20-F 1 form20f.htm FORM 20-F FOR THE FISCAL YEAR ENDED APRIL 30, 2003 Filed by Automated Filing Services Inc. (604) 609-0244 Reg Technologies, Inc. - Form 20-F

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

FORM 20-F

¨   REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934

OR

x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 - For the fiscal year ended April 30, 2003

OR

¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File Number 0-24342

REG TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)

British Columbia, Canada
(Jurisdiction of incorporation or organization)

1103-11871 Horseshoe Way
Richmond, British Columbia V7A 5H5, Canada
(Address of principal executive offices)

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(Title of Class)

     Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None

Indicate the number of outstanding shares of each of the issuer's class of capital or common stock
as of the close of the period covered by the annual report.

     Title of Each Class   Outstanding at April 30, 2003  
  Common Shares, no par value   17,078,371  
  Preferred Shares, $1.00 par value   none  
   Class A, no par value   none  

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

Indicate by check mark which financial statement the registrant has elected to follow.
Item 17. x         Item 18. ¨

TABLE OF CONTENTS

PART I     4  
ITEM 1.   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS 4  
ITEM 2.   OFFER AND STATISTICS AND EXPECTED TIMETABLE 4  
ITEM 3.   KEY INFORMATION 4  
      A.   SELECTED FINANCIAL DATA 4  
      B.   CAPITALIZATION AND INDEBTEDNESS 5  
      C.   REASON FOR THE OFFER AND USE OF PROCEEDS 6  
      D.   RISK FACTORS 6  
ITEM 4.   INFORMATION ON THE COMPANY 9  
      A.   HISTORY AND DEVELOPMENT 9  
      B.   BUSINESS OVERVIEW 11  
      C.   ORGANIZATIONAL STRUCTURE 16  
      D.   PROPERTY, PLANT AND EQUIPMENT 16  
ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS 17  
      A.   OPERATING RESULTS 17  
      B.   LIQUIDITY AND CAPITAL RESOURCES 18  
      C.   RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC. 18  
      D.   TREND INFORMATION 18  
ITEM 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 19  
      A.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 19  
      B.   COMPENSATION 21  
      C.   BOARD PRACTICES 22  
      D.   EMPLOYEES 22  
      E.   SHARE OWNERSHIP 23  
ITEM 7.   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 23  
      A.   MAJOR SHAREHOLDERS 23  
      B.   RELATED PARTY TRANSACTIONS. 23  
      C.   INTERESTS OF EXPERTS AND COUNSEL. 24  
ITEM 8.   FINANCIAL INFORMATION 24  
      A.   CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION 24  
      B.   SIGNIFICANT CHANGES 24  
ITEM 9.   THE OFFER AND LISTING 24  
ITEM 10.   ADDITIONAL INFORMATION 25  
      A.   SHARE CAPITAL 25  
      B.   MEMORANDUM AND ARTICLES OF ASSOCIATION 25  
      C.   MATERIAL CONTRACTS 26  
      D.   EXCHANGE CONTROLS 26  
      E.   TAXATION 26  
      F.   DIVIDENDS AND PAYING AGENTS 26  
      G.   STATEMENT BY EXPERTS. 26  
      H.   DOCUMENTS ON DISPLAY. 27  
      I.   SUBSIDIARY INFORMATION. 27  
ITEM 11.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 27  
ITEM 12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 27  
PART II     28  
ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELIQUENCIES 28  
ITEM 14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS. 28  
      A.   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS 28  
      B.   USE OF PROCEEDS 28  
ITEM 15.   CONTROLS AND PROCEDURES 28  
ITEM 16A.   AUDIT COMMITTEE FINANCIAL EXPERT 28  
ITEM 16B.   AUDIT CODE OF ETHICS 29  
ITEM 16C.   PRINCIPAL ACCOUNTANT FEES AND SERVICES 29  
PART III     29  

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ITEM 17.   FINANCIAL STATEMENTS 29  
ITEM 18.   FINANCIAL STATEMENTS 30  
ITEM 19.   EXHIBITS 30  
SIGNATURE PAGE 33  

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Foreign Private Issuer Status

Foreign Private Issuer Status:

Reg Technologies, Inc., (hereinafter referred to as the "Company”, or “we”, “it”, “our” or such other context as may be applicable), is a Canadian corporation incorporated under the laws of the Province of British Columbia. Less than 50% of our common stock is held by United States citizens and residents, our business is administered principally outside the United States; and more than 50% of our assets are located outside the United States. As a result, we believe that we qualify as a "foreign private issuer" for continuing to report regarding the registration of our common stock using this Form 20-F annual report format.

PART I

ITEM 1.        IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

This Form 20-F is being filed as an annual report under the Exchange Act, and accordingly, the information called for in Item 1 is not required. Please see “Item 6 – Directors, Senior Management and Employees – Directors and Senior Management”.

ITEM 2.        OFFER AND STATISTICS AND EXPECTED TIMETABLE

This Form 20-F is being filed as an annual report under the Exchange Act, and accordingly, the information called for in Item 2 is not required.

ITEM 3.        KEY INFORMATION

A.        SELECTED FINANCIAL DATA

The summary consolidated financial information set forth below should be read in conjunction with, and is qualified in its entirety by reference to, the Consolidated Financial Statements, as of and for the years ended April 30, 2003 and 2002, together with the notes thereto, which appear elsewhere in this annual report. The Consolidated Financial Statements as of and for the years ended April 30, 2003 and 2002 have been audited by Manning Elliott. The Consolidated Financial Statements are prepared in accordance with Canadian GAAP. See Note 11 of the Notes to Consolidated Financial Statements for a reconciliation to U.S. GAAP.

The selected financial data set forth in the following table is expressed in Canadian dollars. Since June 1, 1970, the Government of Canada has permitted a floating exchange rate to determine the value of the Canadian dollar as compared to the United States dollar. At April 30, 2003, US$1.00 was equal to approximately C$1.4335. The exchange rates for the past five fiscal years ended April 30, are presented in the introduction to this registration statement.

The following represents our selected financial data for each of the past five fiscal years, ending on April 30. The data presented is prepared in accordance with generally accepted accounting principles in the United States and expressed in Canadian dollars:

Fiscal Years Ended April 30
    2003 2002 2001 2000 1999
Net sales or operating revenues -  -  -  -  - 
Income (loss) from operations (8,369) 165,989  (1,631,759) 148,090  (929,866)
Income (loss) from continuing operations (8,369) 165,989  (1,631,759) 148,090  (929,866)
Net income (loss) (8,369) 165,989  (1,631,759) 148,090  (929,866)
Net income (loss) from operations per share (0.01) (0.01) (0.10) 0.01  (0.06)

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Income (loss) from continuing operations per share (0.01) (0.01) (0.10) 0.01  (0.06)
Total assets 210,477  253,364  262,443  910,337  890,170 
Net assets (583,285) (838,674) (1,085,587) 266,873  95,965 
Capital stock (excluding long term debt and redeemable preferred stock) 10,467,921  10,467,921  10,392,920  10,142,920  10,142,920 
Number of shares as adjusted to reflect changes in capital 17,078,371  17,078,371  16,578,371  16,078,371  16,078,371 
Dividends per share -  -  -  -  - 
Diluted net income per share -  -  -  -  - 

Reference is made to "Item 4. Information on the Company" and "Item 5. “Operating and Financial Review and Prospects” for a description of the initiation and progression of our activities since incorporation.

Currencies and Exchange Rates:

We publish our financial statements in Canadian dollars. Unless otherwise indicated, monetary amounts referred to in this annual report are in Canadian dollars. Unless otherwise indicated, all translations from Canadian dollars to US dollars have been made at a rate of CDN$ 1.4334 to US$ 1.00, the noon buying rate as certified for customs purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate") on April 30, 2003. We do not represent that Canadian dollar or US dollar amounts could be converted into US dollars or Canadian dollars, as the case may be, at any particular rate, the rates below or at all. On September 9, 2003, the Noon Buying Rate was CDN$ 1.3668 to US$ 1.00. The following table sets forth noon buying rate for US dollars in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York for the periods indicated:

The following table reflects the monthly high and low exchange rates for U.S.$1.00 to the Canadian dollar for the following periods.

Month Year High (CAD$) Low (CAD$)
February 2003 1.5161 1.5092
March 2003 1.4801 1.4714
April 2003 1.4639 1.4543
May 2003 1. 3908 1. 3789
June 2003 1.3768 1.3348
July 2003 1.4114 1.3368
August 2003 1.4100 1.3836

The following table lists the average exchange rate for US$1.00 to the Canadian dollar for the last five years based on the average month-end exchange rates.

Year Average Low/High April 30
2003 1.5388 1.4336/1.5963 1.4663
2002 1.5671 1.5102/1.6128 1.5681
2001 1.5113 1.4639/1.5790 1.5360
2000 1.4634 1.4977/1.4475 1.4789
1999 1.5088 1.5465/1.4305 1.4565

B.        CAPITALIZATION AND INDEBTEDNESS

This Form 20-F is being filed as an annual report under the Exchange Act, and accordingly, the information called for in this Item 3.B is not required

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C.        REASON FOR THE OFFER AND USE OF PROCEEDS

This Form 20-F is being filed as an annual report under the Exchange Act, and accordingly, the information called for in Item 3.C is not required.

D.        RISK FACTORS

The occurrence of any of the following risks could hurt our business, financial condition or results of operations. In such case, the trading price of our shares could decline and you could lose all or part of your investment. 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 not now known to us or that we think are immaterial 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.

Development Stage Enterprise. We are a development stage enterprise and is subject to all of the attendant business risks associated with a development stage enterprise, including constraints on financial and personnel resources, lack of established credit facilities, and uncertainties regarding product development and future revenues. We will continue to be subject to all the risks attendant to a development stage enterprise for the foreseeable future, including competition, complications and setbacks in the development program, and the need for additional capital.

We have reported losses in each year since its inception. At April 30, 2003, we had an accumulated deficit of ($11,373,004) in accordance with U.S. GAAP. Our history consists almost entirely of development of its products funded entirely from the sale of our Common Stock in the absence of revenues. We anticipate that it will continue to incur substantial additional operating losses for at least the next 12 months and expects cumulative losses to increase as our development efforts expand.

Although we anticipate receiving future revenues from the sales of engines or the licensing of our technology or pursuant to a joint venture, we have received minimal revenues in preparation for licensing or joint venture activities, and there are no assurances that significant revenues will be derived from this activity in the future. We have received no revenues from sales of any of the products under development. There can be no assurance as to when or if we will be able to develop significant sources of revenue or whether our operations will become profitable, even if we are able to commercialize any product. See "Operating and Financial Review and Prospects," and Notes to Financial Statements.

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.

