation of the value of unexercised options is
based on the difference between the last sale price of $2.11 per share for our
common stock on April 28, 2006 and the exercise price of each option (then
$0.20), multiplied by the number of shares covered by the option.

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 12, 2006, 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

24

---

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) | 6,463,826    | 25.0%                     
|                                                                                                |              |                           
|James McCann (4)                                                                                | 3,205,986    | 11.9%                     
|                                                                                                |              |                           
|Rand Energy Group Inc. (5)                                                                      | 3,205,986    | 11.9%                     
|                                                                                                |              |                           
|Jennifer Lorette, Vice
      President and Director (6)                                         | 155,400      | *                         
|                                                                                                |              |                           
|James Vandeberg, Chief
      Operating Officer and Director (7)                                 | 75,000       | *                         
|                                                                                                |              |                           
|Brian Cherry, Vice President
      of the Rand Cam Engine Technology Projects                  | Nil          | *                         
|                                                                                                |              |                           
|ALL EXECUTIVE OFFICERS &
      DIRECTORS AS A GROUP (FOUR INDIVIDUALS) (8)                      | 6,637,976    | 25.6%                     

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

(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 3,205,986 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
570,000 options that are currently 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 570,000 options that are currently 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 3,205,986 shares registered in the name of Rand
Energy Group Inc. See Note (6) 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

25

---

Engine Corp. could be considered the beneficial owner of the
3,205,986 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 3,205,986 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 125,000 options that are currently exercisable.
Ms. Lorette's address is the same as the Company's.

(7) Includes 18,750 options that are currently exercisable. Mr.
Vandeberg's address is 601 Union Street, Suite 4500, Seattle, WA 98101.

(8) Includes 3,205,986 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 570,000 options that are currently exercisable.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

26

---

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.

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.

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)
|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)
|10.6   | Agreement
        between REGI U.S., Inc. and Rotary Power Generation, Incorporated made
        as of April 22, 2002                                           | (6)

27

---

|10.7 | Amendment to Agreement between
        REGI U.S., Inc. and Rotary Power Generation, Incorporated made as of April
        2, 2003                                                                                         | (6)
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---
|23.1 | Consent
        of Independent Auditors                                                                                                                                                                                   | (8)
|23.2 | Consent
        of Independent Auditors                                                                                                                                                                                   | (8)
|31.1 | Certification
        of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                                                                        | (8)
|31.2 | Certification
        of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                                                                        | (8)
|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             | (8)
|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 | (8)

|(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 by reference from our 10-KSB for the fiscal
      year ended April 30, 2005    
|(8) | Incorporated herein.                                                                        

|                                                         | Index
|-------------------------------------------------------- | -----
|                                                         |      
|Reports of Independent Registered Public Accounting Firm | F-1  
|                                                         |      
|Balance Sheets                                           | F-3  
|                                                         |      
|Statements of Operations                                 | F-4  
|                                                         |      
|Statements of Stockholders Equity (Deficit)             | F-5  
|                                                         |      
|Statements of Cash Flows                                 | F-8  
|                                                         |      
|Notes to the Financial Statements                        | F-9  

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table discloses accounting fees and services
which we paid to our auditor, Smythe Ratcliffe during 2006, and to our former
auditor, Manning Elliott, in 2005:

|                          | 2006        | 2005       
|------------------------- | ----------- | -----------
|Type of Services Rendered | Fiscal Year | Fiscal Year

(a) Audit Fees
      $ *****
      $10,900(b) Audit-Related Fees
      $Nil
      $Nil(c) Tax Fees
      $Nil
      $Nil(d) All Other Fees
      $Nil
      $Nil


28

---

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: August 14, 2006

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                           | 8/14/06
|(John G. Robertson)   | Executive Officer and Director             |        
|                      |                                            |        
|                      |                                            |        
|/s/James Vandeberg    | Chief Operating Officer                    | 8/14/06
|(James Vandeberg)     | Chief Financial Officer and
      Director |        
|                      |                                            |        
|                      |                                            |        
|/s/ Jennifer Lorette  | Vice President and Director                | 8/14/06
|(Jennifer Lorette)    |                                            |        
|                      |                                            |        
|                      |                                            |        
|/s/ Brian Cherry      | Vice President                             | 8/14/06
|(Brian Cherry)        |                                            |        

