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

FORM 10-KSB/A(Amendment No. 1)

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

For the Fiscal Year Ended April 30, 2003

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      

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.  ̈

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 31, 2002, computed by reference to the price at which
  the stock was sold on that date: $1,120,314.45.

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The number of shares outstanding of the registrant's Common
  Stock, no par value, as of July 31, 2003 was 17,961,055.

Documents incorporated by reference: See Exhibits.

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













2

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

|PART I                                                                           | 4 
|-------------------------------------------------------------------------------- | --
|ITEM 1. DESCRIPTION OF BUSINESS                                                  | 4 
|GENERAL                                                                          | 4 
|BUSINESS
      OF THE COMPANY AND PRODUCTS                                       | 5 
|Overview
      and History                                                       | 5 
|PRODUCTS
      AND PROJECTS                                                      | 7 
|Rand
      Cam Technology                                                        | 7 
|Rand
      Cam Cold Turbine Engine                                               | 7 
|Gasoline
      and Diesel Engine                                                 | 7 
|Compressor                                                                       | 7 
|Hydrogen
      Separator                                                         | 7 
|Ceramic
      Rand CamTMEngine                                                   | 8 
|Rand
      CamTMSteam Expander                                                   | 8 
|MARKETING                                                                        | 8 
|COMPETITION                                                                      | 9 
|RAW
      MATERIALS AND PRINCIPAL SUPPLIERS                                      | 10
|PATENTS,
      TRADEMARKS, LICENCES, FRANCHISES, CONCESSIONS, ROYALTY            |   
|AGREEMENTS,
      LABOR CONTRACTS, INCLUDING DURATION                            | 10
|Patents                                                                          | 10
|Royalty
      Payments                                                           | 10
|RISK
      FACTORS                                                               | 11
|GOVERNMENT
      REGULATIONS                                                     | 14
|DEPENDENCE
      ON CERTAIN CUSTOMERS                                            | 14
|RESEARCH
      AND DEVELOPMENT                                                   | 14
|COSTS
      AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS                    | 14
|NUMBER
      OF TOTAL EMPLOYEES AND NUMBER OF FULL-TIME EMPLOYEES                | 14
|ITEM 2. DESCRIPTION OF PROPERTY                                                  | 14
|ITEM 3. LEGAL PROCEEDINGS                                                        | 15
|ITEM 4. SUBMISSION OF MATTERS
      TO A VOTE OF SECURITY HOLDERS                | 15
|PART II                                                                          | 15
|ITEM 5. MARKET FOR COMMON EQUITY
      AND RELATED STOCKHOLDER MATTERS           | 15
|DIVIDEND
      POLICY                                                            | 15
|RECENT
      SALES OF UNREGISTERED SECURITIES                                    | 16
|ITEM 6: MANAGEMENT'S DISCUSSION
      AND ANALYSIS OR PLAN OF OPERATIONS         | 16
|LIQUIDITY
      AND CAPITAL RESOURCES                                            | 17
|ITEM 7. FINANCIAL STATEMENTS                                                     | 17
|ITEM 8. CHANGES IN AND DISAGREEEMENTS
      WITH ACCOUNTANTS ON ACCOUNTING       |   
|AND FINANCIAL DISCLOSURE                                                         | 17
|ITEM 8A. CONTROLS AND PROCEDURES                                                 | 17
|PART III                                                                         | 18
|ITEM 9. DIRECTORS, EXECUTIVE
      OFFICERS, PROMOTERS AND CONTROL PERSONS;      |   
|COMPLIANCE WITH SECTION 16 (a)
      OF THE EXCHANGE ACT.                        | 18
|BUSINESS EXPERIENCE AND PRINCIPAL
      OCCUPATION OF DIRECTORS, EXECUTIVE       |   
|OFFICERS AND SIGNIFICANT EMPLOYEES                                               | 18
|ITEM 10. EXECUTIVE COMPENSATION                                                  | 20
|ITEM 11. SECURITY OWNERSHIP
      OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT    | 21
|Patrick
      Badgley, Vice President, Research and Development and Director (9) | 22
|ITEM 12. CERTAIN RELATIONSHIPS
      AND RELATED TRANSACTIONS                    | 23
|ITEM 13(a). EXHIBITS.                                                            | 25
|Technologies,
      Inc. REGI U.S., Inc. and Radian Incorporated made            | 25
|Incorporated
      made as of April 22, 2002                                     | 25
|ITEM 13(b). REPORTS ON FORM
      8-K.                                           | 26
|ITEM 14. PRINCIPAL ACCOUNTANT
      FEES AND SERVICES.                           | 26
|SIGNATURES                                                                       | 27

3

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

PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

We were organized under the laws of the State of Oregon on
  July 27, 1992 as Sky Technologies, Inc. On August 1, 1994, our name was officially
  changed by a vote of a majority of our shareholders to REGI U.S., Inc. We are
  controlled by Rand Energy Group Inc., a privately held British Columbia corporation
  ("RAND"), which, 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 RAND. We hold the rights to develop, build and market the RC/DC Engine
  design in the U.S. pursuant to an agreement with RAND. Under a project cost
  sharing agreement entered into with RAND effective May 1, 1993, each company
  funds 50% of the continuing development cost of the RC/DC Engine.

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.

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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 RAND. 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.

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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 products.
  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 three license agreements with Advanced Ceramics for
  10 H.P. or less for remote piloted vehicles, a license agreement with Radian
  MILPARTS for greater than 10 H.P. for military applications and to Rotary Power
  International for Generator applications.

6

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PRODUCTS AND PROJECTS

Rand Cam Technology

Rand Cam Cold Turbine Engine

On May 7, 2003 we announced that Rotary Power International
  has been granted a license agreement for the power generator applications. On
  June 9, 2003 we announced that the license had been extended to December 31,
  2003.

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.

The design phase of the 42 Horsepower Diesel Engine for unmanned
  vehicle applications for helicopters is complete and fabrication of the engine
  has commenced. Planning for the test facility and test plan is also underway.

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 and is presently awaiting
  testing in a bus.

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.

On November 13, 2002 we announced that Trans/Air had notified
  us that testing of our special Rand Cam air conditioning compressor was
  delayed due to lack of personnel. Trans/Air promised to have the necessary people
  available for testing after the start of this year.

Hydrogen Separator

We purchased the rights to the H2O Hydrogen Separator Technology
  consisting of a hydrogen separator based, which is a unique system for extracting
  hydrogen from water.

7

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In consideration for a 50% interest for the rights to the
  Hydrogen Separator Technology Reg Technologies, Inc. (Reg) agrees
  that we shall apply for a patent in the U.S. for the Hydrogen Separator Technology
  at Regs expense; and Reg agrees to build a prototype of the Hydrogen Separator
  Technology as designed by GHM, Inc. We declined the option to purchase an additional
  50% interest. To date, neither patent confirmation nor approval has been received
  by Reg.

Ceramic Rand CamTMEngine

On December 6, 2001 we announced that a U.S. Navy contract
  (SBIR No1-144) has been awarded to Advanced Ceramics Research (prime contractor)
  and REGI U.S., Inc. to build and test a Naval 0.5 horsepower ceramic engine.
  The proposed engine is a four stroke Rand Cam engine utilizing continuous
  injection and combustion in a single combustion chamber. The engine will be
  of all ceramic construction to permit high temperature operation, without cooling,
  to effectively burn heavy oil. This new motor will be developed for powering
  the U.S. Navys new Smart War-fighter Array of Re-configurable Modules
  (SWARM) low cost unmanned aerial vehicle.