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Additional Financing will be Required. Our expectations as to the amount of funds needed for development and the timing of the need for these funds is based on our current operating plan, which can change as a result of many factors, and we could require additional funding sooner than anticipated. Our cash needs may vary materially from those now planned because of results of development or changes in the focus and direction of our development program, competitive and technological advances, results of laboratory and field testing, requirements of regulatory agencies and other factors.

We have no credit facility or other committed sources of capital. To the extent capital resources are insufficient to meet future capital requirements, we will have to raise additional funds to continue our development and operations. There can be no assurance that such funds will be available on favorable terms, or at all. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities could result in dilution to our shareholders. If adequate funds are not available, we may be required to curtail operations significantly or to obtain funds on unattractive terms. Our inability to raise capital would have a material adverse effect on us.

Significant Losses for the Foreseeable Future. We expect to incur significant losses for the foreseeable future and cannot be certain when or if we will achieve profitability. Failure to become and remain profitable will adversely affect the value of our Common Shares and our ability to raise capital and continue operations.

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.

Lack Of Experience To Manufacture Or Market Product. Assuming we are successful in developing the Rand Cam products, we presently have no proven ability either to manufacture or market the engine. There is no assurance that we will be able to profitably manufacture and market engines.

Going Concern Disclosure In Independent Auditor's Report. The report of our independent auditors with respect to our financial statements included in this Form 20-F includes a "going concern" qualification, indicating that our losses and deficits in working capital and shareholders' equity raise substantial doubt about our ability to continue as a going concern. See " Operating and Financial Review and Prospects” and Notes to Financial Statements.

Our Dependence on Skilled Personnel. We are dependent on certain members of our management and engineering staff, the loss of services of one or more of whom could adversely affect our business. In particular, we depend on the abilities and continued participation of Pat Badgley and other key personnel who have been instrumental in bringing the Rand Cam engine to its present state of development. The loss of any of these key individuals could hamper the successful development of the engine. Our present officers and directors have other full-time positions or part-time employment unrelated to our business. Some officers and directors will be available to participate in management decisions on a part-time or as-needed basis only. Our management may devote time to other companies or projects which may compete directly or indirectly with us. We do not have "key man" life insurance on such officers and currently have no plans to obtain such insurance. See "Management". Our success also depends on our ability to attract and retain additional skilled employees.

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

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.

Product Errors. Engines such as the ones proposed by us and our related planned applications may contain errors or defects, especially when first introduced, or when new versions are released. Our products may not be free from errors after commercial release has occurred. Any errors that are discovered after such commercial release could result in loss of revenue or delay in market acceptance, diversion of development resources, damage to our reputation, increased service and warranty costs and liability claims. Any defects in these products could adversely affect the operation of and market for our products, reduce revenue, increase costs and damage our reputation.

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. These companies possess greater technical resources and market recognition than us, and have management, financial and other resources not yet available to us. Existing engines are likely to be perceived by many customers as superior or more reliable than any new product until it has been in the marketplace for a period of time. There is no assurance that we will be able to compete effectively with these companies.

Market prices for our products may decline in the future. We anticipate that market prices for our main products may decline in the future due to increased competition. We expect significant competition among local and international companies, including from new entrants, may continue to drive equipment prices lower. We also expect that there may be increases in promotional spending by companies in our industry which would also contribute to increasing movement of customers between competitors. Such increased competition and the resulting decline of market prices for our products would have a material adverse effect on our business, financial condition and results of operations.

Rapid technological change. New technology or refinement of existing technology could render our Rand Cam products less attractive or obsolete. Our success depends in part upon its ability to anticipate changes in technology and industry standards and to successfully develop and introduce new and improved engines on a timely basis. There is no assurance that we will be able to do so.

Timing of new product introductions and lack of market acceptance for our new products. Our future success may be dependent on the success of our products and services. The success of our business depends on a variety of factors, including:

  • the quality and reliability of our products and services;
  • our ability to develop new products and services superior to that of our competitors;
  • our ability to establish licensing relationships and other strategic alliances;
  • our pricing policies and the pricing policies of our competitors;
  • our ability to introduce new products and services before our competitors;
  • our ability to successfully advertise our products and services; and
  • general economic trends.

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Volatility of The Over-the-Counter Bulletin Board (“OTC BB”) or the TSX Venture Exchange may adversely affect the price of the Common Stock. Certain stocks listed on the OTC BB and/or the TSX Venture Exchange have recently experienced significant price and volume fluctuations and decreases which have adversely affected the market price of our and other stocks listed on the OTC BB and/or the TSX Venture Exchange without any regard to the underlying fundamentals of such stocks. These broad market fluctuations, which may occur in the future, as well as issues more specifically related to our business activities or prospects, our financial performance, intellectual property, may continue to adversely affect the market price of the Common Stock.

Product liability. Product liability claims asserted against us in the future could hurt our business. If a customer suffers damage from our products, the customer could sue us on product liability or related grounds, claim damages for data loss or make other claims. We currently do not carry product liability insurance. While we have not been sued on product liability grounds to date, a successful product liability or related claim brought against us could harm our business.

We do not expect to pay cash dividends. We intend to retain any future earnings to finance our business and operations and any future growth. Therefore, we do not anticipate paying any cash dividends in the foreseeable future.

Potential lack of attractive investment targets. Continued volatility of stock prices on the OTC BB and the TSX Venture Exchange may have a material adverse effect on our ability to raise capital on the OTC BB or the TSX Venture Exchange or by private investment, and the price of our common stock could fluctuate substantially.

Other 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.

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

ITEM 4.        INFORMATION ON THE COMPANY

A.        HISTORY AND DEVELOPMENT

We were originally incorporated on October 6, 1982 as Reg Resources Corp. under a perpetual charter pursuant to the British Columbia Company Act by registration of our Memorandum and Articles. On February 23, 1993 we changed our name to Reg Technologies Inc. in order to better reflect our main area of business development. We did not consolidate our shares at the time our name was changed.

Our authorized capital consists of 45,000,000 shares consisting of 30,000,000 common shares without par value, 10,000,000 preferred shares with a par value of $1.00 per share and 5,000,000 class "A" non-voting shares without par value. Of the 30,000,000 common shares without par value, 17,078,371 shares were issued and outstanding as of April 30, 2003 and 21,035,181 are outstanding as at the date of this 20-F. There are no Preferred or Class "A" Shares currently outstanding. All the Issuer's outstanding shares are Common Shares. They are not subject to any future call or assessment and they all have equal voting rights. There are no special rights or restrictions of any nature attached to any of the shares and they all rank equally, as to all benefits that might accrue to the holder thereof.

Our head office is located at #1103 -11871 Horseshoe Way, Richmond, B.C., V7A 5H5, Canada. Our telephone number is 604-278-5996 and our fax number is 604-278-3409.

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We made our initial public offering of 500,000 Common Shares in July 1983 at a price of $0.50 per share to residents of British Columbia. Following the completion of that offering, our shares were listed on the Vancouver Stock Exchange (which is now the TSX Venture Exchange, previously the Canadian Venture Exchange).

We were initially involved in the mineral development and oil and gas business. The mineral development business produced no revenues from operations and the oil and gas business produced only limited revenues.

On May 23, 1986 we entered an agreement which was amended October 20, 1986 ("Initial Agreements") among ourself, Rand Cam-Engine Corp (a private company owned by James L. McCann, the inventor of the Rand Cam Engine) and James L. McCann. Under this agreement we acquired a 40% interest in a company to be formed, by paying $50,000 and agreeing to expend $200,000 on research and development pertaining to the Rand Cam Engine, which utilizes a new type of design for a rotary internal combustion engine.

The company to be formed referred to above was incorporated in November 1989, by registration of its Memorandum and Articles pursuant to the British Columbia Company Act as Rand Energy Group Inc. (REGI), which company would hold all the rights, agreements and patents to the Rand Cam Engine. We acquired 1,200,000 of the issued and outstanding shares of REGI while Rand Cam-Engine Corp. acquired 1,800,000 of the issued and outstanding shares.

The Initial Agreements were superseded by an "Energy Group Acquisition Agreement" dated March 28, 1990 and a "Share Purchase Agreement" dated March 28, 1990 whereby James L. McCann and Rand Cam- Engine Corp. agreed to transfer all rights, title and interest in and to the Rand Cam Engine to REGI for 1,800,000 common shares of REGI in consideration for certain covenants and warranties along with the $250,000 expended in accordance with the Initial Agreements. We were allotted 1,200,000 common shares of REGI.

These agreements resulted in us owning 40% of the issued and outstanding shares of Rand Technologies Inc., with the balance of 60% being owned by Rand Cam-Engine Corp. Pursuant to an amalgamation agreement between the shareholders of Rand Technologies Inc. and REGI, the two companies were amalgamated effective July 31, 1993. The amalgamated company is called Rand Energy Group Inc. and retains the same ownership structure.

Under an agreement dated April 27, 1993, between ourself, REGI, Rand Cam-Engine Corporation and James L. McCann (the "Agreement"), Rand Cam-Engine Corporation agreed to sell to us 330,000 shares of REGI, representing a further 11% interest in REGI. In consideration for a controlling interest in REGI, we agreed to pay Rand Cam-Engine Corporation $50,000, issue 600,000 shares of our Common Stock (the "Purchase Price") and grant a participating royalty to a maximum amount of $10,000,000, ("Participating Royalty"). On July 14, commencing in 1995 and for each consecutive year thereafter, the Participating Royalty is to be paid in the form of instalments by us. A minimum of $50,000 per year must be paid by us to the Rand Cam-Engine Corporation. As part of the minimum payment, we are to pay to Rand Cam-Engine Corporation, 5% of any after-tax net profits receive by us from REGI.

Pursuant to the Agreement, we were and are to distribute the 600,000 Common Shares to Rand Cam-Engine Corporation as follows: (a) 100,000 shares upon receiving regulatory approval; (b) a further 100,000 shares within five days of receiving written approval of the then Vancouver Stock Exchange following the successful testing of the Alpha version of the Rand Cam/Direct Charge Engine, and an independent engineer's report recommending further expenditures be made. Regulatory approval was received on April 11, 1995 and the shares were issued April 20, 1995 at $1.69 per share;

(c) a further 150,000 shares within five days after the latter of: receipt of written approval of the Vancouver Stock Exchange of an independent assessment report confirming that the Beta version of the RC/DC Engine has commercial or military applications; July 17, 1993; or the date the shares issued in (b) above;

(d) a final 250,000 shares within five days after written approval from the Vancouver Stock Exchange


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following the latter of: the signing of a contract to build and sell the RC/DC Engine or the execution of a License Agreement with an independent company; July 17, 1994; or the date the shares are issued in (c) above.

Under the terms of the Agreement, if any of the 600,000 shares to be issued as set out above remain unissued after ten years from the date of the Agreement, these shares will not be issued and we shall be relieved of any further obligations in respect to the issuance of these shares.