29

---

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) 
|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) 
|23.1   | Consent
        of Independent Auditors                                                                                                                                                                                    | (8) 
|23.2   | Consent
        of Independent Auditors                                                                                                                                                                                    | (8) 
|31.1   | Certification
        of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                                                                         | (8) 
|31.2   | Certification
        of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                                                                         | (8) 
|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              | (8) 
|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 | (8) 

|(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 by reference from our 10-KSB for the fiscal
      year ended April 30, 2006    
|(8) | Incorporated herein.                                                                        

30

---

REGI U.S., Inc. 
  (A Development Stage Company)

April 30, 2006

|                                                         | Index
|-------------------------------------------------------- | -----
|                                                         |      
|Reports of Independent Registered Public Accounting Firm | F-1  
|                                                         |      
|Balance Sheets                                           | F-3  
|                                                         |      
|Statements of Operations                                 | F-4  
|                                                         |      
|Statements of Stockholders Equity (Deficit)             | F-5  
|                                                         |      
|Statements of Cash Flows                                 | F-8  
|                                                         |      
|Notes to the Financial Statements                        | F-9  

---



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 balance sheet of REGI U.S.,
  Inc. (A Development Stage Company) as at April 30, 2006 and the statements of
  operations, stockholders' equity and cash flows for the year then ended and
  the period from July 27, 1992 (date of inception) to April 30, 2006. 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 audit. The
  statements of operations, stockholders 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
  deficit and cash flows from inception to April 30, 2006, insofar as it related
  to amounts for prior periods through April 30, 2005, is solely based on the
  reports of other auditors.

We conducted our audit in accordance with 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 audit provides
  a reasonable basis for our opinion.

In our opinion, based on our audit and the reports of other auditors,
  these financial statements present fairly, in all material respects, the financial
  position of the Company as at April 30, 2006 and the results of its operations
  and its cash flows for the year then ended and the cumulative totals for the
  development stage of operations from July 27, 1992 (date of inception) through
  April 30, 2006 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 minimal 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 25, 2006



F-1

---



Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of
  REGI U.S., Inc. (A Development Stage Company)

We have audited the accompanying balance sheet of REGI U.S.,
  Inc. (A Development Stage Company) as at April 30, 2005 and the related statements
  of operations, cash flows and stockholders’ deficit for the year then
  ended and for the period from July 27, 1992 (Date of Inception) to April 30,
  2005. 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 audit.

We conducted our audit in accordance with the standards of
  the Public Company Accounting Oversight Board (United States). 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 audit provide
  a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
  present fairly, in all material respects, the financial position of the Company
  as at April 30, 2005, and the results of its operations and its cash flows for
  the year then ended and for the period from July 27, 1992 (Date of Inception)
  to April 30, 2005, in conformity with accounting principles generally accepted
  in the United States.

The accompanying financial statements have been prepared assuming
  the Company will continue as a going concern. As discussed in Note 1 to the
  financial statements, the Company has not generated any revenues and has accumulated
  operating losses since inception. These factors raise substantial doubt about
  the Company’s ability to continue as a going concern. Management’s
  plans in regard to these matters are also discussed in Note 1. These financial
  statements do not include any adjustments that might result from the outcome
  of these uncertainties.



CHARTERED ACCOUNTANTS
  Vancouver, Canada
  August 9, 2005

F-2

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Balance Sheets 
  (expressed in U.S. dollars)