On April 4, 2002 we announced that we signed an agreement
  to grant a license to Advanced Ceramics Research, Inc. (ACR) for
  the Rand Cam based motors for 10 H.P. or less for the SBIR No 1-144 Navy
  Contract for the remote piloted applications. We agreed that a 5 year contract
  will also be granted to ACR for the Rand Cam concept motors for the commercial
  and military rights for the applications developed under the Navy contract for
  10 H.P or less.

We will receive a royalty fee of 5% of the purchase price
  for the commercial and Navy applications. We also receive 30% of the Navy phase
  I contract and 50% of the phase II contract which is typically $50,000 to $100,000
  for Phase I and $500,000 to $750,000 for Phase II. Phase I has been completed
  by Advanced Ceramics and proposal for additional work in a Phase II project
  has not been submitted or funded by the Government.

Rand CamTM Steam Expander

We are working with Blasingame on adapting the Rand Cam concept
  as a steam engine expander. These engines span a horsepower range from 25 to
  10,000 horsepower. A proposal for a funded analysis, design, fabrication and
  test program has been prepared and submitted to Blasingame.

We have a license agreement with Radian Milparts to build
  and design a 42 horsepower diesel engine for military unmanned air applications
  for 90 horsepower and up. Three 42 horsepower engines have been built and testing
  is being completed .6% royalty

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.

8

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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 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 following marketing activities are all currently underway:

AIR CONDITIONING COMPRESSOR - An agreement with Trans Air
  Manufacturers has been completed to use the Rand Cam(TM)
  compressor in air conditioning units in bus applications. We have delivered
  a compressor prototype for testing. We are awaiting test results from Trans
  Air.

AIR PUMP  A prototype air pump for a Fuel Cell Application
  has been completed and will be delivered to the Fuel Cell manufacturer and others.
  We plan to build several additional air pumps for demonstration purposes for
  other fuel cell uses.

DIESEL ENGINE  We have signed a license agreement with
  Radian MILPARTS to further develop our Rand Cam Technology for a 42 horsepower
  engine. Our license agreement with Radian calls for a 6% royalty to us and one
  working model 42 horsepower diesel engine for our own use for demonstration
  purposes for the other commercial applications.

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 more fuel efficient, smaller, quieter, costs less to produce
  and will have fewer exhaust emissions.

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

RAW MATERIALS AND PRINCIPAL SUPPLIERS

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

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

Patents

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

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

Two additional patents have been issued for improvements to
  the engine including: U.S. Patents 5,509,793 Rotary Device with Slidable
  Vane Supports) issued April 24, 1996 and 5,551,853 Axial Vane Rotary Device
  and Sealing System Therefor) issued September 3, 1996.

Royalty Payments

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

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

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

10

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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.
  We also have a working capital deficit of $172,883. These factors raise substantial
  doubt about our ability to continue as a going concern. Our ability to emerge
  from the development stage with respect to our planned principal business activity
  is dependent upon our successful efforts to raise additional equity financing,
  receive funding from affiliates and controlling shareholders, and develop a
  market for our products.

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

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

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

Dependence on Consultants and Outside Manufacturing Facilities.
  Since our present plans do not provide for a significant technical staff or
  the establishment of manufacturing facilities, we will be primarily dependent
  on others to perform these functions and to provide the requisite expertise
  and quality control. There is no assurance that such persons or institutions
  will be

11

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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, 2003, of $5,528,650.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 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

12

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may devote time to other companies or projects which may compete
  directly or indirectly with us.

Control by Current Insiders. 11,197,850 common shares, not
  including currently exercisable options or warrants, are owned by current insiders
  representing control of approximately 62.95% 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
  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.

13

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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 funded as
  to 50%.

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 spent $18,830 on research
  and development. 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 full-time contractors directly involved
  in technical development work on the RC/DC Engine. We expect to hire additional
  employees for those positions which we deem necessary to fill, as needs arise.
  Most additional employees are expected to be in technical and licensing/marketing
  positions.

ITEM 2. DESCRIPTION OF PROPERTY

We own no properties. We currently utilizes 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

14

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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, 2002, 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" where it
  has been traded since September 21, 1994. The Common Stock has traded between
  $0.035 and $6.75 per share since that date.

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

|                               | Bid Price | Asked Price
|------------------------------ | --------- | -----------
|                               | High $    | Low $      
|Quarter Ended July 31, 2001    | .36       | .25        
|Quarter Ended October 31, 2001 | .46       | .16        
|Quarter Ended January 31, 2002 | .28       | .15        
|Quarter Ended April 30, 2002   | .22       | .17        
|Quarter Ended July 31, 2002    | .21       | .07        
|Quarter Ended October 31, 2002 | .13       | .07        
|Quarter Ended January 31, 2003 | .12       | .035       
|Quarter Ended April 30, 2003   | .09       | .04        
|Quarter Ended July 31, 2003    | .23       | .045       

(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 30, 2003, there were 17,961,055 shares of Common
  Stock outstanding, held by 244 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.

15

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RECENT SALES OF UNREGISTERED SECURITIES

Set forth below is information regarding the issuance and
  sales of our securities without registration during the last fiscal year. No
  such sales involved the use of an underwriter. See Note 5(d) to our audited
  financial statements for the fiscal year ended April 30, 2003 for more information
  on recent sales of unregistered securities.

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 $5,528,650 and further losses are expected
  until we complete a licensing agreement with a manufacturer and reseller. Our
  working capital deficit is $236,090. Our only assets are our intangible assets,
  being patents and intellectual property rights, totaling $63,207 which represents
  95% of total assets. These factors raise 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 the year, we raised a further $25,968 in addition to
  the $194,550 raised in 2002, pursuant to a private placement of 173,120 units
  issued at $0.15 per unit. Each unit will contain one share and one warrant to
  acquire one additional share at $0.20 per share if exercised in year one after
  receipt of funds. 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, warrants if exercised
  will net $34,624 for the $0.20 warrants and $43,500 for the $0.30 warrants

Results of operations for the year ended April 30, 2003 ("2003")
  compared to the year ended April 30, 2002 ("2002")

There were no revenues from product licensing during 2002
  and 2003.

The net loss in 2003 increased by $64,882 to $220,972 compared
  to $156,090 in 2002. The increase was due to an increase of $93,784 in administrative
  expenses. The increase in administrative expenses was mainly due to an increase
  in consulting services donated by the Companys officers and directors.
  Professional fees made up $7,141 of the administrative expenses in 2003 as compared
  to $19,855 in 2002, which includes accounting, auditing and legal. We continue
  to use a consultant to perform the majority of legal work. The decrease of $28,902
  in research and development was mainly attributed to a decrease in prototype
  costs as $35,028 was received from contracts from Advanced Ceramics Research
  and Radian MILPARTS. The majority of prototype construction and testing costs
  continues to be borne by potential licensees and manufacturers. We paid one
  in house consultant for technical prototype design consulting amounting to $21,440
  compared to $36,932 in 2002, which was mainly conducted by Patrick

16

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Badgley, Vice President of Research and Development. See above
  progress reports for research and development activity conducted during the
  year.

LIQUIDITY AND CAPITAL RESOURCES

During 2003, we financed our operations mainly through subscription
  proceeds of $25,968 towards a private placement of units at $0.15 per unit.

We received funding in 2003 from our affiliated companies
  (common directors) and our 28% shareholder, Rand Energy Group, Inc. and Reg
  Technologies Inc., the controlling shareholder of Rand Energy Group, Inc. The
  total amount owing to related parties is $144,738 or 61% of total current liabilities
  as at April 30, 2003. The balances owing to related parties are non-interest
  bearing, unsecured and repayable on demand. On April 8, 2003, the Company issued
  6,100,000 common shares to settle $305,000 in debt owing to related companies.
  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.

The loss for the year of $220,972 included $35,028 in prototype
  cost recoveries.

