<DOCUMENT>
<TYPE>10KSB
<SEQUENCE>1
<FILENAME>form10k.txt
<TEXT>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
For the Fiscal Year Ended April 30, 2002
COMMISSION FILE NO. 0-23920
-------------------------------
REGI U.S., INC.
-------------------------------
(Name of small business issuer as specified in its charter)
OREGON 91-1580146
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
120 - 3011 VIKING WAY
RICHMOND, BRITISH COLUMBIA V6V 1W1, CANADA
------------------------------------------
(Address, including postal code, of registrant's principal executive offices)
(604) 278-5996
(Telephone number including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act: NONE
Securities registered pursuant to Section 12(g) of the Exchange Act:
Title of each class Name of each Exchange on which registered:
------------------- -----------------------------------------
Common Stock, no par value NASD Over the Counter Bulletin Board
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this form 10-KSB or any amendment to
this Form 10-KSB. [ ]
<PAGE>
Page 2
State the issuer's revenues for its most recent fiscal year: nil.
The aggregate market value of the voting stock held by non-affiliates of the
registrant on July 31, 2002, computed by reference to the price at which the
stock was sold on that date: $1,240,544.
The number of shares outstanding of the registrant's Common Stock, no par value,
as of July 31, 2002 was 11,287,935.
Documents incorporated by reference: See Exhibits.
Transitional Small Business Disclosure Format (Check one): Yes ( ) No (X).
<PAGE>
Page 3
REGI U.S., INC.
FORM 10-KSB
TABLE OF CONTENTS
PART I 5
ITEM 1. DESCRIPTION OF BUSINESS 5
GENERAL 5
BUSINESS OF THE COMPANY AND PRODUCTS 6
Overview and History 6
PRODUCTS AND PROJECTS 8
Rand Cam Technology 8
Rand Cam Cold Turbine Engine 8
Gasoline and Diesel Engine 8
Motor Scooter Project 9
Compressor 9
Air Pump 10
Hydraulic Pump 10
Hydrogen Separator 10
Ceramic Rand Cam TM Engine 10
MARKETING 12
COMPETITION 13
RAW MATERIALS AND PRINCIPAL SUPPLIERS 13
PATENTS, TRADEMARKS, LICENCES, FRANCHISES, CONCESSIONS, ROYALTY
AGREEMENTS, LABOR CONTRACTS, INCLUDING DURATION 13
Patents 13
Royalty Payments 14
RISK FACTORS 14
GOVERNMENT REGULATIONS 17
DEPENDENCE ON CERTAIN CUSTOMERS 17
RESEARCH AND DEVELOPMENT 17
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS 18
NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL-TIME EMPLOYEES 18
ITEM 2. DESCRIPTION OF PROPERTY 18
ITEM 3. LEGAL PROCEEDINGS 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 18
PART II 19
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 19
DIVIDEND POLICY 19
RECENT SALES OF UNREGISTERED SECURITIES 19
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS 19
LIQUIDITY AND CAPITAL RESOURCES 20
ITEM 7. FINANCIAL STATEMENTS 21
ITEM 8. CHANGES IN AND DISAGREEEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE 21
<PAGE>
Page 4
PART III 21
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT. 21
BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION OF DIRECTORS,
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES 22
ITEM 10. EXECUTIVE COMPENSATION 24
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 25
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 27
ITEM 13(a). EXHIBITS. 28
ITEM 13(b). REPORTS ON FORM 8-K. 29
SIGNATURES 30
<PAGE>
Page 5
THIS ANNUAL REPORT ON FORM 10-KSB, INCLUDING EXHIBITS THERETO, CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED. THESE FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY THE
WORDS "ANTICIPATES", "BELIEVES", "EXPECTS", "INTENDS", "FORECASTS", "PLANS",
"FUTURE", "STRATEGY", OR WORDS OF SIMILAR MEANING. VARIOUS FACTORS COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING
STATEMENTS, INCLUDING THOSE DESCRIBED IN "RISK FACTORS" IN THIS FORM 10-KSB. WE
ASSUME NO OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT
ACTUAL RESULTS, CHANGES IN ASSUMPTIONS, OR CHANGES IN OTHER FACTORS, EXCEPT AS
REGULATED BY LAW.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
We were organized under the laws of the State of Oregon on July 27, 1992 as Sky
Technologies, Inc. On August 1, 1994, our name was officially changed by a vote
of a majority of our shareholders to REGI U.S., Inc. We are controlled by Rand
Energy Group Inc., a privately held British Columbia corporation ("RAND"),
which, in turn, is controlled 51% by Reg Technologies Inc., a publicly held
British Columbia corporation ("Reg Tech").