|                                                                                   |  | April 30,  |   |  | April 30,  |  
|---------------------------------------------------------------------------------- |  | ---------- | - |  | ---------- | -
|                                                                                   |  | 2006       |   |  | 2005       |  
|                                                                                   |  | $          |   |  | $          |  
|ASSETS                                                                             |  |            |   |  |            |  
|Current Assets                                                                     |  |            |   |  |            |  
|Cash                                                                               |  | 240,137    |   |  |           |  
|Prepaid
      expenses                                                             |  | 60,139     |   |  | 17,214     |  
|Total Assets                                                                       |  | 300,276    |   |  | 17,214     |  
|                                                                                   |  |            |   |  |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                     |  |            |   |  |            |  
|Current Liabilities                                                                |  |            |   |  |            |  
|Bank indebtedness                                                                  |  |           |   |  | 3,514      |  
|Accounts payable                                                                   |  | 33,515     |   |  | 78,077     |  
|Accrued liabilities                                                                |  | 23,300     |   |  | 9,596      |  
|Due to
      related parties (Note 6(a))                                           |  | 143,258    |   |  | 137,650    |  
|Total Liabilities                                                                  |  | 200,073    |   |  | 228,837    |  
|                                                                                   |  |            |   |  |            |  
|Commitments (Note 7)                                                               |  |            |   |  |            |  
|Stockholders Equity (Deficit)                                                     |  |            |   |  |            |  
|Common Stock (Note 5):                                                             |  |            |   |  |            |  
|50,000,000 shares authorized without par value;
      25,839,125 shares issued and |  |            |   |  |            |  
|outstanding (2005 - 23,720,725
      shares)                                       |  | 6,915,482  |   |  | 5,838,841  |  
|Additional Paid-in Capital                                                         |  | 262,281    |   |  | 125,488    |  
|Subscriptions Received                                                             |  | 3,750      |   |  |           |  
|Donated Capital (Note 6)                                                           |  | 697,500    |   |  | 547,500    |  
|Deficit Accumulated During the Development Stage                                   |  | (7,778,810 | ) |  | (6,723,452 | )
|Total Stockholders
      Equity (Deficit)                                         |  | 100,203    |   |  | (211,623   | )
|Total Liabilities and Stockholders Equity (Deficit)                               |  | 300,276    |   |  | 17,214     |  

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

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

F-3

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Statements of Operations 
  (expressed in U.S. dollars)

|                                                 |  | Accumulated From    |  |  |                    |   |  |            |  
|------------------------------------------------ |  | ------------------- |  |  | ------------------ | - |  | ---------- | -
|                                                 |  | July 27,1992        |  |  |                    |   |  |            |  
|                                                 |  | (Date of Inception) |  |  | For the Year Ended |  
|                                                 |  | to April 30,        |  |  | April 30,          |  
|                                                 |  | 2006                |  |  | 2006               |   |  | 2005       |  
|                                                 |  | $                   |  |  | $                  |   |  | $          |  
|                                                 |  |                     |  |  |                    |   |  |            |  
|Expenses                                         |  |                     |  |  |                    |   |  |            |  
|                                                 |  |                     |  |  |                    |   |  |            |  
|Amortization                                     |  | 130,533             |  |  |                   |   |  | 5,292      |  
|General and administrative1(Note 6)              |  | 3,931,583           |  |  | 1,054,336          |   |  | 434,311    |  
|Impairment loss                                  |  | 72,823              |  |  |                   |   |  | 72,823     |  
|Research
      and development (Note 6)          |  | 3,833,522           |  |  | 75,788             |   |  | 72,463     |  
|                                                 |  |                     |  |  |                    |   |  |            |  
|Operating Loss                                   |  | 7,968,461           |  |  | 1,130,124          |   |  | 584,889    |  
|                                                 |  |                     |  |  |                    |   |  |            |  
|Other Income                                     |  |                     |  |  |                    |   |  |            |  
|                                                 |  |                     |  |  |                    |   |  |            |  
|Accounts
      payable written-off (Note 4)      |  | 189,651             |  |  | 74,766             |   |  |           |  
|                                                 |  |                     |  |  |                    |   |  |            |  
|Net Loss for Year                                |  | 7,778,810           |  |  | 1,055,358          |   |  | 584,889    |  
|                                                 |  |                     |  |  |                    |   |  |            |  
|Loss Per Share                                   |  |                     |  |  | (0.04              | ) |  | (0.03      | )
|                                                 |  |                     |  |  |                    |   |  |            |  
|Weighted Average Common
      Shares Outstanding |  |                     |  |  | 24,240,000         |   |  | 22,836,000 |  
|                                                 |  |                     |  |  |                    |   |  |            |  
|1Included in General and administrative:         |  |                     |  |  |                    |   |  |            |  
|Stock-based compensation                         |  | 263,281             |  |  | 124,793            |   |  | 23,304     |  
|Amortization of deferred compensation            |  | 372,795             |  |  | 12,000             |   |  | 38,828     |  