As at April 30, 2003, we had a cash amount of $87 and other
  current liabilities of $239,177. 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 controlling
  shareholder (REGI). REGI owns 5,063,200 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 PROCEDURES

(a) Evaluation of disclosure controls and procedures

Our Chief Executive Officer and our Chief Financial Officer
  evaluated our “disclosure controls and procedures” (as defined in
  Rule 13a-14 (c) of the Exchange Act) as of a date within 90 days before the
  filing date of this annual report. They concluded that as of the evaluation
  date, our disclosure controls and procedures are effective to ensure that information
  we are required to disclose in reports that we file or submit under the Exchange
  Act is recorded, processed, summarized and reported within the time periods
  specified in SEC rules and forms.

(b) Changes in internal controls.

Subsequent to the date of their evaluation, there were no significant
  changes in our internal controls or in other factors that could significantly
  affect these controls. There were no significant deficiencies or material weaknesses
  in our internal controls so no corrective actions were taken.

17

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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 | 62  | Director, Chairman of the Board of Directors, 
|                  |     | President and Chief Executive Officer         
|Jennifer Lorette  | 31  | Director, Vice-President                      
|James Vandeberg   | 60  | Director and Chief Operating Officer and Chief
|                  |     | Financial Officer                             
|Patrick Badgley   | 59  | Vice-President, Research and Development      

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 April 1994 she has also been Vice President of
  Administration and Secretary 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

18

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British Columbia corporation of which Reg Technologies Inc.
  is the majority shareholder. Since February 1995 Ms. Lorette has been Secretary/Treasurer
  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 June 1994 Ms. Lorette
  has also been Vice President and Secretary of Linux Gold Corp. Since November
  1997 Ms. Lorette has been Vice President of Teryl Resources Corp., a public
  company trading on the TSX Venture Exchange involved in gold, diamond, and oil
  and gas exploration.. She also became a director in February 2001.

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

Mr. Vandeberg became a Director and Chief Operating Officer
  in November 1999 and Chief Financial Officer in 2000. 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 is a director of Information-Highway.com, Inc., a
  Florida corporation which is currently inactive. He is also a director of IAS
  Communications, Inc. an Oregon corporation traded on the OTC bulletin board
  since November 1998. Mr. Vandeberg is also a director of Linux Gold Corp., a
  British Columbia company traded on the OTC bulletin board. Mr. Vandeberg is
  also a director of Cyber Merchants Exchange, Inc. since May 2001. 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.

Patrick R. Badgley - Vice President, Research and Development

Mr. Badgley was appointed our Vice President, Research and
  Development in February 1994. He was directing and participated in the technical
  development of the Rand Cam compressor, gasoline engine and diesel engine. Since
  July 1993 Mr. Badgley has been 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. Between 1986 and 1994, Mr. Badgley was the
  Director of Research and Development at Adiabatics, Inc., in Columbus, Indiana,
  where he directly oversaw several government and privately sponsored research
  programs involving engines. He was the Program Manager for the Gas Research
  Institute project for emissions reduction of two-stoke cycle natural gas engines.
  He was also Program Manager for several coal fuel diesel engine programs for
  the Department of Energy and for uncooled engine programs for a Wankel engine
  for NASA and for a piston type diesel engine for the U.S. Army. Mr. Badgley's
  work has covered all phases of research, design, development and manufacturing,
  from research on ultra-high speed solenoids and fuel sprays, to new product
  conceptualization and production implementation of fuel pumps and fuel injectors.
  Mr. Badgley received his Bachelor of Science degree in Mechanical Engineering
  from Ohio State University. Since February 1995 Mr. Badgley has been a director
  and officer of IAS Communications Inc., an Oregon corporation traded on the
  OTC bulletin board. Mr. Badgley is currently working for Global Aircraft Company.

19

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Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of Forms 3, 4 and 5 furnished to
  us, other than Messrs. Badgley and Vandeberg, 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 2002. Options to purchase 700,000 shares of our common
  stock granted on March 15, 2001, which replaced the 300,000 options that expired
  in January 2001, were repriced from $0.40 to $0.20 on May 10, 2002. No options
  were granted during fiscal 2002.

|Name and Principal
      Position            | Year                       | Annual Compensation                       | Long-Term Compensation                   
|-------------------------------------------- | -------------------------- | ----------------------------------------- | -----------------------------------------
|                                             |                            |                                           | AwardsPayouts                            
|Salary
      ($)                             | Bonus
      ($)            | Other Annual
      Compensation
      ($) | Restricted Stock
      Award(s)
      (#)
|John G. Robertson,
        President and CEO | 2003
      2002
      2001 | 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.                                                                    
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                 
|(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 and rent in the sum of
        $6,000 per annum. Mr. Robertson is a trustee of the Robertson FamilyTrust.            
|    |                                                                                                                                                                                                                                                                                                                                                                 
|(4) | These options
        were granted on March 15, 2001 exercisable at a price of US$0.40 per share
        until March 15, 2006. On May 10, 2002, the exercise price of these options
        was reduced to $0.20 per share, with all other terms remaining the same.                                                                                            

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. No fees were paid during the year ended April 30, 2003.

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

20

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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, 2003 by our Chief
  Executive Officer, and with respect to unexercised options held by our Chief
  Executive Officer at the end of fiscal 2003.

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 /
      Unexercisable
|----------------- | ------------------------------------- | ------------------ | ---------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------
|John G. Robertson | -0-                                   | -0-                | 700,000 / 0                                                                                          | -0- / -0-                                                                                             

(1) The calculation of the value of unexercised
  options is based on the difference between the last sale price of $0.08 per
  share for our Common Stock on April 24, 2003, being the last date the shares
  were traded prior to April 30, 2003, 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

The following table sets forth, as of July 15, 2003, our outstanding
  Class A Common Stock owned of record or beneficially by each person who owned
  of record, or was known by us to own beneficially, more than 5% of our Common
  Stock, and the name and shareholdings of each Executive Officer and Director
  and all Executive Officers and Directors as a group. A person is deemed to be
  the beneficial owner of securities that can be acquired by such person within
  60 days from the date of this report upon the exercise of warrants or options.
  Each beneficial owner's percentage ownership is determined by assuming that
  options that are held by such person and which are exercisable within 60 days
  from the date are exercised.

21

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|Name                                         | Class A Shares Owned | Percentage of 
|-------------------------------------------- | -------------------- | --------------
|                                             |                      | Class A Shares
|                                             |                      | Owned         
|                                             |                      |               
|John G. Robertson, Chairman of the Board     | 10,821,350           | 60.84%        
|of Directors, President and Director (1) (2) |                      |               
|(3) (4)                                      |                      |               
|                                             |                      |               
|James McCann (5)                             | 5,063,200            | 28.46%        
|                                             |                      |               
|Rand Energy Group Inc. (6)                   | 5,063,200            | 28.46%        
|                                             |                      |               
|Jennifer Lorette, Vice President and         | 150,500              | *             
|Director (7)                                 |                      |               
|                                             |                      |               
|James Vandeberg, Chief Operating Officer     | 76,000               | *             
|and Director (8)                             |                      |               
|                                             |                      |               
|Patrick Badgley, Vice President, Research    | 150,000              | *             
|and Development and Director (9)             |                      |               
|                                             |                      |               
|ALL EXECUTIVE OFFICERS &                     | 11,197,850           | 62.95%        
|DIRECTORS AS A GROUP (FOUR                   |                      |               
|INDIVIDUALS) (10)                            |                      |               

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
  15, 2003, which was 17,787,935

(1) These individuals may be deemed to be our "parents or
  founders" as that term is defined in the Rules and Regulations promulgated under
  the Securities Act of 1933.