We are engaged in the business of developing and building an improved axial
vane-type rotary engine known as the Rand Cam/Direct Charge Engine ("RC/DC
Engine"), which is a variation of the Rand Cam Rotary Engine, an axial vane
rotary engine ("Original Engine"). The worldwide, exclusive of the United
States, intellectual and marketing rights to the RC/DC Engine are held by RAND.
We hold the rights to develop, build and market the RC/DC Engine design in the
U.S. pursuant to an agreement with RAND. Under a project cost sharing agreement
entered into with RAND effective May 1, 1993, each company funds 50% of the
continuing development cost of the RC/DC Engine.
Our principal offices are located at 3011 Viking Way, Suite 120, Richmond,
British Columbia V6V 1X1, Canada. Our telephone number is (604) 278-5996 and our
telefacsimile number is (604) 278-3409. Our website is
www.regtech.com.
---------------
We will likely need to raise additional capital in the future beyond any amount
currently on hand and which may become available as a result of the exercise of
warrants and options which are currently outstanding, in order to fully
implement our intended plan of operations.
<PAGE>
Page 6
BUSINESS OF THE COMPANY AND PRODUCTS
Overview and History
We are engaged in the business of developing and building an improved axial
vane-type rotary engine known as the Rand Cam TM Direct Charge ("RC/DC") Engine,
which is a variation of the Original Engine. The Original Engine is an axial
vane rotary engine, the worldwide marketing rights to which are held by RAND. A
United States patent was issued for the RC/DC Engine on July 4, 1995, and
assigned to us. Since no marketable product has yet been developed, we have not
received any revenues from operations.
The RC/DC Engine is based upon the Original Engine patented in 1983. Brian
Cherry, a former officer and director of the Company, has done additional
development work on the Original Engine which resulted in significant changes
and improvements for which the U.S. patent has been issued and assigned to us.
We believe the RC/DC Engine offers important simplification from the basic
Original Engine, which will make it easier to manufacture and will also allow it
to operate more efficiently.
Pursuant to an agreement dated October 20, 1986 between Reg Tech, Rand Cam Corp.
and James McCann, Reg Tech agreed to acquire a 40% voting interest in a new
corporation to be incorporated to acquire the rights to the Original Engine. The
new corporation was RAND. Reg Tech acquired the 40% voting interest in RAND in
consideration of the payment of $250,000.
Pursuant to an agreement made as of April 27, 1993 among Reg Tech, Rand Cam
Corp., RAND and James McCann, Reg Tech acquired an additional 330,000 shares
(11%) of RAND from Rand Cam Corp. to increase its investment to 51%.
On August 20, 1992, we entered in an agreement with RAND and Brian Cherry (the
"August 1992 Agreement") under which we issued 5,700,000 shares of our Common
Stock at a deemed value of $0.01 per share to RAND in exchange for certain
valuable rights, technology, information, and other tangible and intangible
assets, including improvements, relating to the United States rights to the
Original Engine. RAND's president is also our president and its Vice President
and Secretary is also one of our directors. The terms of the agreement were
negotiated between the parties and were deemed to be mutually advantageous based
upon conditions and circumstances existing at the time.
We entered into an agreement dated April 13, 1993 with RAND, Reg Tech and Brian
Cherry (the "April 1993 Agreement") and made as an amendment to a previous
Amendment Agreement dated November 23, 1992 between RAND, Reg Tech and Brian
Cherry and an original agreement dated July 30, 1992 between RAND, Reg Tech and
Brian Cherry, Cherry agreed to: (a) sell, transfer and assign to RAND worldwide
rights, except for the United States, to all of his right, title and interest in
and to the technology related to the RC/DC Engine (the "Technology"), including
all pending and future patent applications in respect of the Technology,
together with any improvements, changes or other variations to the Technology;
(b) sell, transfer and assign to the Company United States of America rights to
all of his right, title and interest in and to the Technology, including all
pending and future patent applications in respect of the Technology, together
with any improvements, changes or other variations to the Technology. On
November 9, 1993, in consideration for this transfer of the Technology, Brian
Cherry was issued 100,000 shares of Reg Tech with a deemed value of $200,000.