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

F-4

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Statements of Stockholders Equity (Deficit) 
  From July 27, 1992 (Date of Inception) to April 30, 2006
  (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 Financial
  Statements)

F-5

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Statements of Stockholders Equity (Deficit) 
  From July 27, 1992 (Date of Inception) to April 30, 2006
  (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 (Note 6) |  | 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 Financial
  Statements)

F-6

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Statements of Stockholders Equity (Deficit) 
  From July 27, 1992 (Date of Inception) to April 30, 2006
  (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 Financial
  Statements)

F-7

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  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,          |   |  |          |  
|                                                         |  | 2006                |   |  | 2006               |   |  | 2005     |  
|                                                         |  | $                   |   |  | $                  |   |  | $        |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Operating Activities                                     |  |                     |   |  |                    |   |  |          |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Net loss                                                 |  | (7,778,810          | ) |  | (1,055,358         | ) |  | (584,889 | )
|                                                         |  |                     |   |  |                    |   |  |          |  
|Adjustments to reconcile net
      loss to net cash used |  |                     |   |  |                    |   |  |          |  
|in operating activities                                  |  |                     |   |  |                    |   |  |          |  
|Accounts
      payable written-off                       |  | (189,651            | ) |  | (74,766            | ) |  |         |  
|Amortization                                             |  | 130,533             |   |  |                   |   |  | 5,292    |  
|Impairment
      loss                                    |  | 72,823              |   |  |                   |   |  | 72,823   |  
|Stock-based compensation                                 |  | 263,281             |   |  | 124,793            |   |  | 23,304   |  
|Amortization
      of deferred compensation              |  | 372,795             |   |  | 12,000             |   |  | 38,828   |  
|Donated services                                         |  | 697,500             |   |  | 150,000            |   |  | 150,000  |  
|Intellectual
      property written-off                  |  | 578,509             |   |  |                   |   |  |         |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Changes in operating assets and
      liabilities        |  |                     |   |  |                    |   |  |          |  
|Accounts receivable                                      |  | (3,000              | ) |  |                   |   |  |         |  
|Prepaid
      expense                                    |  | (60,139             | ) |  | (42,925            | ) |  | (17,214  | )
|Accounts payable and accrued liabilities                 |  | 254,622             |   |  | 43,908             |   |  | 1,423    |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Cash Used in Operating
      Activities                  |  | (5,661,537          | ) |  | (842,348           | ) |  | (310,433 | )
|                                                         |  |                     |   |  |                    |   |  |          |  
|Investing Activities                                     |  |                     |   |  |                    |   |  |          |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Patent protection costs                                  |  | (38,197             | ) |  |                   |   |  | (13,250  | )
|Purchase of property, plant and equipment                |  | (198,419            | ) |  |                   |   |  |         |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Cash Used in Investing Activities                        |  | (236,616            | ) |  |                   |   |  | (13,250  | )
|                                                         |  |                     |   |  |                    |   |  |          |  
|Financing Activities                                     |  |                     |   |  |                    |   |  |          |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Increase (decrease) in bank indebtedness                 |  |                    |   |  | (3,514             | ) |  | 381      |  
|Advance from related parties                             |  | 431,105             |   |  | 5,608              |   |  | 728      |  
|Proceeds from convertible debenture                      |  | 5,000               |   |  |                   |   |  |         |  
|Proceeds from the sale of common stock                   |  | 5,672,467           |   |  | 1,076,641          |   |  | 322,574  |  
|Subscriptions received                                   |  | 29,718              |   |  | 3,750              |   |  |         |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Cash Provided by Financing Activities                    |  | 6,138,290           |   |  | 1,082,485          |   |  | 323,683  |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Increase In Cash and Cash Equivalents                    |  | 240,137             |   |  | 240,137            |   |  |         |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Cash and Cash Equivalents - Beginning of Period          |  |                    |   |  |                   |   |  |         |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Cash and Cash Equivalents - End of Period                |  | 240,137             |   |  | 240,137            |   |  |         |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Non-Cash Investing and Financing Activities              |  |                     |   |  |                    |   |  |          |  
|                                                         |  |                     |   |  |                    |   |  |          |  
|Shares issued to settle debt                             |  | 496,000             |   |  |                   |   |  |         |  
|Shares issued for convertible
      debenture            |  | 5,000               |   |  |                   |   |  |         |  
|Shares issued for intellectual property                  |  | 345,251             |   |  |                   |   |  |         |  
|Consulting services reflected
      as donated capital   |  | 697,500             |   |  | 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 Financial
  Statements)