(2) Includes 5,063,200 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 700,000 options
  that are currently exercisable. Mr. Robertson's address is the same as the Company's.

(3) Includes 2,650,000 shares registered in the name of Access
  Information Services, Ltd., a corporation controlled by the Robertson Family
  Trust, and 700,000 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 our address.

(4) Rainbow Network is a private Turks and Caicos Island company.
  Mr. Robertson is the President and director of Rainbow Network. Mr. Robertson
  disclaims beneficial ownership of the shares owned or controlled by the Rainbow
  Network. Mr. Robertson's address is the same as our address.

22

---

(5) Includes 5,063,200 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.

(6) Rand Energy Group Inc. is owned 51% by Reg Technologies
  Inc. and 49% by Rand Cam Engine Corp. Under Rule 13d-3 under the Securities
  Exchange Act of 1934, both Reg Technologies Inc. and Rand Cam Engine Corp. could
  be considered the beneficial owner of the 5,063,200 shares registered in the
  name of Rand Energy Group Inc.

Reg Technologies Inc. is a British Columbia corporation listed
  on the TSX Venture Exchange that has financed the research on the Rand Cam Engine
  since 1986. Since October 1984 Mr. Robertson has been President and a Director
  of Reg Technologies Inc. SMR Investment Ltd., a British Columbia corporation,
  holds a controlling interest in Reg Technologies Inc. Since May 1977 Mr. Robertson
  has been President and a member of the Board of Directors of SMR Investments
  Ltd. Susanne M. Robertson, Mr. Robertson's wife, owns SMR Investment Ltd. Accordingly,
  in Note (2) above, beneficial ownership of the 5,063,200 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 minor interest by several other shareholders.
  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.

(7) Includes 150,000 options that are currently exercisable.
  Ms. Lorette's address is the same as the Company's.

(8) Includes 75,000 options that are currently exercisable.
  Mr. Vandeberg's address is 1000 Second Avenue, Suite 1710, Seattle, WA 98104.

(9) Includes 150,000 options that are currently exercisable.
  Mr. Badgely's address is 2815 Franklin Drive, Columbus, Indiana, 47201.

(10) Includes 5,063,200 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 1,075,000 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

23

---

Canadian Venture Exchange ("Reg Tech"), and 49% by Rand Cam
  Engine Corp. Reg Tech's President is also our President and its Vice President
  is also Vice President of the Company.

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

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

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

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.

24

---

ITEM 13(a). 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,                         | (6 | )
|       | Incorporated made as of April 22, 2002                                                 |    |  
|10.7   | Amendment to Agreement between REGI U.S., Inc. and Rotary
      Power                  | (6 | )
|       | Generation, Incorporated made as of April
      2, 2003                                |    |  
|23.1   | Consent of Independent Auditors                                                        | (6 | )
|31.1   | Certification of Chief Executive Officer pursuant to
      Section 302 of the          |    |  
|       | Sarbanes-Oxley Act of 2002                                                             |    |  
|31.2   | Certification of Chief Financial Officer pursuant to Section 302 of the                |    |  
|       | Sarbanes-Oxley Act of 2002                                                             |    |  
|32.1   | Certification of John G. Robertson, President
      (Principal Executive Officer),     |    |  
|       | pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the    |    |  
|       | Sarbanes-Oxley Act of 2002                                                             |    |  
|32.2   | Certification of James Vandeberg, Chief Financial Officer
      (Principal Financial   |    |  
|       | Officer), pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 |    |  
|       | of the Sarbanes-Oxley Act of 2002                                                      |    |  

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

|Independent Auditor's Report      | F-1        
|--------------------------------- | -----------
|                                  |            
|Balance Sheets                    | F-3        
|                                  |            
|Statements of Operations          | F-4        
|                                  |            
|Statements of Cash Flows          | F-5        
|                                  |            
|Statement of Stockholders' Equity | F-6        
|                                  |            
|Notes to the Financial Statements | F-8 to F-13

25

---

ITEM 13(b). REPORTS ON FORM 8-K.

None.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table discloses accounting fees and services which we paid to
  our auditor, Manning Elliott:

|Type of Services Rendered                       | 2003
      Fiscal Year
      (CAD$) | 2002
      Fiscal Year
      (CAD$)
|----------------------------------------------- | ----------------------------------- | -----------------------------------
|                                                |                                     |                                    
|                                                |                                     |                                    
|(a) Audit Fees                                  | $4,000                              | $2,500                             
|                                                |                                     |                                    
|(b) Audit-Related Fees                          | $5,000                              | $5,000                             
|(eg. review of Form 10-KSB,
      Forms 10-QSB) |                                     |                                    
|                                                |                                     |                                    
|(c) Tax Fees                                    | Nil                                 | $650                               
|                                                |                                     |                                    
|(d) All Other Fees                              | Nil                                 | Nil                                

26

---

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.



By: /s/ John G. Robertson 
    John G. Robertson, President 
    Chief Executive Officer and Director


Dated: September 9, 2003

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                     | 9/9/03 | 
|(John G. Robertson)   | Executive Officer and Director       |        | 
|                      |                                      |        | 
|/s/ James Vandeberg   | Chief Operating Officer              | 9/9/03 | 
|(James Vandeberg)     | Chief Financial Officer and Director |        | 
|                      |                                      |        | 
|/s/ Jennifer Lorette  | Vice President and Director          | 9/9/03 | 
|(Jennifer Lorette)    |                                      |        | 

27

---

EXHIBIT INDEX

|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,                         | (6 | )
|       | Incorporated made as of April 22, 2002                                                 |    |  
|10.7   | Amendment to Agreement between REGI U.S., Inc. and Rotary
      Power                  | (6 | )
|       | Generation, Incorporated made as of April
      2, 2003                                |    |  
|23.1   | Consent of Independent Auditors                                                        | (6 | )
|31.1   | Certification of Chief Executive Officer pursuant to
      Section 302 of the          |    |  
|       | Sarbanes-Oxley Act of 2002                                                             |    |  
|31.2   | Certification of Chief Financial Officer pursuant to Section 302 of the                |    |  
|       | Sarbanes-Oxley Act of 2002                                                             |    |  
|32.1   | Certification of John G. Robertson, President
      (Principal Executive Officer),     |    |  
|       | pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the    |    |  
|       | Sarbanes-Oxley Act of 2002                                                             |    |  
|32.2   | Certification of James Vandeberg, Chief Financial Officer
      (Principal Financial   |    |  
|       | Officer), pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 |    |  
|       | of the Sarbanes-Oxley Act of 2002                                                      |    |  

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

|Independent Auditor's Report      | F-1        
|--------------------------------- | -----------
|                                  |            
|Balance Sheets                    | F-3        
|                                  |            
|Statements of Operations          | F-4        
|                                  |            
|Statements of Cash Flows          | F-5        
|                                  |            
|Statement of Stockholders' Equity | F-6        
|                                  |            
|Notes to the Financial Statements | F-8 to F-13



---



| | Independent Auditors Report
      
      To the Stockholders and Board of Directors 
        of REGI U.S., Inc. 
        (A Development Stage Company)
      We have audited the accompanying balance sheets of REGI
        U.S., Inc. (A Development Stage Company) as of April 30, 2003 and 2002
        and the related statements of operations, stockholders deficit and
        cash flows for the period from July 27, 1992 (Inception) to April 30,
        2003 and the years ended April 30, 2003 and 2002. These financial statements
        are the responsibility of the Companys management. Our responsibility
        is to express an opinion on these financial statements based on our audits.
      We conducted our audits in accordance with generally
        accepted auditing standards in the United States. Those standards require
        that we plan and perform the audit to obtain reasonable assurance about
        whether the financial statements are free of material misstatement. An
        audit includes examining, on a test basis, evidence supporting the amounts
        and disclosures in the financial statements. An audit also includes assessing
        the accounting principles used and significant estimates made by management,
        as well as evaluating the overall financial statement presentation. We
        believe that our audit provides a reasonable basis for our opinion.
      In our opinion, the aforementioned financial statements
        present fairly, in all material respects, the financial position of REGI
        U.S., Inc. (A Development Stage Company), as of April 30, 2003 and 2002,
        and the results of its operations and its cash flows for the period from
        July 27, 1992 (Inception) to April 30, 2003 and the years ended April
        30, 2003 and 2002, in conformity with generally accepted accounting principles
        used in the United States. | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 