(***** pages 7 à 25 ôtées car trop volumineux *******
<PAGE>
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<TABLE>
<CAPTION>
<S><C>
Name Class A Shares Owned Percentage of
Class A Shares
Owned
<S> <C> <C>
John G. Robertson, Chairman of the Board 5,781,350 51.22%
of Directors, President and Director (1) (2)
The Watchtower Society (3) 5,073,200 44.94%
James McCann (4) 5,073,200 44.94%
Rand Energy Group Inc. (5) 5,073,200 44.94%
Jennifer Lorette, Vice President and Director 85,500 *
(6)
James Vandeberg, Chief Operating Officer 76,000 *
and Director (7)
Patrick Badgley, Vice President, Research 75,000 *
and Development and Director (8)
ALL EXECUTIVE OFFICERS & 6,017,850 53.31%
DIRECTORS AS A GROUP (FOUR
INDIVIDUALS) (9)
</TABLE>
Except as noted below, all shares are held beneficially and of record and each
record shareholder has sole voting and investment power.
*Less than one percent of the issued and outstanding on July 31, 2002 which was
11,287,935
(1) These individuals may be deemed to be our "parents or founders" as that term
is defined in the Rules and Regulations promulgated under the Securities Act of
1933.
(2) Includes 5,073,200 shares registered in the name of Rand Energy Group Inc.
See Note (5) below for an explanation of the beneficial ownership of Rand Energy
Group Inc. Mr. Robertson disclaims beneficial ownership of these shares beyond
the extent of his pecuniary interest. Also includes 700,000 options that are
currently exercisable. Mr. Robertson's address is the same as the Company's.
(3) Includes 5,073,200 shares registered in the name of Rand Energy Group Inc.
See Note (5) below for an explanation of the beneficial ownership of Rand Energy
Group Inc.
(4) Includes 5,073,200 shares registered in the name of Rand Energy Group Inc.
See Note (5) below for an explanation of the beneficial ownership of Rand Energy
Group Inc.
(5) Rand Energy Group Inc. is owned 51% by Reg Technologies Inc. and 49% by
Rand Cam Engine Corp. Under Rule 13d-3 under the Securities Exchange Act of
1934, both Reg Technologies Inc. and Rand Cam Engine Corp. could be considered
the beneficial owner of the 5,073,200 shares registered in the name of Rand
Energy Group Inc.
Reg Technologies Inc. is a British Columbia corporation listed on the Canadian
Venture Exchange that has financed the research on the Rand Cam Engine since
1986. Since October 1984 Mr. Robertson has been President and a Director of Reg
Technologies Inc. SMR Investment Ltd., a British Columbia corporation, holds a
controlling interest in Reg Technologies Inc. Since May 1977 Mr. Robertson has
<PAGE>
Page 27
been President and a member of the Board of Directors of SMR Investments Ltd.
Susanne M. Robertson, Mr. Robertson's wife, owns SMR Investment Ltd.
Accordingly, in Note (2) above, beneficial ownership of the 5,073,200 shares
registered in the name of Rand Energy Group Inc. has been attributed to Mr.
Robertson. We believe it would be misleading and not provide clear disclosure to
list as beneficial owners in the table the other entities and persons discussed
in this paragraph, although a strict reading of Rule 13d-3 under the Securities
Exchange Act of 1934 might require each such entity and person to be listed in
the beneficial ownership table.
Rand Cam Engine Corp. is a privately held company whose stock is reportedly
owned 50% by
The Watchtower Society, a religious organization, 34% by James
McCann and the balance by several other shareholders. Mr. McCann has indicated
that he donated the shares held by
The Watchtower Society to that organization
but has retained a voting proxy for those shares. Accordingly, in Notes (3) and
(4) above, beneficial ownership of the 5,073,200 shares registered in the name
of Rand Energy Group Inc. has been attributed to
The Watchtower Society and Mr.
McCann. We believe it would be misleading and not provide clear disclosure to
list as beneficial owners in the table the other entities and persons discussed
in this paragraph, although a strict reading of Rule 13d-3 under the Securities
Exchange Act of 1934 might require each such entity and person to be listed in
the beneficial ownership table.
(6) Includes 85,000 options that are currently exercisable. These 85,000 options
were cancelled on May 10, 2002 and replaced with 150,000 options expiring May
10, 2007 at a price of $0.20 per share. Ms. Lorette's address is the same as
the Company's.
(7) Includes 75,000 options that are currently exercisable. Mr. Vandeberg's
address is Ogden Murphy Wallace, P.L.L.C., 1601 Fifth Avenue, Suite 2100,
Seattle, Washington 98101-1686.