F-8

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  Years Ended April 30, 2006 and 2005 
  (expressed in U.S. dollars)

|1. | NATURE OF OPERATIONS AND CONTINUANCE OF
        BUSINESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | REGI U.S., Inc. (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). The world-wide marketing and intellectual
        rights, other than in the U.S., are held by Reg Technologies, Inc. (Reg),
        a major shareholder who owns 13% of the Companys issued and outstanding
        stock and controls the Company. 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%.                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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 $7,778,810 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 12% 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. 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 Financial Statements 
  Years Ended April 30, 2006 and 2005 
  (expressed in U.S. dollars)

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

| |                                                           |  | April 30, |  
| | --------------------------------------------------------- |  | --------- | -
| |                                                           |  | 2005      |  
| |                                                           |  | $         |  
| |                                                           |  |           |  
| |                                                           |  |           |  
| | Net loss  as reported                                    |  | (584,889  | )
| | Add: Stock-based compensation expense included in net     |  |           |  
| | loss 
      as reported                                  |  | 23,304    |  
| | Deduct: Stock-based compensation expense determined under |  |           |  
| | fair value method                                         |  | (25,884   | )
| |                                                           |  |           |  
| | Net loss  pro forma                                      |  | (587,469  | )
| |                                                           |  |           |  
| | Loss per share  basic and diluted 
      as reported    |  | (0.03     | )
| | Loss per share  basic and diluted  pro forma            |  | (0.03     | )

F-10

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  Years Ended April 30, 2006 and 2005 
  (expressed in U.S. dollars)

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

| |                                 | April 30, 2006 | April 30, 2005
| | ------------------------------- | -------------- | --------------
| | Expected dividend yield         | 0%             | 0%            
| | Risk-free interest rate         | 3.89%          | 2.44%         
| | Expected volatility             | 123%           | 172%          
| | Expected option life (in years) | 2.04           | 1.36          

| |     | 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, and therefore,
        the existing models do not necessarily provide a reliable single measure
        of the fair value of the Companys stock option.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (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 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 December 2004, the Financial Accounting Standards
        Board (FASB) issued SFAS No. 153, Exchanges of Non-Monetary
        Assets - An Amendment of APB Opinion No. 29. The guidance in
        APB Opinion No. 29, Accounting for Non-Monetary Transactions,
        is based on the principle that exchanges of non-monetary assets should
        be measured based on the fair value of the assets exchanged. The guidance
        in that opinion, however, included certain exceptions to that principle.
        SFAS No. 153 amends Opinion No. 29 to eliminate the exception for non-monetary
        exchanges of similar productive assets and replaces it with a general
        exception for exchanges of non-monetary assets that do not have commercial
        substance. A non-monetary exchange has commercial substance if the future
        cash flows of the entity are expected to change significantly as a result
        of the exchange. The provisions of SFAS No. 153 are effective for non-monetary
        asset exchanges occurring in fiscal periods beginning after June 15, 2005.
        Early application is permitted and companies must apply the standard prospectively.
        The adoption of this standard did not have a material effect on the Companys
        results of operations or financial position.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | In May 2005, the FASB issued SFAS No. 154, Accounting
        Changes and Error Corrections  A Replacement of APB Opinion No.
        20 and SFAS No. 3. SFAS No. 154 changes the requirements for
        the accounting for and reporting of a change in accounting principle and
        applies to all voluntary changes in accounting principle. It also applies
        to changes required by an accounting pronouncement in the unusual instance
        that the pronouncement does not include specific transition provisions.
        SFAS No. 154 requires retrospective application to prior periods
        financial statements of changes in accounting principle, unless it is
        impracticable to determine either the period-specific effects or the cumulative
        effect of the change. The provisions of SFAS No. 154 are effective for
        accounting changes and correction of errors made in fiscal years beginning
        after December 15, 2005. The adoption of this standard will not have a
        material effect on the Companys results of operations or financial
        position.                                                                                                                                                                                                                              