F-1

---



| | 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 or profitable operations since
        inception and has a severe working capital deficit. 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. The financial statements do not include any adjustments that
        might result from the outcome of this uncertainty. | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
| | /s/ Manning Elliott                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
| | CHARTERED ACCOUNTANTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 
| | Vancouver, Canada                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
| | August 12, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 





F-2

---

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

|                                                                           | April 30,  |   |            |  
|-------------------------------------------------------------------------- | ---------- | - | ---------- | -
|                                                                           | 2003       |   | 2002       |  
|                                                                           | $          |   | $          |  
|Assets                                                                     |            |   |            |  
|                                                                           |            |   |            |  
|Current Assets                                                             |            |   |            |  
|                                                                           |            |   |            |  
|Cash                                                                       | 87         |   |           |  
|Amounts receivable                                                         | 3,000      |   | 16,400     |  
|                                                                           |            |   |            |  
|                                                                           |            |   |            |  
|Total Current Assets                                                       | 3,087      |   | 16,400     |  
|                                                                           |            |   |            |  
|Property and Equipment (Note 3)                                            |           |   | 664        |  
|                                                                           |            |   |            |  
|Long-Lived Assets (Note 4)                                                 | 63,207     |   | 66,920     |  
|                                                                           |            |   |            |  
|                                                                           |            |   |            |  
|Total Assets                                                               | 66,294     |   | 83,984     |  
|                                                                           |            |   |            |  
|                                                                           |            |   |            |  
|Liabilities and Stockholders Deficit                                      |            |   |            |  
|                                                                           |            |   |            |  
|Current Liabilities                                                        |            |   |            |  
|                                                                           |            |   |            |  
|Cheques issued in excess of
      funds on deposit                         |           |   | 2,256      |  
|Accounts payable                                                           | 86,264     |   | 87,952     |  
|Accrued liabilities                                                        | 8,175      |   | 7,500      |  
|Convertible debenture                                                      |           |   | 5,000      |  
|Due to related parties (Note
      6)                                      | 144,738    |   | 473,155    |  
|                                                                           |            |   |            |  
|                                                                           |            |   |            |  
|Total Current Liabilities                                                  | 239,177    |   | 575,863    |  
|                                                                           |            |   |            |  
|                                                                           |            |   |            |  
|Commitments and Contingent Liabilities (Notes 1 and 7)                     |            |   |            |  
|Subsequent Events (Note 8)                                                 |            |   |            |  
|                                                                           |            |   |            |  
|Stockholders Deficit                                                      |            |   |            |  
|                                                                           |            |   |            |  
|Common Stock (Note 5), 20,000,000 shares authorized without par value;     |            |   |            |  
|17,687,935 and 11,287,935 shares
      issued and outstanding respectively | 5,105,299  |   | 4,778,799  |  
|                                                                           |            |   |            |  
|Common Stock Paid For But Unissued (Note 5(d)(i))                          | 25,968     |   |           |  
|                                                                           |            |   |            |  
|Donated Capital (Note 6)                                                   | 187,500    |   |           |  
|                                                                           |            |   |            |  
|Stock Based Compensation                                                   | 37,000     |   | 37,000     |  
|                                                                           |            |   |            |  
|Deficit Accumulated During the Development Stage                           | (5,528,650 | ) | (5,307,678 | )
|                                                                           |            |   |            |  
|                                                                           |            |   |            |  
|Total Stockholders Deficit                                                | (172,883   | ) | (491,879   | )
|                                                                           |            |   |            |  
|                                                                           |            |   |            |  
|Total Liabilities and Stockholders Deficit                                | 66,294     |   | 83,984     |  
|                                                                           |            |   |            |  

(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    |   |            |   |            |  
|                                                          | (Inception)      |   | Year Ended |  
|                                                          | To April 30,     |   | April 30,  |  
|                                                          | 2003             |   | 2003       |   | 2002       |  
|                                                          | $                |   | $          |   | $          |  
|                                                          |                  |   |            |   |            |  
|Revenues                                                  |                 |   |           |   |           |  
|                                                          |                  |   |            |   |            |  
|                                                          |                  |   |            |   |            |  
|Administrative Expenses                                   |                  |   |            |   |            |  
|Bank charges and interest                                 | 10,942           |   | 1,279      |   | 907        |  
|Consulting services (Note 6)                              | 187,500          |   | 187,500    |   |           |  
|Foreign exchange loss (gain)                              | 3,247            |   | (605       | ) | (95        | )
|Interest on debentures                                    | 12,593           |   |           |   |           |  
|Investor relations  publications                         | 315,929          |   |           |   |           |  
|Investor relations  consulting                           | 793,045          |   | 16,800     |   | 111,370    |  
|Office, rent and telephone (Note
      6)                 | 165,339          |   | 9,346      |   | 11,525     |  
|Professional fees                                         | 350,559          |   | 7,141      |   | 19,855     |  
|Transfer agent and regulatory
      fees                  | 102,545          |   | 4,372      |   | 2,201      |  
|Travel                                                    | 12,897           |   | 175        |   | 1,048      |  
|Less: interest and other income                           | (16,788          | ) |           |   | (33        | )
|accounts
      payable written off                        | (14,554          | ) |           |   | (14,554    | )
|                                                          |                  |   |            |   |            |  
|                                                          |                  |   |            |   |            |  
|                                                          | 1,923,254        |   | 226,008    |   | 132,224    |  
|                                                          |                  |   |            |   |            |  
|                                                          |                  |   |            |   |            |  
|Research and Development Expenses                         |                  |   |            |   |            |  
|Intellectual property (Note
      4)                      | 578,509          |   | -          |   | 12,364     |  
|Amortization                                              | 120,454          |   | 5,212      |   | 6,939      |  
|Market development                                        | 92,782           |   |           |   |           |  
|Professional fees                                         | 73,904           |   |           |   |           |  
|Project management                                        | 280,000          |   |           |   | 30,000     |  
|Project overhead                                          | 211,588          |   | 2,000      |   | 17,290     |  
|Prototype design and construction
      contracts, net of |                  |   |            |   |            |  
|recoveries                                                | 1,354,322        |   | (35,028    | ) | 4,758      |  
|Royalties                                                 | 93,000           |   |           |   | 6,000      |  
|Technical prototype design consulting                     | 533,178          |   | 21,440     |   | 36,932     |  
|Technical reports                                         | 24,364           |   |           |   | 2,244      |  
|Technical salaries                                        | 169,467          |   |           |   |           |  
|Travel                                                    | 168,226          |   | 1,340      |   | 1,737      |  
|Less: accounts payable written
      off                  | (94,398          | ) | -          |   | (94,398    | )
|                                                          |                  |   |            |   |            |  
|                                                          |                  |   |            |   |            |  
|                                                          | 3,605,396        |   | (5,036     | ) | 23,866     |  
|                                                          |                  |   |            |   |            |  
|                                                          |                  |   |            |   |            |  
|Net Loss for the Year                                     | (5,528,650       | ) | (220,972   | ) | (156,090   | )
|                                                          |                  |   |            |   |            |  
|                                                          |                  |   |            |   |            |  
|Loss Per Share - Basic                                    |                  |   | (0.02      | ) | (0.02      | )
|                                                          |                  |   |            |   |            |  
|                                                          |                  |   |            |   |            |  
|Weighted Average Shares Outstanding                       |                  |   | 11,509,000 |   | 10,399,000 |  
|                                                          |                  |   |            |   |            |  