Pursuant to an agreement with Brian Cherry ("Cherry Agreement") dated July 30, 1992 , REGI was assigned all rights, title and interest in the Direct Charge Rotary Engine for all countries excluding the United States of America. Also under the Cherry Agreement, Sky Technologies Inc. (now called REGI U.S., Inc.) was assigned from Brian Cherry all right, title and interest in and to the Rand Cam/Direct Charge Rotary Engine for the United States.

REGI U.S., INC.

REGI U.S., Inc. ("REGI U.S.") is 28.5% owned U.S. subsidiary of Rand Energy Group Inc. which is in turn controlled through 51% ownership by us. REGI U.S. was organized under the laws of the State of Oregon on July 27, 1992 as Sky Technologies, Inc. with its name changed on August 1, 1994. It has a total authorized capital of 20,000,000 common shares. As of April 30, 2003, a total of 17,687,935 shares were issued of which 5,043,200 are owned by Rand Energy Group Inc. In 1993 Sky completed an offering of 500,000 units consisting of one share of the Common Stock with no par value and one Warrant to purchase one share of Sky. Each Warrant entitled the holder to purchase one share of Sky at $1.25 until August 24, 1994 and then at a price of $1.50 during the following 12 month period, or extension thereof.

Pursuant to an agreement dated July 30, 1992 and amendments thereto between Brian Cherry, Sky and ourself (the "Cherry Agreement"), we acquired and then assigned to Sky the U.S. technology rights to the Rand Cam/Direct Charge Rotary Engine (the "Rand Cam/Direct Charge Rotary Engine") from Brian Cherry. REGI will retain a 5% interest in the net profits from the United States rights. In consideration, Mr. Cherry received, subject to regulatory approval, 100,000 shares of the Company, and a 1% net profits interest in REGI U.S. Brian Cherry purchased 300,000 shares of Sky/REGI at US $0.01.

Our stock currently trades on the OTC BB under the symbol REGRF and on the TSX Venture Exchange as RRE.

B.        BUSINESS OVERVIEW

Nature of the Company’s Operations

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 that 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.

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.


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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 have built prototypes for these products including air pumps for fuel cell applications and air conditioning compressors. Our strategy is to develop engines and compressors for low to medium horsepower applications, then apply the Technology to larger applications. We plan to license the Technology or enter into joint venture arrangements for other specific applications. The licensee or joint venture partners will then provide funding for research and development of the specific applications. To date, we have, through our subsidiary REGI US, 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. The agreement with Advanced Ceramics has terminated due to Phase II funding not being completed. A previous agreement with Trans Air to test an air conditioning Rand Cam™ compressor is still pending.

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.


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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 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.

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.

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.

Description of the Markets in Which the Company Competes

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

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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.

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.

Seasonality

We believe that there is no seasonality which affects the sales of our products.

Availability of Raw Materials

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.

Marketing Strategy

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

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

We expect revenue from license agreements with the potential end users based on the success of the design from the compressor, pump, and diesel engine prototypes. Based on of successful testing of the Rand Cam prototypes, we expect to have joint venture or license agreements 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.

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Dependence on Certain Commercial Agreements

We do not have any material agreements upon which we are dependent.

Patents and Licenses

Patents

We have patents on the Rand Cam Engine for Canada, Mexico and the United States to protect certain aspects of the Rand Cam engine. U.S. patent 5,429,084 was granted on July 4, 1995, to James McCann, Brian Cherry, Patrick Badgley and four other individuals for various improvements incorporated in the RC/DC Engine, This patent has been assigned to us. The patent to the original Rand Cam engine, U.S. Patent 4,401,070, was issued on August 30, 1983 to James McCann and the marketing rights are held by Rand Energy.

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.

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

Competition and Alternative Technologies

We believe strong competition can be expected in the engine market with new patents being taken out on a continuous basis and that we may have a time advantage over some of the competitive products as far as niche markets which we may enter, however there is no way to accurately determine or predict whether this situation is or will continue to be true.

The conventional piston type internal combustion engine is the prime competitor of the Rand Cam Engine. Due to the substantial infrastructure built up to support the standard combustion engine, substantial barriers to entry exist into this market.

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A number of the new engine designs over the last decade have offered advantages on the thermodynamics front (e.g. more efficient use of energy through better combustion, better heat transfer, etc.). In the case of the Rand Cam Engine, its strong point it believed to be in its mechanism, not in its thermodynamics. Whether or not the engine's mechanism alone will provide the competitive edge necessary to result in a marketable and successful product is unknown at this time.

Since we do not have management experience in manufacturing engines, it hopes to be able to follow the same strategy as that of other companies such as Orbital and Wankel, where it would be licensing its technology and would therefore not be directly engaged in manufacturing.

An extensive manufacturing study has not been performed to date and it could turn out that the costs to manufacture are prohibitive for one or more reasons. However, the computer modelling done can be utilized to generate manufacturing drawings which could be used to obtain preliminary costing estimates.

The development of our business and its ability to maintain its competitive and technical position has depended and will depend, in part, upon its ability to attract and retain qualified scientific, engineering, managerial and manufacturing personnel.

Significant competition exists from engine manufacturers and engineering firms specializing in the development of internal combustion engines technology for the automotive, marine, motorcycle and small engine industry. Such competition also exists in the pump and compressor markets which may utilize the Rand Cam technology in their products. Many of these companies have substantially greater resources for research, development and manufacturing than us. It is possible that our competitors may succeed in developing technologies and products that are more effective or commercially acceptable. We believe, based on its testing of the Rand Cam engine that the engine is a superior overall engine package to the reciprocating piston engine. This assessment is made on the basis of the Rand Cam engine's potential for reduced engine weight and packaging volume, improved performance, and possibly lower manufacturing costs.

Technology development is taking place on many fronts and competitors may have, unknown to us, a product or products under development which may be technologically superior to ours which may be more acceptable to the market. Competition with engines employing Rand Cam technology may also include other lean burn engines, electric motors, gas turbine engines, solar power and hybrid vehicles, and may include concepts not yet known to us.

Material effects of Government

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.

C.        ORGANIZATIONAL STRUCTURE

For a list of our significant subsidiaries, see “Item 10 – Additional Information – Subsidiary Information”.

D.        PROPERTY, PLANT AND EQUIPMENT

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

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ITEM 5.        OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included elsewhere herein. The Consolidated Financial Statements have been prepared in accordance with Canadian GAAP. See Note 11 to the consolidated financial statements for a reconciliation to U.S. GAAP. The following discussion is derived from the U.S. GAAP reconciliation.

A.        OPERATING RESULTS

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 $11,373,004 and further losses are expected until we complete a licensing agreement with a manufacturer and reseller. Our working capital deficit is $743,558. Our major assets are our tangible and intangible assets, being patents and intellectual property rights, totaling $201,996 which represents 96% of total assets. 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.

Fiscal 2003 compared to 2002

Results of operations was a net loss of $8,000 ($0.01 per share) for 2003 as compared to net income of $166,000 ($0.01 per share) for 2002.

No revenues from the sale or licensing of any technology were realized in 2003 or 2002. We entered into license agreements with Advanced Ceramics Research, Inc. and Rotary Power Generation Incorporated in 2002.

In 2003, the Company recognized a loss of $216,000 as a result of its subsidiary issuing shares outside the consolidated group for cash proceeds of $476,000 which resulted in a deemed disposition of 16% of its ownership in the subsidiary. In 2002 there was a gain of $217,000 on proceeds of $423,000. In 2002 a loss of $30,000 was recognized due to the write-down of the AVFS rights and development costs as compared to nil in 2003. Administrative expenses increased by $91,000 to $441,000 in 2003 from $350,000 in 2002. This increase is a result of services donated to REGI U.S., Inc by directors of the subsidiary; professional fees decreased by $13,000 to $42,000 in 2003 from $55,000 in 2002; travel and promotion decreased by $6,000 to $1,000 in 2003 from $7,000 in 2002.

Research and development expenses increased by $77,000 to $47,000 spent in 2003 compared to a $30,000 recover in 2002. Technical consulting continued to consist of Patrick Badgley and Paul LaMarche, resulting in a decrease of $26,000 to $71,000 in 2003 from $97,000 in 2002. Prototype development costs of $54,000 were recovered in 2003 compared to $97,000 spent in 2002. Accounts payable of $259,000 were written off during 2002. The majority of prototype developments are now being borne by the licesencees and manufacturers.

The Company did not issue any common shares during the year.

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B.        LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY AND CAPITAL RESOURCES

In the past, we have derived most of our development and operating capital primarily from the issuance of our capital stock and our subsidiary REGI U.S., Inc. We have also caused our subsidiary, Rand Energy Group Inc. to sell shares it owned in REGI U.S., Inc.

We have been successful in the past in acquiring capital through the issuance of shares of our Common Stock, and through advances from related parties. Although we intend to continue utilizing these sources, there has been no assurance in the past that these sources and methods would continue to be available in the future.

In the event that no other sources of capital were available to us in the future, on a reasonable financial basis, we would face the same obstacles as many small, undercapitalized companies do, and, in the worst case, we could be forced to reorganize or liquidate, either of which consequence would likely have an adverse financial effect upon our shareholders.

Fiscal 2003 compared to 2002

During the fiscal year ended April 30, 2003, we derived most of our development and operating capital primarily from the $141,000 in proceeds received from related companies ($365,000 in 2002).

During the year, we raised a further $42,000 in subscriptions received pursuant to private placements in both the Company and its subsidiary, REGI U.S., Inc. 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 stock options, if exercised. Options with respect to 1,325,000 shares at $0.10 per share may be exercised to net $132,500, if exercised.

Our investment in research and development activities totaled $64,284 during the 2003 fiscal year, down 36% from the $101,219 spent during the 2002 fiscal year.

C.        RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

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 $165,503 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.

D.        TREND INFORMATION

See “Item 4. - Information on the Company, - Part B., Business Overview”

E.        OFF-BALANCE SHEET ARRANGEMENTS

There are no known significant off-balance sheet arrangements other than those disclosed in this Form 20-F and in our audited consolidated financial statements for the year ended April 30, 2003.

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F.        TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table summarizes all of the outstanding obligations of the Company’s continuing operations by the year that they become due. We expect to fund these obligations from operating income and equity financing:

Contractual Obligations
 Year Expenditure
Commitment		 Number of Shares
       
              Nil 2003 $ -       -      
              Nil 2004 $ -       -      
              Nil 2005 $ -       -      

G.        Safe Harbor

This annual report includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include conclusions of prefeasibility and feasibility studies, estimates of future production, capital and operating costs, prices of silver and gold and other known and unknown risks. These and other factors and uncertainties may cause material differences from future results as expressed or implied by these forward looking statements. These risks, uncertainties and other factors include but are not limited to the risks involved in the exploration, development and mining business.

All statements, other than statements of historical facts, included in this annual report that address activities, events or developments which we expect or anticipate will or may occur in the future are forward-looking statements. The words "believe", "intend", "expect", "anticipate", "project", "estimate", "predict" and similar expressions are also intended to identify forward-looking statements.