F-11

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  Years Ended April 30, 2006 and 2005 
  (expressed in U.S. dollars)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                            
|   | (i)                                                                                                                                                        
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   | (j)                                                                                                                                                        
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|3. | INTANGIBLE ASSETS                                                                                                                                          
|   |                                                                                                                                                            
|   | (a)                                                                                                                                                        
|   |                                                                                                                                                            
|   | (b)                                                                                                                                                        
|   |                                                                                                                                                            
|4. | ACCOUNTS PAYABLE                                                                                                                                           
|   |                                                                                                                                                            
|   | Long outstanding accounts payable in the amount
        of $74,766 was determined to be no longer payable and was written-off
        during the 2006 year.
|   |                                                                                                                                                            
|5. | COMMON STOCK                                                                                                                                               
|   |                                                                                                                                                            
|   | (a)                                                                                                                                                        
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   | (b)                                                                                                                                                        
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            
|   |                                                                                                                                                            

F-12

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  Years Ended April 30, 2006 and 2005 
  (expressed in U.S. dollars)

|5. | COMMON STOCK(Continued)
|-- | -----------------------
|   |                        
|   | (b)                    
|   |                        
|   |                        
|   |                        
|   |                        

On May 27, 2005, the Company granted
  75,000 stock options to consultants exercisable at $0.45 per share, up to May
  27, 2010. On April 21, 2006, the Company granted 75,000 stock options to a consultant
  exercisable at $2.20 per share, up to April 21, 2011. The weighted average grant
  date fair value of these 150,000 stock options granted to non-employees pursuant
  to the Plan was $1.32 per share. During the year ended April 30, 2006, the Company
  charged stock-based compensation expense of $63,571 to operations for the vested
  fair value of these stock options in accordance with SFAS No. 123.

On May 27, 2005, the Company granted
  50,000 stock options to an officer of the Company exercisable at $0.45 per share,
  up to May 27, 2010. On March 9, 2006, the Company granted 570,000 stock options
  to the President of the Company exercisable at $0.20 per share, up to March
  15, 2007. The weighted average grant date fair value of these 620,000 stock
  options granted to non-employees pursuant to the Plan was $0.55 per share. During
  the year ended April 30, 2006, the Company charged stock-based compensation
  expense of $61,222 to operations for the vested fair value of these stock options
  in accordance with SFAS No. 123R.

The following table summarizes the continuity
  of the Companys stock options:

| |                                   |  |           |   |  | Weighted       | 
| | --------------------------------- |  | --------- | - |  | -------------- | 
| |                                   |  |           |   |  | average        | 
| |                                   |  | Number of |   |  | exercise price | 
| |                                   |  | Shares    |   |  | $              | 
| |                                   |  |           |   |  |                | 
| | Outstanding, April 30, 2004       |  | 1,900,000 |   |  | 0.50           | 
| | Granted                           |  | 246,500   |   |  | 0.50           | 
| | Exercised                         |  | (133,750  | ) |  | 0.24           | 
| | Expired                           |  | (400,000  | ) |  | 0.20           | 
| |                                   |  |           |   |  |                | 
| | 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           | 