(The accompanying notes are an integral part of the financial
  statements)

F-4

---

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

|                                                          | Accumulated from |   |            |   |          |  
|--------------------------------------------------------- | ---------------- | - | ---------- | - | -------- | -
|                                                          | July 27, 1992    |   |            |   |          |  
|                                                          | (Inception)      |   | Year Ended |   |          |  
|                                                          | to April 30,     |   | April 30,  |   |          |  
|                                                          | 2003             |   | 2003       |   | 2002     |  
|                                                          | $                |   | $          |   | $        |  
|Cash Flows to Operating Activities                        |                  |   |            |   |          |  
|Net loss for the year                                     | (5,528,650       | ) | (220,972   | ) | (156,090 | )
|Adjustments to reconcile net loss to cash                 |                  |   |            |   |          |  
|Accounts payable written off                              | (96,755          | ) |           |   | (96,755  | )
|Amortization                                              | 120,454          |   | 5,212      |   | 6,939    |  
|Donated services                                          | 187,500          |   | 187,500    |   |         |  
|Intellectual property written
      off                   | 578,509          |   |           |   | 12,364   |  
|Stock based compensation                                  | 294,796          |   | 16,500     |   | 3,083    |  
|Changes in operating assets and liabilities               |                  |   |            |   |          |  
|(Increase) decrease in accounts
      receivable          | (3,000           | ) | 13,400     |   | (16,400  | )
|Increase (decrease) in accounts
      payable and accrued |                  |   |            |   |          |  
|liabilities                                               | 199,350          |   | (1,013     | ) | (69,202  | )
|                                                          |                  |   |            |   |          |  
|                                                          |                  |   |            |   |          |  
|Net Cash Provided (Used) by Operating Activities          | (4,247,796       | ) | 627        |   | (316,061 | )
|                                                          |                  |   |            |   |          |  
|                                                          |                  |   |            |   |          |  
|Cash Flows from Financing Activities                      |                  |   |            |   |          |  
|Subscriptions received                                    | 25,968           |   | 25,968     |   |         |  
|Proceeds from convertible debenture                       | 5,000            |   |           |   | 5,000    |  
|Issuance of common stock                                  | 4,167,252        |   |           |   | 194,550  |  
|Increase (decrease) in due to
      related parties       | 266,584          |   | (23,417    | ) | 118,182  |  
|                                                          |                  |   |            |   |          |  
|                                                          |                  |   |            |   |          |  
|Net Cash Provided by Financing Activities                 | 4,464,804        |   | 2,551      |   | 317,732  |  
|                                                          |                  |   |            |   |          |  
|                                                          |                  |   |            |   |          |  
|Cash Flows to Investing Activities                        |                  |   |            |   |          |  
|Purchase of property and equipment                        | (24,947          | ) |           |   |         |  
|Patent protection costs                                   | (191,974         | ) | (835       | ) | (2,461   | )
|                                                          |                  |   |            |   |          |  
|                                                          |                  |   |            |   |          |  
|Net Cash Used by Investing Activities                     | (216,921         | ) | (835       | ) | (2,461   | )
|                                                          |                  |   |            |   |          |  
|                                                          |                  |   |            |   |          |  
|Increase (decrease) in cash                               | 87               |   | 2,343      |   | (790     | )
|Cash (deficiency) - beginning of period                   |                 |   | (2,256     | ) | (1,466   | )
|                                                          |                  |   |            |   |          |  
|                                                          |                  |   |            |   |          |  
|Cash (deficiency) - end of period                         | 87               |   | 87         |   | (2,256   | )
|                                                          |                  |   |            |   |          |  
|                                                          |                  |   |            |   |          |  
|Non-Cash Financing Activities                             |                  |   |            |   |          |  
|Shares issued for convertible
      debenture             | 5,000            |   | 5,000      |   |         |  
|Affiliates shares issued
      for intellectual property | 200,000          |   |           |   |         |  
|Shares issued for consulting
      services               | 257,796          |   | 16,500     |   |         |  
|Shares issued for intellectual
      property             | 345,251          |   |           |   |         |  
|Shares issued to settle debt
      (Note 6)               | 330,000          |   | 305,000    |   |         |  
|Stock based compensation                                  | 37,000           |   |           |   | 3,083    |  
|                                                          |                  |   |            |   |          |  
|                                                          |                  |   |            |   |          |  
|                                                          | 1,175,047        |   | 326,500    |   | 3,083    |  
|                                                          |                  |   |            |   |          |  
|                                                          |                  |   |            |   |          |  
|Supplemental Disclosures                                  |                  |   |            |   |          |  
|Interest paid                                             | 12,593           |   |           |   |         |  
|Income tax paid                                           |                 |   |           |   |         |  

(The accompanying notes are an integral part of the financial
  statements)

F-5

---

REGI U.S., Inc. (A Development Stage Company)
  Statement of Stockholders Equity 
  From July 27, 1992 (Inception) to April 30, 2003

|                                                          |              |  |           |  |             |  | Deficit     |  
|--------------------------------------------------------- | ------------ |  | --------- |  | ----------- |  | ----------- | -
|                                                          |              |  |           |  |             |  | Accumulated |  
|                                                          |              |  |           |  |             |  | During the  |  
|                                                          | Common Stock |  | Donated   |  | Development | 
|                                                          | Shares       |  | Amount    |  | Capital     |  | Stage       |  
|                                                          | #            |  | $         |  | $           |  | $           |  
|Balance - July 27, 1992 (inception)                       |             |  |          |  |            |  |            |  
|Stock issued for intellectual
      property              | 5,700,000    |  | 57,000    |  |            |  |            |  
|Stock issued for cash                                     | 300,000      |  | 3,000     |  |            |  |            |  
|Net loss for the period                                   |             |  |          |  |            |  | (23,492     | )
|                                                          |              |  |           |  |             |  |             |  
|                                                          |              |  |           |  |             |  |             |  
|Balance - April 30, 1993                                  | 6,000,000    |  | 60,000    |  |            |  | (23,492     | )
|Stock issued for cash pursuant
      to a public offering | 500,000      |  | 500,000   |  |            |  |            |  
|Net loss for the year                                     |             |  |          |  |            |  | (394,263    | )
|                                                          |              |  |           |  |             |  |             |  
|                                                          |              |  |           |  |             |  |             |  
|Balance - April 30, 1994                                  | 6,500,000    |  | 560,000   |  |            |  | (417,755    | )
|Stock issued for cash pursuant
      to:                  |              |  |           |  |             |  |             |  
|options
      exercised                                   | 10,000       |  | 1,000     |  |            |  |            |  
|a
      private placement                                 | 250,000      |  | 562,500   |  |            |  |            |  
|warrants
      exercised                                  | 170,200      |  | 213,000   |  |            |  |            |  
|Net loss for the year                                     |             |  |          |  |            |  | (1,225,743  | )
|                                                          |              |  |           |  |             |  |             |  
|                                                          |              |  |           |  |             |  |             |  
|Balance - April 30, 1995                                  | 6,930,200    |  | 1,336,500 |  |            |  | (1,643,498  | )
|Stock issued for cash pursuant
      to:                  |              |  |           |  |             |  |             |  
|options
      exercised                                   | 232,500      |  | 75,800    |  |            |  |            |  
|warrants
      exercised                                  | 132,200      |  | 198,300   |  |            |  |            |  
|a
      private offering memorandum                       | 341,000      |  | 682,000   |  |            |  |            |  
|Net loss for the year                                     |             |  |          |  |            |  | (796,905    | )
|                                                          |              |  |           |  |             |  |             |  
|                                                          |              |  |           |  |             |  |             |  
|Balance - April 30, 1996                                  | 7,635,900    |  | 2,292,600 |  |            |  | (2,440,403  | )
|Stock issued for cash pursuant
      to:                  |              |  |           |  |             |  |             |  
|options
      exercised                                   | 137,000      |  | 13,700    |  |            |  |            |  
|warrants
      exercised                                  | 185,400      |  | 278,100   |  |            |  |            |  
|private
      placements                                  | 165,000      |  | 257,500   |  |            |  |            |  
|Net loss for the year                                     |             |  |          |  |            |  | (510,184    | )
|                                                          |              |  |           |  |             |  |             |  
|                                                          |              |  |           |  |             |  |             |  
|Balance - April 30, 1997                                  | 8,123,300    |  | 2,841,900 |  |            |  | (2,950,587  | )
|Stock issued for cash pursuant
      to:                  |              |  |           |  |             |  |             |  
|options
      exercised                                   | 50,000       |  | 5,000     |  |            |  |            |  
|a
      units offering                                    | 500,000      |  | 500,000   |  |            |  |            |  
|Stock issued for acquisition
      of AVFS rights         | 400,000      |  | 288,251   |  |            |  |            |  
|Stock issued for financial consulting
      services      | 125,000      |  | 170,250   |  |            |  |            |  
|Stock issued to settle an accrued
      liability         | 50,000       |  | 25,000    |  |            |  |            |  
|Net loss for the year                                     |             |  |          |  |            |  | (580,901    | )
|                                                          |              |  |           |  |             |  |             |  
|                                                          |              |  |           |  |             |  |             |  
|Balance - April 30, 1998                                  | 9,248,300    |  | 3,830,401 |  |            |  | (3,531,488  | )
|                                                          |              |  |           |  |             |  |             |  