(8) Includes 75,000 options that are currently exercisable. Mr. Badgely's
address is 2815 Franklin Drive, Columbus, Indiana, 47201.
.
(9) Includes 5,073,200 shares registered in the name of Rand Energy Group Inc.
whose beneficial ownership is attributed to Mr. Robertson as set forth in Note
(2) above. See Note (5) above for an explanation of the beneficial ownership of
Rand Energy Group Inc. Mr. Robertson disclaims beneficial ownership of these
shares beyond the extent of his pecuniary interest. Also includes 935,000
options that are currently exercisable.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to the August 1992 Agreement we issued 5,700,000 shares of our Common
Stock at a deemed value of $0.01 per share to Rand Energy Group Inc., a
privately held British Columbia corporation ("RAND") in exchange for certain
valuable rights, technology, information, and other tangible and intangible
assets relating to the United States rights to the Original Engine. RAND is
owned 51% by Reg Technologies Inc., a British Columbia corporation listed on the
Canadian Venture Exchange ("Reg Tech"), and 49% by Rand Cam Engine Corp. Reg
Tech's President is also our President and its Vice President is also Vice
President of the Company.
We also agreed to pay semi-annually to RAND a royalty of 5% of any net profits
to be derived by us from revenues received as a result of its license of the
Original Engine.
<PAGE>
Page 28
In the April 1993 Agreement, an amendment to a previous Amendment Agreement
dated November 23, 1992, between RAND, Reg Tech and Brian Cherry (a former
officer and director) and an original agreement dated July 30, 1992, between
RAND, Reg Tech and Brian Cherry, Cherry agreed to: (a) sell, transfer and assign
to RAND all his right, title and interest in and to the technology related to
the RC/DC Engine, including all pending and future patent applications in
respect of the Technology for all countries except the United States of America,
together with any improvements, changes or other variations to the Technology;
(b) sell, transfer and assign to us (then called Sky Technologies Inc.), all his
right, title and interest in and to the Technology, including all pending and
future patent applications in respect of the Technology for the United States of
America, together with any improvements, changes or other variations to the
Technology.
Other provisions of the April 1993 Agreement call for us (a) to pay to RAND a
continuing royalty of 5% of the net profits derived from the Technology by us
and (b) to pay to Brian Cherry a continuing royalty of 1% of the net profits
derived from the Technology by us.
A final provision of the April 1993 Agreement assigns and transfers ownership to
us of any patents, inventions, copyrights, know-how, technical data, and related
types of intellectual property conceived, developed or created by RAND or its
associated companies either prior to or subsequent to the date of the agreement,
which results or derives from the direct or indirect use of the Original Engine
and/or RC/DC Engine technologies by RAND.
The terms of the agreements referenced above were negotiated by the parties in
non-arm's-length transactions but were deemed by the parties involved to be fair
and equitable under the circumstances existing at the time.
We are controlled by Rand Energy Group Inc., a privately held British Columbia
corporation ("RAND"), which, in turn, is controlled 51% by Reg Technologies
Inc., a publicly held British Columbia corporation ("Reg Tech") and 49% by Rand
Cam Engine Corp. SMR Investment Ltd., a British Columbia corporation, holds a
controlling interest in Reg Technologies Inc. Since May 1977 Mr. Robertson has
been President and a member of the Board of Directors of SMR Investments Ltd.
Susanne M. Robertson, Mr. Robertson's wife, owns SMR Investment Ltd. Rand Cam
Engine Corp. is a privately held company whose stock is reportedly owned 50% by
The Watchtower Society, a religious organization, 34% by James McCann and the
balance by several other shareholders. Mr. McCann has indicated that he donated
the shares held by The Watchtower Society to that organization but has retained
a voting proxy for those shares.
ITEM 13(a). EXHIBITS.
Number Description
----------------------------------------------------------------------------
3.1 Articles of Incorporation (1)
3.2 Article of Amendment changing name to REGI U.S., Inc. (2)
3.3 By-Laws (1)
4.1 Specimen Share Certificate (1)
4.2 Specimen Warrant Certificate (1)
10.1 Consulting Agreement, dated December 1, 1999, between
Regi U.S., Inc. and Patrick Badgley (3)
10.2 Special Service Proposal, dated December 21, 1999, between
Regi U.S. and ColTec, Inc (3)
10.3 Agreement between Coltec and REGI dated October 2000 (4)
Soyez sérieux un peu.