F-13

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  Years Ended April 30, 2006 and 2005 
  (expressed in U.S. dollars)

|5. | COMMON STOCK(Continued)
|-- | -----------------------
|   |                        
|   | (b)                    
|   |                        
|   |                        

| |                                                |  | Exercise |  |   | April 30, |  |   | April 30, | 
| | ---------------------------------------------- |  | -------- |  | - | --------- |  | - | --------- | 
| | Expiry Date                                    |  | Price    |  |   | 2006      |  |   | 2005      | 
| |                                                |  |          |  |   |           |  |   |           | 
| | March 15, 2006                                 |  | $0.20    |  |   |          |  |   | 570,000   | 
| | April 12, 2006                                 |  | $0.20    |  |   |          |  |   | 75,000    | 
| | November 29, 2006                              |  | $0.20    |  |   | 37,500    |  |   | 75,000    | 
| | March 15, 2007                                 |  | $0.20    |  |   | 570,000   |  |   |          | 
| | May 10, 2007                                   |  | $0.20    |  |   | 75,000    |  |   | 337,500   | 
| | August 1, 2008                                 |  | $0.20    |  |   |          |  |   | 81,250    | 
| | September 10, 2008                             |  | $0.25    |  |   | 150,000   |  |   | 150,000   | 
| | December 2, 2008                               |  | $0.35    |  |   | 100,000   |  |   | 100,000   | 
| | May 25, 2009                                   |  | $0.25    |  |   | 24,500    |  |   | 36,500    | 
| | September 30, 2009                             |  | $0.35    |  |   | 50,000    |  |   | 50,000    | 
| | October 19, 2009                               |  | $0.30    |  |   |          |  |   | 25,000    | 
| | November 9, 2009                               |  | $0.40    |  |   |          |  |   | 12,500    | 
| | January 7, 2010                                |  | $0.75    |  |   |          |  |   | 100,000   | 
| | May 27, 2010                                   |  | $0.45    |  |   | 93,750    |  |   |          | 
| | April 21, 2011                                 |  | $2.20    |  |   | 75,000    |  |   |          | 
| |                                                |  |          |  |   |           |  |   |           | 
| | Options outstanding                            |  |          |  |   | 1,175,750 |  |   | 1,612,750 | 
| |                                                |  |          |  |   |           |  |   |           | 
| | Options exercisable                            |  |          |  |   | 173,750   |  |   | 589,250   | 
| |                                                |  |          |  |   |           |  |   |           | 
| | Weighted average price for options exercisable |  |          |  | $ | 0.43      |  | $ | 0.24      | 

| | (c) | Performance Stock Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The Company has allotted 1,500,000 shares to be issued
        pursuant to a Performance Stock Plan approved and registered on June 27,
        1997. There are no options currently granted pursuant to this plan.                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (d) | 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 30, 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 $12,000 (2005  $11,000) to operations
        for the pro-rata portion of services performed during the year ended April
        30, 2006.

F-14

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  Years Ended April 30, 2006 and 2005 
  (expressed in U.S. dollars)

|5. | COMMON STOCK(Continued)
|-- | -----------------------
|   |                        
|   | (e)                    
|   |                        
|   |                        

| |                               |           | Weighted      
| | ----------------------------- | --------- | --------------
| |                               |           | average       
| |                               | Number of | exercise price
| |                               | Shares    | $             
| | Balance, April 30, 2004       | 173,120   | 0.20          
| | Issued                        | 516,400   | 0.35          
| | Exercised                     | (173,120) | 0.20          
| | 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          

At April 30, 2006, the following share
  purchase warrants were outstanding:

| |                        | Exercise    | April 30, | April 30,
| | ---------------------- | ----------- | --------- | ---------
| | Expiry Date            | Price       | 2006      | 2005     
| |                        |             |           |          
| | December 30, 2005      | $0.35       |          | 516,400  
| | November 30, 2006/2007 | $0.80/$1.00 | 325,000   |         
| | April 26, 2007/2008    | $0.80/$1.00 | 425,000   |         
| |                        |             |           |          
| | Warrants outstanding   |             | 750,000   | 516,400  

| | (f) | As of April 30, 2006, the Company had received subscriptions
        of $3,750 upon the exercise of stock options for 18,750 shares issued
        subsequent to the period.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                             
| | (g) | During the year ended April 30, 2006, the Company issued
        212,000 shares upon the exercise of stock options for proceeds of $53,313.                                 
| |     |                                                                                                                                                                             
| | (h) | During the year ended April 30, 2006, the Company issued
        406,400 shares at $0.35 per share upon the exercise of warrants for proceeds
        of $142,240.          