(The accompanying notes are an integral part of the financial
  statements)

F-6

---

REGI U.S., Inc. (A Development Stage Company)
  Statement of Stockholders Equity 
  From July 27, 1992 (Inception) to April 30, 2003

|                                                              |              |  |           |   |         |  | Deficit     |  
|------------------------------------------------------------- | ------------ |  | --------- | - | ------- |  | ----------- | -
|                                                              |              |  |           |   |         |  | Accumulated |  
|                                                              |              |  |           |   |         |  | During the  |  
|                                                              | Common Stock |  |           |   | Donated |  | Development |  
|                                                              | Shares       |  | Amount    |   | Capital |  | Stage       |  
|                                                              | #            |  | $         |   | $       |  | $           |  
|                                                              |              |  |           |   |         |  |             |  
|Stock issued for financial consulting
      services          | 100,000      |  | 71,046    |   |        |  |            |  
|Net loss for the year                                         |             |  |          |   |        |  | (397,924    | )
|                                                              |              |  |           |   |         |  |             |  
|                                                              |              |  |           |   |         |  |             |  
|Balance - April 30, 1999                                      | 9,348,300    |  | 3,901,447 |   |        |  | (3,929,412  | )
|Stock issued for cash pursuant
      to:                      |              |  |           |   |         |  |             |  
|a
      private placement                                     | 852,101      |  | 639,075   |   |        |  |            |  
|less
      cash commission paid                               |             |  | (47,607   | ) |        |  |            |  
|warrants
      exercised                                      | 17,334       |  | 17,334    |   |        |  |            |  
|Net loss for the year                                         |             |  |          |   |        |  | (413,495    | )
|                                                              |              |  |           |   |         |  |             |  
|                                                              |              |  |           |   |         |  |             |  
|Balance - April 30, 2000                                      | 10,217,735   |  | 4,510,249 |   |        |  | (4,342,907  | )
|Stock issued for cash pursuant
      to:                      |              |  |           |   |         |  |             |  
|warrants
      exercised                                      | 4,000        |  | 2,000     |   |        |  |            |  
|Net loss for the year                                         |             |  |          |   |        |  | (808,681    | )
|                                                              |              |  |           |   |         |  |             |  
|                                                              |              |  |           |   |         |  |             |  
|Balance - April 30, 2001                                      | 10,221,735   |  | 4,512,249 |   |        |  | (5,151,588  | )
|Stock issued for cash pursuant
      to a private placement   | 1,066,200    |  | 266,550   |   |        |  |            |  
|Net loss for the year                                         |             |  |          |   |        |  | (156,090    | )
|                                                              |              |  |           |   |         |  |             |  
|                                                              |              |  |           |   |         |  |             |  
|Balance - April 30, 2002                                      | 11,287,935   |  | 4,778,799 |   |        |  | (5,307,678  | )
|                                                              |              |  |           |   |         |  |             |  
|Stock issued to settle debt
      (Note 6)                    | 6,100,000    |  | 305,000   |   |        |  |            |  
|Stock issued for investor and
      public relations services | 250,000      |  | 16,500    |   |        |  |            |  
|Stock issued for convertible
      debenture                  | 50,000       |  | 5,000     |   |         |  |            |  
|Donated consulting services                                   |             |  |          |   | 187,500 |  |            |  
|Net loss for the year                                         |             |  |          |   |        |  | (220,972    | )
|                                                              |              |  |           |   |         |  |             |  
|                                                              |              |  |           |   |         |  |             |  
|Balance - April 30, 2003                                      | 17,687,935   |  | 5,105,299 |   | 187,500 |  | (5,528,650  | )
|                                                              |              |  |           |   |         |  |             |  

(The accompanying notes are an integral part of the financial
  statements)

F-7

---

REGI U.S., Inc. (A Development Stage Company)
  Notes to the Financial Statements
  (expressed in U.S. dollars)

|1. | Nature of Operations and Continuance of Business
      REGI U.S., Inc. herein (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 the U.S., are held by Rand Energy Group Inc. (REGI),
        which is a major shareholder of 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 REGI 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
        also has a working capital deficit of $236,090. 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
        a shareholder REGI. REGI owns approximately 28% of the shares of the Company,
        having an approximate current market value of $1,338,000 as at August
        12, 2003, and plans to sell shares as needed to meet ongoing funding requirements
        if traditional equity sources of financing prove to be insufficient.
      The Company receives interim support from its ultimate
        parent company and other 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 raise additional funds through the exercise of
        warrants and stock options, if exercised.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|2. | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

F-8

---

REGI U.S., Inc. (A Development Stage Company)
  Notes to the Financial Statements
  (expressed in U.S. dollars)

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | (e)                                                           
|   |                                                               
|   | (f)                                                           
|   |                                                               
|   | (g)                                                           
|   |                                                               
|   | (h)                                                           
|   |                                                               
|   | (i)                                                           
|   |                                                               
|   | (j)                                                           

F-9

---

REGI U.S., Inc. (A Development Stage Company)
  Notes to the Financial Statements
  (expressed in U.S. dollars)

