<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended JANUARY 31, 1997
----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------- -----------------
Commission File No. 0-23920
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REGI U.S., INC.
---------------------------------------
(Exact 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 No.)
185-10751 SHELLBRIDGE WAY, RICHMOND, BC. CANADA V6X 2W8
-------------------------------------------------------
(Address of principal executive offices)
(604) 278-5996
--------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports 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.
YES X NO
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State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: As of March 10, 1997 - 8,123,300
shares of common stock, no par value.
<PAGE>
INDEX
PART I -- Financial Information
<TABLE>
<CAPTION>
Page
<S> <C>
Item 1. Financial statements.................................. 2
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Balance Sheets as of January 31, 1997 and 1996 (unaudited)..... 3
Statements of Operations for the three months and
nine months ended January 31, 1997 and 1996 (unaudited)... 4
Statement of Cash Flows for the nine months ended
January 31, 1997 and 1996 (unaudited)..................... 5
Notes to the Financial Statements.............................. 6
Item 2. Management's Discussion and Analysis of Results of
- ------ --------------------------------------------------
Operations and Financial Condition.................... 7-10
----------------------------------
PART II -- Other Information................................... 11
Signatures..................................................... 12
</TABLE>
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<PAGE>
PART I Financial Information
Item 1. Financial statements (Unaudited)
- ------ --------------------------------
-2-
<PAGE>
REGI U.S., Inc.
(A Development Stage Company)
Balance Sheets
as of January 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
January 31,
---------------------------
1997 1996
<S> <C> <C>
Assets
Current Assets
Cash $ 1,206 $ 54,913
Accounts receivable 799 -
Prepaid expenses - 6,090
Due from affiliate 65,269 -
----------- ------------
67,274 61,003
Computer equipment 4,871 10,021
Patents 44,409 32,168
------------ ------------
$ 116,654 $ 103,192
============ ============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 103,589 $ 57,462
Due to affiliate - 45,708
------------ ------------
103,589 103,170
------------ ------------
Stockholders' Equity
Common Stock (Note 1), 20,000,000
shares authorized without par value; 8,123,300
shares and 7,613,900 shares issued
and outstanding respectively 2,841,900 2,246,850
Deficit Accumulated During The Development Stage (2,828,935) (2,246,828)
------------ ------------
12,965 22
------------ ------------
$ 116,554 $ 103,192
============ ============
</TABLE>
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<PAGE>
REGI U.S., Inc.
(A Development Stage Company)
Statements of Operations
for the three months and nine months
ended January 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
January 31, January 31,
------------------------- -----------------------
1997 1996 1997 1996
Revenue $ - $ - $ - $ -
----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Administration Expenses
Advertising - stock 4,825 12,482 8,505 91,819
Bank charges 874 101 1,426 463
Investor relations 18,576 32,513 79,199 64,783
Foreign exchange (256) 155 1,014 361
Office, courier, printing and telephone 2,109 4,084 15,358 15,875
Professional fees 17,093 17,212 76,772 43,357
Transfer agent and regulatory 564 2,636 6,462 4,523
Travel 609 - 609 -
Less interest (122) (1,761) (675) (6,017)
------------- ------------- ------------ -----------
44,272 67,422 188,670 215,164
============= ============= ============ ===========
Research and Development Expenses
Depreciation 1,753 1,770 5,593 4,734
Market development - - 4,000 6,820
Professional fees 2 (180) 1,332 2,750
Project management 7,500 7,500 22,500 22,500
Project overhead 6,265 1,584 19,041 23,997
Prototype construction and testing 11,974 33,879 42,477 268,443
Technical consulting 23,586 - 49,444 1,455
Technical reports - - 1,001 -
Technical salaries 12,519 14,266 37,976 39,145
Travel 1,628 2,772 16,498 18,322
------------- ------------- ------------ -----------
65,227 61,591 199,862 388,166
------------- ------------- ------------ -----------
Net Loss $ (109,499) $ (129,013) $ (388,532) $ (603,330)
============= ============= ============ ===========
Net Loss Per Share $ (.01) $ (.02) $ (.05) $ (.08)
============= ============= ============ ===========
Weighted Average Shares Outstanding
(including redeemable shares) 8,028,000 7,551,900 $7,860,000 7,375,610
============= ============= ============ ===========
</TABLE>
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<PAGE>
REGI U.S., Inc.