Our estimated or anticipated future results or other non-historical facts are forward-looking and reflect our current perspective of existing trends and information. These statements involve risks and uncertainties that cannot be predicted or quantified, and consequently actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others, the success of our exploration and development activities, environmental and other regulatory requirements, foreign exchange issues, mineral deposit estimates and mineral prices, competition by other mining companies, financing risks, mineral title issues, insider conflicts of interest, political stability issues, and other risks and uncertainties detailed in this report and from time to time in our other Securities and Exchange Commission (“SEC”) filings.

Consequently, all of the forward-looking statements made in this annual report are qualified by these cautionary statements. We cannot assure you that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected effect on us or our business or operations.

Forward-looking statements are subject to a variety of risks and uncertainties in addition to the risks referred to in “Risk Factors” under Item 3.D above.

ITEM 6.        DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.        DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

As of April 30, 2003, our Board of Directors consisted of four Directors, two of whom are independent (or “outside”) non-executive Directors. The following table provides certain information about the members of our Board of Directors as of April 30, 2003.

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Name Position with Registrant Term of Office Office Held Since
John G. Robertson President and Director Annual Shareholders
Meeting for fiscal 2003		 1982
Jennifer Lorette Secretary and Vice
President of
Administration and
Director		 Annual Shareholders
Meeting for fiscal 2003		 2001
Patrick Badgley Director Annual Shareholders
meeting for fiscal 2003		 1993
Susanne Robertson Director Annual Shareholders
meeting for fiscal 2003		 1984

Susanne Robertson, a director, is the wife of John Robertson, our President and a director.

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

John G. Robertson, Richmond, B.C. Since October 1984, Mr. Robertson has been President and a Director of our Company. He is also the Chairman of the Board, founder and a director of Linux G old Corp. since its inception. Mr. Robertson has been the Chairman, President and Chief Executive Officer of REGI U.S., Inc., an Oregon corporation traded on the OTC bulletin board, since July 1992, a U.S. public company engaged in the development of a rotary engine/compressor (“Rand Cam Engine”) and hydrogen separator technology. REGI U.S. is ultimately controlled by Reg Technologies Inc. Mr. Robertson has been the President and Principal Executive Officer and a Director of IAS Communications, Inc. since its formation in December 1994, a U.S. public company which is developing and marketing proprietary antenna technology. Since June 1997 Mr. Robertson has been President, Principal Executive Officer and a Director of Information Highway.com, Inc., a Florida corporation which is inactive. Mr. Robertson is also the President and founder of Teryl Resources Corp., a British Columbia company trading on the TSX Venture Exchange involved in mineral exploration. Since May 1977 Mr. Robertson has been President and a member of the Board of Directors of SMR Investments Ltd., a private British Columbia corporation engaged in management of public companies. Mr. Robertson is also the President and Director of the following private companies: JGR Petroleum, Inc., BlueCrow Internet Co. Ltd., 394754 B.C. Ltd., dba SOVO Computer Centre, Pavlik Travel Services Ltd., World Tel-Internet (Toronto) Ltd., International Diamond Syndicate Ltd., Argon Investment Corporation, and Airstream Communications, Inc. Mr. Robertson is a citizen and resident of Canada.

Jennifer Lorette, Richmond, B.C. - Since April 1994, Ms. Lorette has been Vice President of Administration for Reg Technologies, Inc., and became a director in 2000. Ms. Lorette is a director of Linux Gold Corp., a British Columbia company traded on the OTC BB, and has held several positions with it since June 1994, most recently as its Vice President and Secretary. Also since June 1994 Ms. Lorette, has been Vice President of REGI U.S., Inc., an Oregon corporation traded on the OTC bulletin board. REGI U.S. is ultimately controlled by Reg Technologies Inc. Since June 1997 Ms. Lorette has been Secretary/Treasurer, and a Director of Information Highway.com, Inc., a Florida corporation traded which is inactive. Ms. Lorette is a founder, and has been Secretary/Treasurer of IAS Communications, Inc. since February 1995. 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. Ms. Lorette is a citizen and resident of Canada.

Susanne M. Robertson, Richmond, B.C. Mrs. Robertson has been a director of the Company since 1984 and is also the wife of John Robertson, its president. She has been active in the management of the Company since its incorporation. She is also a director of Linux Gold Corp. and Teryl Resources Corp., and is the principal shareholder of SMR Investments Ltd. Mrs. Robertson is a citizen and resident of Canada.

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Patrick Badgley, Columbus, Indiana Mr. Badgley has been a director is the Company since 1993. Mr. Badgley was appointed Vice President, Research and Development of REGI U.S. in February 1994. He is directing and participating in the technical development of the Rand Cam compressor, gasoline engine and diesel engine. 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. Mr. Badgley is a citizen and resident of the United States.

B.        COMPENSATION

For the fiscal year ended April 30, 2003 we and our subsidiary paid $185,743 in compensation to directors and officers as a group. Total compensation paid to all employees was $187,968.

During the year ended April 30, 2003, the aggregate cash compensation (including salaries, fees, directors' fees, commissions, bonuses paid for services rendered, and any compensation other than bonuses earned during the fiscal year, the payment of which was deferred) paid to such executive officers as a group by us and our subsidiaries for services rendered was C$17,735 and US$32,000.

Under a three-year Management Agreement entered into on May 1, 1996 between us and SMR Investments Ltd. (“SMR”), and approved by the TSX Venture Exchange, SMR, a company owned by Susanne M. Robertson, a director of the Company and wife of John G. Robertson, receives $2,500 per month for management services provided to us. This contract is renewable annually after the initial term ended May 1, 1999. During fiscal 2003 SMR was paid an additional $1,500 per month for secretarial services.

$12,000 was paid to our President, John G. Robertson, as a director's fee during the past fiscal year.

During fiscal 2003,US$30,000 was paid to Access Information Systems, Inc., which is owned and controlled by the Robertson Family Trust, the beneficiary of which is Kelly Robertson, daughter of John G. Robertson. Mr. Robertson is one of three trustees of the Robertson Family Trust, which acts by the majority vote of the three trustees, for project management services.

US$42,690 was paid during the year by REGI U.S. Inc., our US subsidiary, to Patrick Badgley for research and development services related to the Rand Cam Engine.

Except as noted elsewhere herein, we did not pay any additional compensation to our executive officers (including personal benefits and securities or properties paid or distributed), which compensation was not offered on the same terms to all full time employees.

No monies were set aside or accrued by us during the fiscal year ended April 30, 2003 to provide pension, retirement or similar benefits for our officers or directors.

During the fiscal year ended April 30, 2003, we did not grant any long-term incentive plans awards to any of our executive officers, directors or employees.

Additional detailed information regarding compensation shall be included in the Information Circular for our

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2003 annual general meeting, which is anticipated to be held on October 15, 2003.

During the fiscal year ended April 30, 2003 25,000 stock options were granted pursuant to stock option plans.

Total options currently exercisable at the date of this 20-F are 1,800,000. Of the total amount 1,325,000 are exercisable at $0.10 per share expiring September 23, 2007. 175,000 are exercisable at $0.20 per share expiring December 11, 2003 and 300,000 are exercisable at $0.30 per share expiring September 18, 2008.

Options to Purchase Registrant's Common Shares Held by Officers and Directors of Registrant

   NAME OF OPTIONEE NUMBER OF OPTIONS EXERCISE PRICE EXPIRY DATE
John G. Robertson 750,000 $0.10 September 23, 2007
Jennifer Lorette 50,000 $0.10 September 23, 2007
Susanne Robertson 250,000 $0.10 September 23, 2007
Patrick Badgley 100,000 $0.10 September 23, 2007
TOTAL HELD AS A GROUP: 1,150,000    

Options to Purchase Registrant’s Common Shares Held by Persons Other than Officers and Directors of the Registrant

NAME OF OPTIONEE NUMBER OF OPTIONS EXERCISE PRICE EXPIRY DATE
Suzanne Foster 25,000 $0.10 September 23, 2007
Gordon Friesen 75,000 $0.10 September 23, 2007
Paul LaMarche 50,000 $0.10 September 23, 2007
Monique Van Oord 25,000 $0.10 September 23, 2007
TOTAL: 175,000    

C.        BOARD PRACTICES

Under section 187 of the Company Act, R.S.B.C. 1996, c. 62, the directors of a reporting company, from among their number, must elect at their first meeting following each annual general meeting a committee, to be known as the audit committee, composed of not fewer than 3 directors, of whom a majority must not be officers or employees of the company or an affiliate of the company, to hold office until the next annual general meeting. Our Board of Directors established an Audit Committee which members consist of John Robertson, Patrick Badgley, and Susanne Robertson. It is intended that following the completion of the annual general meeting of shareholders scheduled to be held in December, 2003, that, providing the directors nominated are elected by the shareholders, the directors will appoint John Robertson Jim Vandeberg (nominee), and Susanne Robertson as members of the Audit Committee.

Our directors are elected by the shareholders to hold office for a term of one year or until re-elected at the next annual general meeting.

D.        EMPLOYEES

Competition for technical personnel in our industry is intense. We believe that we have been successful in recruiting qualified employees, and that our future success depends in part on our continued ability to hire, assimilate and retain qualified personnel.

Our employees do not belong to any labor unions. We have not been subject to any strikes or other labor disturbances that have interfered with our operations.

As of April 30, 2003, we employed three part-time employees/contractors. Many of our legal, accounting, marketing and administrative functions are contracted out to consultants.

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E.        SHARE OWNERSHIP

The following table sets forth the ownership of our common shares by our Directors and Officers as at August 30, 2003:

Shareholder Number of shares issued and
outstanding		 Percentage ownership (1)
John G. Robertson (2) 2,668,699 12.68%
Jennifer Lorette (3) 58,400 *
Susanne Robertson (4) 1,675,446 7.9%6
Patrick Badgley(5) 100,000 *

(1 ) as at August 30, 2003, there were 21,035,181 issued and outstanding common shares.
(2 )
Includes 1,286,530 shares registered in the name of and beneficially owned by Access Information Services, Inc., a Washington corporation which is owned and controlled by the Robertson Family Trust, the beneficiary of which is Kelly Robertson, daughter of John G. Robertson. 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. It also includes 750,000 stock options which are currentlyexercisable and in-the-money.
(3 ) Includes 50,000 stock options which are currently in-the-money.
(4 )
SMR Investments Ltd., a company wholly-owned by Susanne Robertson, is the beneficial owner of 1,077,971 common shares representing 5.12% of our outstanding common shares. This amount also includes 250,000 stock options which are currently exercisable but not in the money.
(5 ) Includes 100,000 stock options which are currently exercisable but not in the money.

* Beneficially owns less than one percent of our common shares.

For information regarding the ownership of stock options to acquire our common shares which are held by our Directors and Officers, and also by our employees, please refer to “ – Stock Options Granted to Employees, Directors and Senior Managers”.