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------
|   |                                                       
|   | (k)                                                   
|   |                                                       
|   |                                                       
|   |                                                       

| |              |  | Amount    |  | Year of    | 
| | ------------ |  | --------- |  | ---------- | 
| | Year of Loss |  | $         |  | Expiration | 
| | 1993         |  | 23,000    |  | 2008       | 
| | 1994         |  | 393,000   |  | 2009       | 
| | 1995         |  | 1,007,000 |  | 2010       | 
| | 1996         |  | 792,000   |  | 2011       | 
| | 1997         |  | 521,000   |  | 2012       | 
| | 1998         |  | 605,000   |  | 2013       | 
| | 1999         |  | 417,000   |  | 2014       | 
| | 2000         |  | 429,000   |  | 2015       | 
| | 2001         |  | 518,000   |  | 2016       | 
| | 2002         |  | 153,000   |  | 2017       | 
| | 2003         |  | 17,000    |  | 2018       | 
| |              |  |           |  |            | 
| |              |  | 4,875,000 |  |            | 
| |              |  |           |  |            | 
| |              |  |           |  |            | 

| | Pursuant to SFAS 109 the Company is required to compute tax asset benefits
          for net operating losses carried forward. Potential benefit of net operating
          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 net operating losses carried forward in future years.
        The components of the net deferred tax asset at the end of April 30,
          2003 and 2002, and the statutory tax rate, the effective tax rate and
          the elected amount of the valuation allowance are scheduled below:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 2003   |   | 2002    |  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ | - | ------- | -
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $      |   | $       |  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |   |         |  
| |     | Net Operating Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 17,000 |   | 156,000 |  
| |     | Statutory Tax Rate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 34%    |   | 34%     |  
| |     | Effective Tax Rate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |       |   |        |  
| |     | Deferred Tax Asset                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 6,000  |   | 53,000  |  
| |     | Valuation Allowance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | (6,000 | ) | (53,000 | )
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |   |         |  
| |     | Net Deferred Tax Asset                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |   |        |  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |   |         |  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |   |         |  
| | (l) | Recent Accounting Pronouncements
        In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
          Financial Instruments with Characteristics of both Liabilities and Equity.
          SFAS No. 150 establishes standards for how an issuer classifies and
          measures certain financial instruments with characteristics of both
          liabilities and equity. It requires that an issuer classify a financial
          instrument that is within its scope as a liability (or an asset in some
          circumstances). The requirements of SFAS No. 150 apply to issuers
          classification and measurement of freestanding financial instruments,
          including those that comprise more than one option or forward contract.
          SFAS No. 150 does not apply to features that are embedded in a financial
          instrument that is not a derivative in its entirety. SFAS No. 150 is
          effective for financial instruments entered into or modified after May
          31, 2003, and otherwise is effective at the beginning of the first interim
          period beginning after June 15, 2003, except for mandatory redeemable
          financial instruments of non-public entities. It is to be implemented
          by reporting the cumulative effect of a change in an accounting principle
          for financial instruments created before the issuance date of SFAS No.
          150 and still existing at the beginning of the interim period of adoption.
          Restatement is not permitted. The adoption of this standard is not expected
          to have a material effect on the Companys results of operations
          or financial position.

F-10

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REGI U.S., Inc. (A Development Stage Company)
  Notes to the Financial Statements
  (expressed in U.S. dollars)

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------
|   |                                                       
|   | (l)                                                   
|   |                                                       
|   | (m)                                                   
|   |                                                       
|3. | Property and Equipment                                

|   |                    |       |              | April 30,    | April 30,   
|-- | ------------------ | ----- | ------------ | ------------ | ------------
|   |                    |       |              | 2003         | 2002        
|   |                    |       | Accumulated  | Net Carrying | Net Carrying
|   |                    | Cost  | Amortization | Value        | Value       
|   |                    | $     | $            | $            | $           
|   |                    |       |              |              |             
|   | Computer equipment | 5,452 | 5,452        |             | 664         
|   |                    |       |              |              |             
|   |                    |       |              |              |             
|4. | Long-Lived Assets 

| |                        |        |              | April 30,    | April 30,   
| | ---------------------- | ------ | ------------ | ------------ | ------------
| |                        |        |              | 2003         | 2002        
| |                        |        | Accumulated  | Net Carrying | Net Carrying
| |                        | Cost   | Amortization | Value        | Value       
| |                        | $      | $            | $            | $           
| |                        |        |              |              |             
| | Patents - RC/DC Engine | 91,556 | 28,349       | 63,207       | 66,920      
| |                        |        |              |              |             

F-11

---

REGI U.S., Inc. (A Development Stage Company)
  Notes to the Financial Statements
  (expressed in U.S. dollars)

|4. | Long-Lived Assets (continued)
|-- | -----------------------------
|   |                              
|   | (a)                          
|   |                              
|   | (b)                          
|   |                              
|   | (c)                          
|   |                              
|5. | Common Stock                 
|   |                              
|   | (a)                          
|   |                              
|   | (b)                          

| |                                    | Shares    | Weighted     | Weighted         
| | ---------------------------------- | --------- | ------------ | -----------------
| |                                    | Under     | Average      | Average          
| |                                    | Option    | Option Price | Remaining Life of
| |                                    | #         | $            | Options (Months) 
| | Beginning balance  April 30, 2002 | 1,450,000 | 0.20*        | 38               
| |                                    |           |              |                  
| | Granted                            | 560,000   | 0.20         |                  
| | Exercised                          |          |             |                  
| | Cancelled                          | (210,000) | 0.20         |                  
| | Lapsed                             | (50,000)  | 0.20         |                  
| |                                    |           |              |                  
| | Ending balance  April 30, 2003    | 1,750,000 | 0.20         | 39               
| |                                    |           |              |                  

F-12

---

REGI U.S., Inc. (A Development Stage Company)
  Notes to the Financial Statements
  (expressed in U.S. dollars)

|5. | Common Stock (continued)
|-- | ------------------------
|   |                         
|   | (b)                     
|   |                         
|   |                         

| |  |                          | 2003     |   | 2002     |  
| |  | ------------------------ | -------- | - | -------- | -
| |  |                          | $        |   | $        |  
| |  | Net loss                 |          |   |          |  
| |  | As reported              | (220,972 | ) | (156,090 | )
| |  | Pro forma                | (329,125 | ) | (263,110 | )
| |  | Basic net loss per share |          |   |          |  
| |  | As
      reported        | (0.02    | ) | (0.02    | )
| |  | Pro
      forma          | (0.03    | ) | (0.03    | )

|   |                                     |                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ----------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | (c)                                 | Performance Stock Plan
      The Company has allotted 1,000,000 shares to be issued pursuant to a
        Performance Stock Plan approved and registered on June 27, 1997. Compensation
        is recorded when the conditions to issue shares are met at their then
        fair market value. There are no options currently granted pursuant to
        this plan.                              
|   |                                     |                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (d)                                 | Private Placement                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                     |                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                     | (i)                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                     |                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                    
|6. | Related Party Transactions/Balances
|   |                                     |                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (a)                                 | Amounts owing to related parties are
        unsecured, non-interest bearing and are due on demand. These companies
        are related through significant ownership of the Company, having common
        officers and directors, and sharing the same office. On April 8, 2003,
        the Company issued 6,100,000 common shares to settle $305,000 in debt
        owing to related companies.
|   |                                     |                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (b)                                 | The value of consulting
        services of $120,000 was contributed by the President, CEO and director
        of the Company and charged to operations and treated as donated capital.                                                                                                                                                                                                            

F-13

---

REGI U.S., Inc. (A Development Stage Company)
  Notes to the Financial Statements
  (expressed in U.S. dollars)

|6. | Related Party Transactions/Balances (continued)
|-- | -----------------------------------------------
|   |                                                
|   | (c)                                            
|   |                                                
|   | (d)                                            
|   |                                                
|   | (e)                                            
|   |                                                
|   | (f)                                            
|   |                                                
|7. | Commitments and Contingent Liabilities         
|   |                                                
|   | (a)                                            
|   |                                                
|   | (b)                                            
|   |                                                
|8. | Subsequent Events                              
|   |                                                
|   | (a)                                            
|   |                                                
|   | (b)                                            

F-14

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