|6. | RELATED PARTY TRANSACTIONS/BALANCES
|-- | -----------------------------------
|   |                                    
|   | (a)                                
|   |                                    
|   | (b)                                
|   |                                    
|   | (c)                                
|   |                                    
|   | (d)                                

F-15

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  Years Ended April 30, 2006 and 2005 
  (expressed in U.S. dollars)

|6. | RELATED PARTY TRANSACTIONS/BALANCES(Continued)
|-- | ----------------------------------------------
|   |                                               
|   | (e)                                           
|   |                                               
|   | (f)                                           
|   |                                               
|   | (g)                                           
|   |                                               
|   | (h)                                           
|   |                                               
|   | (i)                                           
|   |                                               
|   | (j)                                           
|   |                                               
|   |                                               
|   |                                               
|   |                                               

In each case, the Company must pay Rand
  an amount equal to the fair value of the stock option granted to the consultant
  by Rand, and reimburse Rand any cash payments paid to the consultant on behalf
  of the Company. The liabilities arising from these arrangements are reflected
  in due to related parties.

The fair value of the foregoing options
  are calculated and reflected in the Companys financial statements using
  the Black-Scholes option pricing model with assumptions that are identical to
  those that would have been applied had the Company directly engaged the services
  of the consultant

The assumptions used in the option pricing
  model are as follows:

| | Risk-free interest rate | 4.03%  
| | ----------------------- | -------
| | Expected volatility     | 237%   
| | Expected option life    | 3 years

F-16

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  Years Ended April 30, 2006 and 2005 
  (expressed in U.S. dollars)

|6. | RELATED PARTY TRANSACTIONS/BALANCES(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | (k)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | (l)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | All of the above transactions and balances
        are in the normal course of operations and are measured at the exchange
        amount, which is the amount of consideration established and agreed to
        by the related parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|7. | COMMITMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|8. | 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 $6,158,000, 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, 2006 and 2005, the valuation allowance established
        against the deferred tax assets increased by $272,600 and $157,000, respectively.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The components of the net deferred tax asset
        at April 30, 2006 and 2005 and the statutory tax rate, the effective tax
        rate and the elected amount of the valuation allowance are scheduled below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

| |                        | April 30,   | April 30,  
| | ---------------------- | ----------- | -----------
| |                        | 2006        | 2005       
| |                        | $           | $          
| | Net Operating Losses   | 6,213,000   | 5,433,000  
| | Statutory Tax Rate     | 35%         | 35%        
| | Effective Tax Rate     |            |           
| | Deferred Tax Asset     | 2,174,600   | 1,902,000  
| | Valuation Allowance    | (2,174,600) | (1,902,000)
| | 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 have 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.

F-17

---

REGI U.S., Inc. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  Years Ended April 30, 2006 and 2005 
  (expressed in U.S. dollars)

|8. | INCOME TAXES(Continued)                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                             
|   | The reconciliation of income tax attributable to continuing
        operations computed at the statutory tax rates to income tax expense is:

| |                                                           |  | April 30, |   |  | April 30, |  
| | --------------------------------------------------------- |  | --------- | - |  | --------- | -
| |                                                           |  | 2006      |   |  | 2005      |  
| |                                                           |  | $         |   |  | $         |  
| | Income tax benefit computed at U.S. statutory
      rates |  | 369,375   |   |  | 204,711   |  
| | Stock-based compensation                                  |  | (43,678   | ) |  |          |  
| | Compensation recognized as donated capital                |  | (52,500   | ) |  | (52,500   | )
| | Impairment loss                                           |  |          |   |  | 25,488    |  
| | Non-deductible write-off of accounts payable              |  | 26,168    |   |  |          |  
| | Unrecognized tax losses                                   |  | (299,365  | ) |  | (177,699  | )
| | Future income tax benefit                                 |  |          |   |  |          |  

|9. | SUBSEQUENT EVENTS                         
|-- | ------------------------------------------
|   |                                           
|   | Subsequent to April 30, 2006, the Company:
|   |                                           
|   | (a)                                       
|   |                                           
|   | (b)                                       
|   |                                           
|   | (c)                                       

F-18

---