ITEM 7.        MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.        MAJOR SHAREHOLDERS.

To the best of our knowledge, we are not indirectly owned or controlled by any other corporation or foreign government.

As of August 30, 2003, 21,035,181 Common Shares were outstanding. At such date, and to the knowledge of our directors and senior officers, no person beneficially owned shares carrying more than 10% of the voting rights attached to all our shares.

We do not know of any arrangements which could result in a change in our control.

B.        RELATED PARTY TRANSACTIONS.

Under a three-year Management Agreement entered into on May 1, 1996 between us and SMR Investments Ltd., and approved by the TSX Venture Exchange, SMR, a company owned by Susanne M. Robertson, one of our directors and wife of John G. Robertson, receives $2,5OO per month for management services provided to us. This contract has been renewable annually after the initial term ended May 1, 1999. Accordingly, SMR incurred management fees of $30,000 in each of fiscal years 2003, 2002 and 2001, and rent of $6,000 in each of fiscal years 2003, 2002 and 2001. SMR is a private company owned by Susanne M. Robertson, one of our directors and the wife of John G. Robertson.

- 23 -

We paid a director's fee of $12,000 to John G. Robertson, our President, during each of fiscal years 2003, 2002 and 2001.

We had related party advances outstanding of $552,848 at the April 2003 year-end, compared to $854,734 at the end of our previous fiscal year. These were unsecured, non-interest bearing and with no fixed terms of repayment.

During the fiscal year ended April 30, 2003 there was no material direct or indirect interest by our directors and officers, any shareholder who beneficially owns more than 10% of our common shares, or any known associate or affiliate of these persons in any transactions or proposed transaction which has or would materially affect us.

At no time during the fiscal year ended April 30, 2003 has any director, senior officer, proposed nominee for election, nor any associate of such persons been indebted to us or our subsidiaries, other than routine indebtedness.

C.        INTERESTS OF EXPERTS AND COUNSEL.

Not applicable.

ITEM 8.        FINANCIAL INFORMATION

A.        CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION See page F-1 to F-13 following Item 19. Legal Proceedings We are not a party to any material legal proceedings.

Dividend Distribution Policy

We have not paid any cash dividends to date and we do not intend to pay cash dividends in the foreseeable future.

B.        SIGNIFICANT CHANGES

None.

ITEM 9.        THE OFFER AND LISTING

Not applicable, except for Item 9.A.4 and Item 9.C.

Our shares have traded on the Vancouver Stock Exchange (the "VSE") its successor, the Canadian Venture Exchange, and its successor the TSX Venture Exchange (the principal non-United States trading market) since August, 1983. In addition, there has been a U.S. market in our shares on the NQB "Pink Sheets" for the past several years and more recently, on the OTC Bulletin Board. We are not specifically aware of prices and other trading details for any shares which have or may have traded on the "Pink Sheets". The ranges of the low and high sales prices for our shares traded on the VSE/CDNX/TSX and OTC BB for the periods indicated are as follows:

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            TSX Venture

 OTC BB
            High Low High Low
            Cdn. $ Cdn. $ U.S. $ U.S. $
1998       2.30 0.70 High-Bid Low-Bid
1999       1.45 0.41 U.S. $ U.S. $
2000       1.40 0.33 N/a N/a
2001       0.80 0.15 N/a N/a
2002           0.90625 0.02
      1st Quarter ended
July 31/01		 $0.25 $0.17 0.375 0.09375
      2nd Quarter ended
October 31/01		 0.30 0.14            
      3rd Quarter ended
January 31/02		 0.25 0.13 0.17 0.10
      4th Quarter ended
April 30/02		 0.16 0.10 0.21 0.09
2003                   0.17 0.085
      1st Quarter ended
July 31/02		 0.13 0.04 0.085 0.07
      2nd Quarter ended
October 31/02		 0.13 0.07            
      3rd Quarter ended
January 31/03		 0.12 0.06 0.075 0.05
      4th Quarter ended
April 30/03		 0.08 0.05 0.065 0.04
High and low closing prices for
each of the most recent six months 		                  0.05
      March 0.07 0.06 0.05 0.03
      April 0.05 0.04    
      May 0.13 0.04 0.05 0.035
      June 0.17 0.07 0.05 0.03
      July 0.12 0.08 0.165 0.03
      August 0.22 0.15 0.09 0.06

ITEM 10.        ADDITIONAL INFORMATION

A.        SHARE CAPITAL

Not applicable.

B.        MEMORANDUM AND ARTICLES OF ASSOCIATION

Our Memorandum and Articles are incorporated by reference to the information in our registration statement on Form 20-F filed with the Securities and Exchange Commission, in Washington, D.C. on June 15, 1994, to which our Articles of Incorporation and Memorandum were filed as exhibits.

- 25 -

C.        MATERIAL CONTRACTS

We did not enter into any material contracts which were not made in the ordinary course of business.

D.        EXCHANGE CONTROLS.

There are no governmental laws, decrees or regulations in Canada relating to restrictions on the export of capital affecting the remittance of interest, dividends or other payments to nonresident holders of the Registrant's shares. Any such remittances, however, are subject to withholding tax. See Item 7, "Taxation".

There are no limitations under the laws of Canada, the Province of British Columbia or in the charter or any other constituent documents of the Company on the right of foreigners to hold or vote our shares. However, under the provisions of the Investment Canada Act, when control of a Canadian business is acquired by a non- Canadian, the transaction may be reviewable in certain circumstances by Investment Canada, an agency of the federal government of Canada. Reviewable transactions are those in which a non-Canadian acquires the assets of a Canadian business or the voting shares of a Canadian corporation the value of which assets or shares exceeds $5 million (Canadian). Also, certain transactions are specifically exempted from review.

E.        TAXATION.

Withholding

Generally, cash dividends paid by Canadian corporations to nonresident shareholders are subject to a withholding tax of 25 percent. However, pursuant to Article X[2] of the Canada-United States tax treaty, dividends paid to a resident if a company of the United States are only subject to a 15 percent withholding tax. Further, if the United states resident owns 10 percent or more of the voting shares of the Canadian company paying the dividends, the withholding tax is reduced to 10 percent. In addition to dividend withholding, interest paid to United States residents is subject to a 15 percent withholding tax pursuant to Article XI[2] of the Canada-United States tax treaty.

Capital Gains

A nonresident purchaser who holds our shares as capital property will not be subject to tax on capital gains realized on the disposition of such shares unless such shares are "taxable Canadian property" within the meaning of the Income Tax Act (Canada) and no relief is afforded under any applicable tax treaty. Our shares would be taxable Canadian property of a nonresident purchaser if the nonresident purchaser used the shares in carrying on a business in Canada or if at any time during the five-year period immediately preceding the disposition not less than 25 percent of the issued shares of any class of the Company belonged to the particular purchaser, persons with whom the purchaser did not deal at arm's length or any combination thereof.

Holders of our Common Shares should seek independent advice from their own professional tax advisors with respect to the Canadian Income Tax consequences arising from the holding of our Common Shares.

F.        DIVIDENDS AND PAYING AGENTS

Not applicable.

G.        STATEMENT BY EXPERTS.

Not applicable.

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H.        DOCUMENTS ON DISPLAY.

We filed a registration statement on Form 20-F filed the Securities and Exchange Commission in Washington, D.C. (Registration No. 000-30084) on June 15, 1994, which became effective August 15, 1994. The Registration Statement contains exhibits and schedules. Any statement in this annual report about any of our contracts or other documents is not necessarily complete. If the contract or document is filed as an exhibit to the Registration Statement, the contract or document is deemed to modify the description contained in this annual report. You must review the exhibits themselves for a complete description of the contract or documents.

You may inspect and copy our registration statements, including their exhibits and schedules, and the reports and other information we file with the Securities and Exchange Commission in accordance with the Exchange Act at the public reference facilities maintained by the Securities and Exchange Commission at Judiciary Plaza, 450 Fifth Street, Room 1024, N.W., Washington, D.C. 20549 and at the regional offices of the Securities and Exchange Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You may also inspect the registration statements, including their exhibits and schedules, at the office of the New York Stock Exchange, Wall Street, New York, New York 10005. Copies of such material may also be obtained from the Public Reference Section of the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. You may obtain information regarding the Washington D.C. Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330 or by contacting the Securities and Exchange Commission over the Internet at its website at http://www.sec.gov.

I.        SUBSIDIARY INFORMATION.

REGI U.S., Inc. ("REGI U.S.") is a 28.5% owned U.S. subsidiary of Rand Energy Group Inc. which is in turn controlled through 51% ownership by us. REGI trades its shares on the OTC BB under the symbol RGUS. Refer to Exhibit 3 outlining our subsidiary structure.

ITEM 11.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133. "Accounting For Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SFAS No. 133 was effective for our fiscal year beginning March 1, 2002. The Company believes that it does not have any material exposure to interest or commodity risks. The Company does not own any derivative instruments, does not engage in any hedging transactions and does not have any outstanding long-term debt. Because we are not involved in any activities covered by SFAS No. 133, the adoption of SFAS No. 133 is not expected to have a material effect on our financial position or results of operations.

ITEM 12.        DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

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PART II

ITEM 13.        DEFAULTS, DIVIDEND ARREARAGES AND DELIQUENCIES

None.

ITEM 14.        MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.

A.        MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

None.

B.        USE OF PROCEEDS.

Not applicable

ITEM 15.        CONTROLS AND PROCEDURES

Based on review and evaluation of the Company’s disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(c) and 15(d)-15(c), our principle executive officer and our principle financial officer have concluded that they:

1. are responsible for establishing and maintaining disclosure controls and procedures;
   
2.
have designed such disclosure controls and procedures to ensure that material information relating to the Company, including our consolidated subsidiaries, is made known to them by others within those entities, particularly during the periods in which this 20-F is being prepared;
   
3.
have evaluated the effectiveness of the Company’s disclosure controls and procedures as of a date within 90 days prior to the filing of this 20-F (the “Evaluation Date”);
   
4. along with the Company’s other certifying officers, have disclosed, based on their most recent evaluation, to the Company’s auditors and the audit committee of the Company’s board of directors:
     
  a.
all significant deficiencies, if any, in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data and have identified for the Company’s auditors any material weaknesses, if any, in internal controls; and
     
  b.
any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls; and
     
5.
can advise that there were no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses..

ITEM 16A.        AUDIT COMMITTEE FINANCIAL EXPERT

We do not currently have a financial expert in our audit committee due to our relatively small size. In 2003, we had only no employees and we relied upon the services of a chartered accountant in Vancouver, BC, Canada, to prepare our interim unaudited quarterly consolidated financial statements. Also, we retained the audit services of Manning Elliott chartered accountants to perform the audit on our year-end consolidated financial statements, and the review engagements to our unaudited quarterly interim statements.

- 28 -

Moreover, the audit committee is comprised of seasoned business professionals, whereby one member has over 25 years of experience in the investment business and is a board member of several corporations.

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

ITEM 16B.        AUDIT CODE OF ETHICS

We have not adopted a formal written code of ethics given our relatively small size, whereby we had no employees in 2003.

Directors are subject to the laws of the Province of British Columbia, Canada, whereby they are required to act honestly, in good faith and in the best interests of the Company.

ITEM 16C.        PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table discloses accounting fees and services of the Registrant:

(Stated in terms of Canadian dollars)

  2003 2002
Type of Services Rendered
 Fiscal Year FiscalYear
  (CAD$) (CAD$)
     
     (a)  Audit Fees 25,910 15,850
     
     (b)  Audit-Related Fees
            (eg. review of Form 20-F)		 1,200 1,100
     
     (c)  Tax Fees 2,000 1,800
     
     (d)  All Other Fees - -

PART III

ITEM 17.        FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to Item 17.

Reference is made to Item 19 for a list of all financial statements filed as part of this annual report.

Our consolidated financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP). See Note 11 to the consolidated financial statements for a reconciliation to U.S. GAAP. The consolidated financial statements as required under Item 17 are included immediately following the text of this Report.

- 29 -

ITEM 18.        FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to Item 17.

ITEM 19.        EXHIBITS

(a)    The following consolidated financial statements, together with the report of Manning, Elliott, on the annual financial statements referred to below, are filed as part of this annual report, and are included immediately following the text of this 20-F:

Index to Consolidated Financial Statements
Independent Auditors’ Report
Consolidated Balance Sheets
Consolidated Statements of Loss and Deficit
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements

(b)    Documents filed as exhibits to this annual report:

Number
Description
  
     
1.1
Articles of Incorporation with Bylaws dated October 6, 1982
    (1)
1.2
Certificate of Name Change and Special Resolution dated February 23, 1993
    (1)
2.1
Special rights and restrictions attaching to the Common Shares without par value and the Class A non-voting shares without par value. Special resolution dated November 25, 1985
    (1)
4. (a) 1
Contract among the Company, Rand Technologies Corp. and Rand Energy Group Inc. regarding formation of Rand Energy Group Inc. and arrangement of various inter- related matters, dated March 28, 1990
    (1)
4. (a) 2
Energy Group Acquisition Agreement among the Company, Rand Cam-Engine Corporation, James L. McCann and Rand Energy Group Inc. regarding acquisition of technology, and rights to the Rand Cam-Engine, dated March 28, 1990
    (1)
4. (a) 3
Contract among the Company, Rand Cam-Engine Corporation Rand Energy Group Inc. and James L. McCann regarding arrangement of various inter-related matters concerning issuance of shares, payments, royalties, etc., dated July 30, 1992
    (1)
4. (a) 4
Agreement with Center for Industrial Research Applications (CIRA) regarding Year 2: Engine Refinement and Testing on the Rand-Cam Engine
    (1)
4. (a) 5
Research & Development Agreement Between Members of the Consortium of Reg Technologies Inc., Rand Energy Group Inc., Hercules Incorporated and The West Virginia University Research Corporation, dated May 10, 1994
    (1)
4. (a) 6
Agreement dated October 31, 1995 between the Company and REGI U.S., Inc. regarding assignment of Machine Vision Technology agreement with Integral Vision Systems, Inc.
    (2)
4. (a) 7
Cooperative Agreement between the Company and Global Aircraft Corporation regarding NASA General Aviation Propulsion Program
    (3)

- 30 -



4. (a) 8
Agreement dated June 22, 1997 between John Weston and the Company regarding the acquisition of rights to Air/Vapour Flow Systems by the Company from Weston
    (4)
4. (a) 9
Agreement dated September 23, 1997 between the Company, REGI U.S., Inc. and SMR Investments Ltd. regarding the assignment of the above agreement by the Company to REGI and SMR pending regulatory approval of the original agreement
    (4)
4. (a) 10
Agreement dated December 31, 1997 between the Company REGI U.S., Inc. and SMR Investments Ltd. regarding the Canadian rights to the AVFS and repayment of advances to Weston by SMR
    (4)
4. (a) 11
Joint Venture Agreement dated July 28, 1998 between REGI U.S., Inc and Trans Air Manufacturing Corporation regarding development and manufacturing of a prototype Bus Compressor
    (4)
4. (a) 12
Agreement dated August 5, 1998 between the Company and T.W. Blasingame Company, Inc. (Blasingame) regarding the licensing of certain Rand Cam/Direct Charge Engine manufacturing rights to Blasingame and licensing of certain rights to the "Vane Restraint Mechanism" by Blasingame to the Company
    (5)
4. (a) 13
Cooperative and Licensing Agreement dated December 14, 1998 between the Company, REGI U.S., Inc. Rand Energy Group, Inc. USA and Global Aircraft Corporation regarding the NASA SBIR Phase I Contract for development of the Rand-Cam Diesel Aircraft Engine
    (5)
4. (a) 14
Agreement made as of October 27, 2000 with GHM Inc. regarding 50% interest in the rights to the hydrogen separator technology
    (7)
4. (a) 15
Agreement between Radian, Inc., Reg Technologies Inc., REGI U.S., Inc. and Rand Energy Group Inc. made as of April 24, 2002
    (8)
4. (a) 16
Agreement between REGI and Advanced Ceramics Research dated March 20, 2002
    (8)
4. (b) 1
Management Agreement between the Company and SMR Investments Ltd., dated April 2, 1993
    (1)
4. (b) 2
Agreement between Brian Cherry, Sky Technologies, Inc. and Rand Energy Group Inc., regarding U.S. rights to the Rand Cam/Direct Charge Engine dated August 20, 1993
    (1)
4. (b) 3
Employment Agreement between Sky Technologies, Inc. and Patrick Badgley dated February 9, 1994
    (1)
4. (b) 4
Management Agreement between Sky Technologies, Inc. and Access Information Services, Inc., dated April 1, 1994
    (1)
4. (b) 5
Agreement between the Company and Rand Energy Group Inc. granting the Company rights to negotiate and sell licenses and marketing rights for the Rand Cam Engine, dated February 27, 1992
    (1)
4. (b) 6
Management Agreement dated May 1, 1996 between the Company and SMR Investments Ltd.
    (3)
8.1 List of Parents and Subsidiaries of the Company    (9)
12.1

Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(John G. Robertson)

   (9)

- 31 -



12.2

Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(Susanne Robertson)

    (9)
13.1

Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(John G. Robertson)

    (9)
13.2

Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Susanne Robertson)

    (9)

(1)  
incorporated by reference to the Registrant’s Registration Statement on Form 20-F filed on June 15, 1994 with the US Securities and Exchange Commission
(2)  
incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 1996
(3)   incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 1997
(4)   incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 1998
(5)   incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 1999
(6)   incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2000
(7)   incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2001
(8)   incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2002
(9)   Exhibits filed herewith.

- 32 -

SIGNATURE PAGE

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this transitional report on its behalf.

REG TECHNOLOGIES INC.
REGISTRANT

Dated: September 23, 2003 By: /s/ John G. Robertson
    John G. Robertson
    President/Director

- 33 -

Auditors’ Report

To the Shareholders of
Reg Technologies Inc.

We have audited the consolidated balance sheets of Reg Technologies Inc. as at April 30, 2003 and 2002, and the consolidated statements of loss and deficit and cash flows for the years then ended. 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 used in Canada. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects the financial position of the Company as at April 30, 2003 and 2002, and the results of its operations and the changes in its cash flows for the years then ended, in accordance with generally accepted accounting principles used in Canada. As required by The British Columbia Company Act we report that, in our opinion, these principles have been applied on a basis consistent with that of the preceding year.

/s/ Manning Elliott

CHARTERED ACCOUNTANTS

Vancouver, B.C.

September 19, 2003

Comments by Auditors for
U.S. Readers on Canada - U.S. Reporting Conflict

We also conducted our audits in accordance with generally accepted auditing standards used in the United States. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by significant uncertainties and contingencies such as those referred to in Note 2 to these financial statements. Our report to the shareholders dated September 13, 2003 is expressed in accordance with Canadian reporting standards which do not permit a reference to such uncertainties in the auditors’ report when the uncertainties are adequately disclosed in the financial statements.

/s/ Manning Elliott

CHARTERED ACCOUNTANTS

Vancouver, B.C.

September 19, 2003

Reg Technologies Inc.
Consolidated Balance Sheets
As at April 30, 2003 and 2002

  2003   2002  
  $   $  
Assets        
Current Asset        
          Accounts receivable 8,481   25,926  
Property and Equipment [Note 4] 710,171   773,713  
Development Costs [Schedule] 8,335,425   8,676,237  
         
  9,054,077   9,475,876  
         
Liabilities        
Current Liabilities        
          Cheques issued in excess of funds on deposit 6,118   11,417  
          Accounts payable and accruals 193,073   225,893  
          Due to related companies [Notes 9 and 12[a]] 552,848   854,734  
         
  752,039   1,092,044  
         
Non-controlling Interest [Note 7] 3,020,985   2,702,347  
Subscriptions for Shares of Subsidiary 41,723   –  
         
  3,814,747   3,794,391  
Shareholders’ Equity        
Capital Stock [Note 5] 10,467,921   10,467,921  
Donated Capital [Note 6] 268,763   –  
Accumulated Foreign Exchange Gain [Note 3] 178,042   554,093  
Deficit (5,675,396 ) (5,340,529 )
         
  5,239,330   5,681,485  
         
  9,054,077   9,475,876  

Contingency [Note 2]      
Approved by the Board “John G. Robertson”   “Jennifer Lorette”
  John G. Robertson, Director   Jennifer Lorette, Director

Reg Technologies Inc.
Consolidated Statements of Operations and Deficit
For the Years Ended April 30, 2003 and 2002

  2003   2002  
  $   $  
Administrative Expenses        
          Amortization - property, plant and equipment –   3,379  
                     - goodwill [Note 4] –   25,175  
          Bank charges and interest 5,400   4,187  
          Foreign exchange (6,509 ) (36,808 )
          Investor relations - advertising 35,450   13,215  
          Investor relations - consulting 288,469   105,526  
          Management and directors fees 42,000   42,000  
          Mineral property maintenance expenses 5,908   5,292  
          Office, printing and couriers 6,750   34,660  
          Professional fees 41,855   55,414  
          Regulatory fees 21,814   19,263  
          Rent 24,630   23,549  
          Secretarial wages and benefits 25,960   37,486  
          Telephone 4,592   28,376  
          Travel and promotion 269   6,955  
          Less interest income (30 ) (128 )
Net Loss Before Other Items (496,558 ) (367,541 )
Other Items        
          Write-off of intellectual property and development costs –   (30,472 )
          Gain on payables written-off 1,490   42,115  
          Gain (loss) on sale of subsidiary’s shares (664 ) 13,588  
          Gain (loss) on issue by subsidiary of its own shares        
                    outside the consolidated group [Note 7[a]] (215,878 ) 216,719  
          Non-controlling interest adjustment [Note 7[b]] 376,743   (4,482 )
Net Loss for the Year (334,867 ) (130,073 )
Deficit - Beginning of Year (5,340,529 ) (5,210,456 )
Deficit - End of Year (5,675,396 ) (5,340,529 )
         
Loss per Share - weighted average basis (.01 ) (.01 )
         
Weighted average number of shares outstanding 17,078,000   16,870,000  

Reg Technologies Inc.
Consolidated Statements of Cash Flows
For the Years Ended April 30, 2003 and 2002

  2003   2002  
  $   $  
Operating Activities        
          Net loss for the year (334,867 ) (130,073 )
         
          Items not involving cash        
                    Services paid by issuing shares of subsidiary 25,619   –  
                    Amortization –   28,554  
                    Non-controlling interest (376,743 ) 4,482  
                    Gain (loss) on issue by subsidiary of its own shares 215,878   (216,719 )
                    Gain on payables written-off (1,490 ) (42,115 )
                    Donated services 288,469   –  
                    Gain (loss) on sale of subsidiary’s shares 664   (13,588 )
                    Write-off of intellectual property and developmental costs –   30,472  
         
  (182,470 ) (338,987 )
          Change in non-cash working capital items        
                    Accounts receivable 17,445   (24,480 )
                    Accounts payable and accruals (32,820 ) (501,769 )
                    Prepaid expenses –   119  
         
Cash to Operating Activities (197,845 ) (865,117 )
         
Financing Activities        
          Shares issued for cash –   75,000  
          Proceeds from related companies 140,729   365,423  
          Proceeds on subsidiary’s shares issued –   312,380  
          Proceeds on sale of marketable securities 3,129   92,439  
          Subscriptions received 41,723   –  
  185,581   845,242  
Investing Activities        
          Development costs - net of amortization (64,284 ) (101,219 )
          Patent protection costs (2,475 ) (3,585 )
         
  (66,759 ) (104,804 )
Translation Adjustments 84,322   133,684  
Increase in Cash During the Year 5,299   9,005  
Cash (Deficiency) - Beginning of Year (11,417 ) (20,422 )
Cash (Deficiency) - End of Year (6,118 ) (11,417 )
         
Non-Cash Financing Activities        
          Subsidiary’s shares issued for convertible debenture 7,475   –  
          Shares issued for consulting services 25,619   –  
          Shares issued to settle debt 442,615   –  
  475,709   –  

Reg Technologies Inc.
Consolidated Schedule of Deferred Development Costs
To April 30, 2003

April 30,   Incurred   Foreign   April 30,  
2002   during the   Exchange   2003  
Cumulative   year   Adjustment   Cumulative  
$   $   $   $  
Amortization of patents and intellectual property 483,708   39,128   (31,771 ) 491,065  
Consulting 1,198,978   70,775   (68,225 ) 1,201,528  
Management 579,180   36,000   (73,828 ) 541,352  
Market development 384,973   –   (12,535 ) 372,438  
Overhead 385,375   3,077   (28,525 ) 359,927  
Professional fees 236,458   –   (9,985 ) 226,473  
Prototype design and construction 4,588,360   (53,569 ) (180,069 ) 4,354,722  
Reports 81,394   –   (3,292 ) 78,102  
Salaries 627,345   –   (26,059 ) 601,286  
Travel and promotion 490,923   8,001   (22,688 ) 476,236  
               
9,056,694   103,412   (456,977 ) 8,703,129  
Less: Government assistance (121,430 ) –   –   (121,430 )
           Payables written-off (259,027 ) –   12,753   (246,274 )
               
8,676,237   103,412   (444,224 ) 8,335,425  

Note:

Included in development costs capitalized during the year is a non-cash adjustment for the decrease in foreign exchange in translating the Company’s US subsidiary’s balances into Canadian dollars at the year-end rate. Cash expenditures incurred during the year, not including amortization, amounted to $64,284.

Reg Technologies Inc.
Notes to the Consolidated Financial Statements
For the Years Ended April 30, 2003 and 2002

1.

Consolidated Financial Statements

These consolidated financial statements include the accounts of the Company and its 51% owned subsidiary, Rand Energy Group Inc., which owns a 28.5% interest in REGI US, Inc., a U.S. public company listed on the OTC Bulletin Board in the United States. REGI US, Inc. continues to be considered a controlled subsidiary for consolidation purposes by way of control through irrevocable voting trusts with other affiliated companies giving the Company the ability to control REGI US, Inc.
   
2.

Nature of Operations and Continuance of Business

The Company is in the business of developing and commercially exploiting an improved axial vane type rotary engine known as the Rand Cam™/Direct Charge Engine and other RandCam™ applications, such as compressors and pumps (the “RC/DC Engine”). The world-wide marketing and intellectual rights, other than the U.S., are held by Rand Energy Group Inc. which controls REGI US, Inc. REGI US, Inc. owns the U.S. marketing and intellectual rights. Rand Energy Group Inc. and REGI US, Inc. have a project cost sharing agreement whereby the companies each fund 50% of the further development of The RC/DC Engine and its related industrial applications.

These financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated any revenues from the sale or licensing of The RC/DC Engine or related applications or achieved operational profitability since inception. The Company’s activities are in the development stage and additional costs for the further advancement and application diversification of The RC/DC Engine and related applications must be incurred. There is substantial doubt as to the Company’s ability to generate revenues and to continue as a going concern. The continuation of the Company as a going concern is dependent on its ability to obtain financing and/or the attainment of revenues and profitable operations.

The Company also owns a 51% interest in Rand Energy Group, which owns 5,043,000 shares of REGI U.S. Inc., a U.S. company trading on the OTC Bulletin Board, which shares had a value of approximately US$2,068,000 as of September 17, 2003. The Company can sell up to 177,000 shares of REGI US, Inc., being 1% of the issued shares, during any 90 day period.
   
3.
Significant Accounting Policies
     
 
[a]

Goodwill

Goodwill represents the excess of the original purchase consideration paid for Rand Energy Group Inc. over fair market value of net identifiable assets acquired and contingent consideration paid. Goodwill is evaluated in each reporting period and is written down to its net recoverable amount when there is a permanent decline in value.
     
 
[b]

Development costs

Costs incurred by the Company in development of The RC/DC Engine and related applications are capitalized as incurred. Costs will be amortized over the estimated useful life of specific licensed products or rights following commencement of commercial activity, or written-off should The RC/DC Engine and/or AVFS be determined not to be commercially viable. The AVFS rights and development costs were written-off during the year.
     
 
[c]

Property and equipment

Costs to register and protect patents are capitalized. Costs to acquire intellectual property such as technological rights and design drawings are capitalized. Costs of patents and intellectual property are being amortized to development costs on a straight-line basis over 20 years or written-off should The RC/DC Engine and/or AVFS be determined by management not to be commercially viable.

Computer equipment is amortized over three years on a straight-line basis.

Reg Technologies Inc.
Notes to the Consolidated Financial Statements
For the Years Ended April 30, 2003 and 2002

3.
Significant Accounting Policies (continued)
     
 
[d]

Accounting basis

These financial statements are prepared using Canadian generally accepted accounting principles. See Note 11 regarding adjustments from Canadian generally accepted accounting principles to U.S. generally accepted accounting principles.
     
 
[e]
Foreign currency translation
     
 
[i]

Translation of foreign currency transactions and balances

Revenue, expenses and non-monetary balance sheet items in foreign currencies are translated into Canadian dollars at the rate of exchange prevailing on the transaction dates. Monetary balance sheet items are translated at the rate prevailing at the balance sheet date. The resulting exchange gain or loss is included in operations.
     
 
[ii]

Translation of foreign subsidiary balances

Assets and liabilities of REGI US, Inc. are translated into Canadian dollars at the rates of exchange on the balance sheet date. The foreign subsidiary’s operating results are translated into Canadian dollars using the average exchange rate for the year with any translation gain or loss deferred and included as a separate component of shareholders’ equity.

The accumulated foreign exchange gain, totalling $178,042 to April 30, 2003, is a result of translating assets and liabilities at the rate of exchange on April 30, 2003 as compared to the exchange rate accumulated from the inception of REGI US, Inc.
     
 
[f]

Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, particularly the recoverability of capital assets and goodwill, and recording of liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.
   
4.

Property and Equipment

Property and equipment includes tangible and intangible assets stated at cost less accumulated amortization.

          2003 2002
      Accumulated Carrying Carrying
    Cost Amortization Value Value
    $ $ $ $
  Tangible        
           Computer equipment 98,125 98,125 – 1,041
  Intangible        
           Goodwill 503,494 218,181 285,313 285,313
           RC/DC Engine rights and related        
                    patent protection costs 765,918 341,061 424,857 487,358
           Mineral resource properties 1 – 1 1
    1,269,413 559,242 710,171 772,672
    1,367,538 657,367 710,171 773,713

Reg Technologies Inc.
Notes to the Consolidated Financial Statements
For the Years Ended April 30, 2003 and 2002

5. Capital Stock
       
  Authorized:
       
    30,000,000
Common shares without par value
    10,000,000
Preferred shares with a $1 par value, redeemable for common shares on the basis of 1 common share for 2 preferred shares
    5,000,000 Class A non-voting shares without par value. Special rights and restrictions apply.

            Value
      Common shares issued: #   $
            April 30, 2001 16,578,371   10,392,921
            Issued during the year for cash:      
               Private placement 500,000   75,000
         April 30, 2002 and 2003 17,078,371   10,467,921
             
  [a]

Escrowed shares

93,750 shares are held in escrow, the release of which is subject to the direction and determination of regulatory authorities.
     
  [b] Stock options outstanding:

  April 30, Price Granted Cancelled April 30, Expiry Date
  2002 $ # # 2003  
  #       #  
  1,300,000 0.10 25,000 – 1,325,000 September 27, 2007

   
*During the second quarter ended October 31, 2002, the stock option exercise prices were reduced to $0.10 and expiry dates extended to September 27, 2007.
     
  [c]

Private placement

On October 2, 2001 the Company completed a unit private placement and issued 500,000 units at $0.15 per unit for gross proceeds of $75,000. Each unit consisted of 500,000 shares and 500,000 warrants to acquire 500,000 shares at $0.20 per share which expired October 2, 2002.
     
6. Capital Stock Activity of REGI US, Inc.

           Value  
  Common shares issued: #   US$  
  April 30, 2001 10,221,735   4,584,249  
           Shares issued for cash pursuant to a private placement 1,066,200   194,550  
  April 30, 2002 11,287,935   4,778,799  
           Stock issued to settle related party debt 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  
  April 30, 2003 17,687,935   5,105,299  

Reg Technologies Inc.
Notes to the Consolidated Financial Statements
For the Years Ended April 30, 2003 and 2002

6. Capital Stock Activity of REGI US, Inc. (continued)
     
  [a]
5,043,000 shares, having an approximate undiscounted fair market value as at September 17, 2003 of US$2,068,000, are owned by Rand Energy Group Inc. The Company owns 51% of Rand Energy Group Inc.
     
  [b]
A total of 1,750,000 shares are reserved for the exercise of stock options, exercisable at a weighted average price of US$0.20.
     
  [c]
A total of 145,000 shares are reserved for the exercise of warrants at US$0.30 per share with expiry dates ranging from November 1, 2003 to December 11, 2003.
     
  [d]
On July 22, 2003, REGI US, Inc. issued 173,120 common shares and 173,120 common share purchase warrants to acquire shares at US$0.20 per share expiring July 7, 2004. Proceeds of US$25,968 were received prior to April 30, 2003.
   
7. Non-Monetary Transactions
     
  [a]
  

Gain on shares issued

During fiscal 2003 and 2002, REGI US, Inc. issued shares outside the consolidated group for cash proceeds. These issuances effectively reduced Rand Energy Group Inc.’s interest in REGI US, Inc. which resulted in a deemed gain (loss) on sale of subsidiary’s shares as follows:

         2003   2002  
      $   $  
    Cash proceeds on issuance of shares 475,709   423,015  
    Less net book value of interest deemed sold (691,587 ) (206,296 )
    Monetary Gain (Loss) (215,878 ) 216,719  
             
  [b] Non-controlling interest

         2003   2002  
      $   $  
    Non-controlling interest - beginning of year 2,702,347   2,412,717  
    Non-controlling interest - end of year 3,020,985   2,702,347  
    Increase in non-controlling interest 318,638   289,630  
             
    Components of the increase in non-controlling interest:

    [i] non-controlling interest in subsidiaries’ net results of operations (376,743 ) 4,482  
    [ii] net book value of REGI US, Inc. deemed sold [Note 7[a]] 691,587   206,296  
    [iii] net book value of REGI US, Inc. shares sold to settle debt 3,794   78,852  
        318,638   289,630  

Reg Technologies Inc.
Notes to the Consolidated Financial Statements
For the Years Ended April 30, 2003 and 2002

8.

Losses and Deductions for Tax Purposes

The Company and Rand Energy Group Inc. have combined Canadian income tax losses of approximately $2,119,000 which are available to reduce Canadian taxable income of future years. The losses expire as follows:

    $     $
2004   402,000 2008   361,000
2005   390,000 2009   138,000
2006   409,000 2010   190,000
2007   229,000      

 
The Company’s US subsidiary, REGI US, Inc., has U.S. income tax losses of US$4,875,000 which are available to reduce U.S. taxable income of future years. The losses expire as follows:

    US$     US$
2008   23,000 2014   417,000
2009   393,000 2015   429,000
2010   1,007,000 2016   518,000
2011   792,000 2017   153,000
2012   521,000 2018   17,000
2013   605,000      

  The potential benefits of income tax losses have not been recognized in the accounts as realization is not likely.
   
9. Related Party Balances and Transactions
     
  [a]
The Company shares office space, staff and service providers with a number of private and public companies with several directors in common.
     
  [b]
The amounts owing to or from related companies are unsecured, non-interest bearing and due on demand.
     
  [c]
The value of consulting services of US$187,500 was contributed by directors of REGI US to the subsidiary and charged to operations and treated as donated capital.
     
  [d]
During the year, the President of the Company was paid $12,000 (2002 - $12,000) in director’s fees.
   
10.

Commitments

In connection with the acquisition of REGI the Company may have the following obligations: a further 150,000 shares may be issued, subject to regulatory approval, when an independent market
     
  [a]
assessment report confirming the Beta version of The RC/DC Engine has commercial or military applications;
     
  [b]
a further 250,000 shares may be issued, subject to regulatory approval, upon signing of a contract to build and sell The RC/DC Engine or the execution of a license agreement with an independent company;

Reg Technologies Inc.
Notes to the Consolidated Financial Statements
For the Years Ended April 30, 2003 and 2002

  [c]
A participating royalty is to be paid to the inventor to a maximum amount of $10,000,000. The participating royalty is to be paid in minimum annual instalments of $50,000 per year beginning on the date the first revenues are derived from the license or sale of the patented technology and after shares are issued per above. As part of the minimum payment, the Company is to pay 5% of all net profits from sales, licenses, royalties or income derived from the patented technology.
     
  [d]
Pursuant to a letter of understanding between the Company, REGI US and REGI (collectively called the grantors) and West Virginia University Research Corporation (WVURC), the grantors have agreed that WVURC shall own 5% of all patented technology and will receive 5% of all net profits from sales, licenses, royalties or income derived from the patented technology.
     
  [e]
1% net profit royalty will be payable to a director on all U.S. based sales.
   
11.

Differences Between Generally Accepted Accounting Principles in Canada and Those in the United States

The material differences between Canadian and U.S. accounting principles is the treatment of the following items:
     
  [a]

Development costs

Development costs, under Canadian accounting principles, may be deferred, until the processes reach commercial production, at which time they are amortized on a systematic basis by reference to the sale or use of the processes, or until the project is sold or abandoned, at which time the costs are written-off.

Under U.S. accounting principles, development costs must be expensed as incurred requiring that development costs of $8,335,425 be expensed.
     
  [b]

Capital assets

Intellectual property and goodwill are treated as capital assets under Canadian accounting principles. Under U.S. accounting principles, these relate to and thus, are treated as, research and development, which must be expensed as incurred, requiring the net book value of capital assets totalling $508,175 be expensed.
     
  [c]

Non-controlling interest.

The amounts written-off to operations in (a) and (b) above would be reduced by $3,020,985 which represents non-controlling interest therein.
     
  [d]

Accumulated foreign exchange

Foreign exchange gains and losses recognized on translation of self-sustaining foreign operations are included in the statement of operations under U.S. accounting principles.

Reg Technologies Inc.
Notes to the Consolidated Financial Statements
For the Years Ended April 30, 2003 and 2002

11. Differences Between Generally Accepted Accounting Principles in Canada and Those in the United States (continued)
     
  [e] The balance sheet, as determined under U.S. accounting principles, is as follows:

      2003   2002  
      $   $  
    Assets        
    Current Assets        
             Accounts receivable 8,481   25,926  
    Capital Assets 201,996   227,438  
             
      210,477   253,364  
    Liabilities        
    Current Liabilities        
             Cheques issued in excess of funds on deposit 6,118   11,417  
             Accounts payable and accruals 193,073   225,892  
             Due to related companies 552,848   854,734  
      752,039   1,092,043  
    Subscriptions For Shares 41,723   –  
      793,762   1,092,043  
    Shareholders’ Equity (Deficit)        
    Capital Stock 10,467,921   10,467,921  
    Donated Capital 268,763   –  
    Stock Based Compensation 53,035   58,035  
    Deficit (refer to reconciliation following) (11,373,004 ) (11,364,635 )
      (583,285 ) (838,679 )
      210,477   253,364  

Reg Technologies Inc.
Notes to the Consolidated Financial Statements
For the Years Ended April 30, 2003 and 2002

11. Differences Between Generally Accepted Accounting Principles in Canada and Those in the United States (continued)
     
  [f]
  
Loss and deficit accumulated during the development stage as determined under U.S. generally accepted accounting principles is as follows:

      2003   2002  
      $   $  
    Net loss, as determined under        
             Canadian generally accepted accounting principles (334,867 ) (130,073 )
             Amortization of goodwill on consolidation –   25,175  
             Stock based compensation –   (4,832 )
             Foreign exchange translation 55,500   (44,890 )
             Non-controlling interest (376,743 ) 4,482  
             Gain on sale of subsidiaries’ shares 3,793   76,293  
             Gain on issue of subsidiaries’ shares 691,587   206,296  
             Development costs written-off (47,639 ) 33,538  
             
    Net earnings (loss), as determined under        
             U.S. generally accepted accounting principles (8,369 ) 165,989  
    Deficit accumulated during the development        
             stage, as determined under U.S. generally        
             accepted accounting principles        
                      - Beginning of year (11,364,635 ) (11,530,624 )
                      - End of year (11,373,004 ) (11,364,635 )
    Earnings (loss) per share, weighted average basis        
    (excluding escrowed shares) (0.01 ) 0.01  
     
  [g]
Material effects of the different generally accepted accounting principles on the Company's balance sheet are as follows:

         2003   2002  
      $   $  
             
    Deferred development costs, as determined in Canada 8,335,425   8,676,237  
    Deferred development costs, as determined in the U.S. –   –  
             
    Increase to deficit as determined in the U.S. 8,335,425   8,676,237  
             
    Capital assets, as determined in Canada 710,171   773,713  
    Capital assets, as determined in the U.S. 201,996   227,438  
             
    Increase to deficit as determined in the U.S. 508,175   546,275  
             
    Non-controlling interest, as determined in Canada (3,020,985 ) (2,702,347 )
    Non-controlling interest, as determined in the U.S. –   –  
             
    Decrease to deficit as determined in the U.S. (3,020,985 ) (2,702,347 )

Reg Technologies Inc.
Notes to the Consolidated Financial Statements
For the Years Ended April 30, 2003 and 2002

11. Differences Between Generally Accepted Accounting Principles in Canada and Those in the United States (continued)
     
  [g] Material effects of the different generally accepted accounting principles on the Company's balance sheet are as follows:

         2003   2002  
      $   $  
    Accumulated foreign exchange gain, as determined in Canada 178,042   554,093  
    Accumulated foreign exchange gain, as determined in the U.S. –   –  
             
    Decrease to deficit as determined in the U.S. (178,042 ) (554,093 )
             
    Stock based compensation, as determined in Canada –   –  
    Stock based compensation, as determined in the U.S. 53,035   58,035  
             
    Increase to deficit as determined in the U.S. 53,035   58,035  
             
    Deficit, as determined in Canada 5,675,396   5,340,529  
    Deficit, as determined in the U.S. 11,373,004   11,364,635  
             
    Net increase to deficit as determined in the U.S. 5,697,608   6,024,106  

12. Subsequent Events
     
  [a]
On June 4, 2003, the Company issued 3,956,820 common shares to settle related party debt in the amount of $395,682.
     
  [b]

On September 12, 2003, the Company granted incentive stock options to purchase up to 300,000 common shares at a price of $0.20 per share, exercisable for a period of 90 days from the date of granting.
     
  [c]
On September 18, 2003, the Company granted incentive stock to purchase up to 175,000 commonshares at a price of $0.30 per share, exercisable for a period of five years from the date of granting.
     
  [d]
Subsequent to year end, the Company has arranged a private placement of one million units at a price of $0.15 per unit. Each unit consists of one common share and one non-transferable share purchase warrant. Each one purchase warrant entitles the holder to purchase one common share at a price of $0.20 in the first year and $0.25 in the second year.