(A Development Stage Company)
Statement of Cash Flows
for the nine months ended January 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
January 31,
-----------------------
1997 1996
<S> <C> <C>
Cash Flows to Operating Activities
Net loss $(388,532) $(603,330)
Adjustment to reconcile net loss to cash
Depreciation 5,593 4,734
(Increase) in accounts receivable (799) -
Decrease (increase) in prepaid expenses - (89)
Increase in accounts payable 28,520 22,590
----------- ----------
Net Cash Used in Operating Activities (355,218) (576,095)
----------- ----------
Cash Flows to Investing Activities
(Increase) in computer equipment - (4,588)
(Increase) in patent protection costs (13,625) (5,467)
Decrease in license (proceeds on sale) - 200,000
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Net Cash (Used in) provided by Investing Activities (13,625) 189,945
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Cash Flows from Financing Activities
Increase in common stock 549,300 910,350
(Decrease) in advance from affiliate (182,019) (535,729)
----------- ----------
367,281 374,621
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(Decrease) in Cash (1,562) (11,529)
Cash - Beginning of Period 2,768 66,442
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Cash - End of Period $ 1,206 $ 54,913
=========== ==========
</TABLE>
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<PAGE>
REGI U.S., Inc.
(A Development Stage Company)
Notes to the Financial Statements
for the nine months ended January 31, 1997
(Unaudited)
1. Common Stock
(a) Stock option activity
<TABLE>
<CAPTION>
Granted
April 30 during the January 31,
1996 Price period Exercised 1997
# $ # # # Expiry Date
<S> <C> <C> <C> <C> <C>
187,000 0.10 - 137,000 50,000 April 30, 1998
43,000 1.00 - - 43,000 April 30, 1998
135,000 1.00 - - 135,000 October 29, 1998
75,000 1.00 - - 75,000 February 9, 1999
35,000 2.75 - - 35,000 October 20, 1999
30,000 1.50 - - 30,000 January 15, 2000
5,000 2.50 - - 5,000 March 15, 2000
25,000 2.50 - - 25,000 August 11, 2000
5,000 2.50 - - 5,000 September 8, 2000
350,000 3.00 - - 350,000 January 3, 2001
------- -------- ------- -------
890,000 - 137,000 753,000
======= ======== ======= =======
</TABLE>
(b) Warrants outstanding
<TABLE>
<S> <C> <C>
# of Exercise Expiry
Shares Price
$
361,000 2.00 August 15, 1997
2.50 August 15, 1998
40,000 2.00 September 15, 1997
2.50 September 15, 1998
</TABLE>
2. Related Party Transactions
A management fee of $2,500 per month and rent of $500 per month has been paid
to a company controlled by a director.
A secretarial fee of $500 per month has been paid to an officer and director
of the Company.
A technical salary of $4,200 per month has been paid to an officer and
director of the Company.
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<PAGE>
..2..
Item 2. Management's Discussion and Analysis of Results of Operations and
- ------- -----------------------------------------------------------------
Financial Condition
-------------------
Management's Discussion
- -----------------------
Directors Report for the Period Ending October 31, 1996
- -------------------------------------------------------
Progress Reports from May 1, 1996 to February 28, 1997
- ------------------------------------------------------
February 26, 1997 Reg Technologies, Inc. reported that a successful preliminary
system function test was conducted in Detroit, MI. The test consisted of a
simulated vehicle with all the components, evaporator, condenser, control
valves, fan and ducts on the Rand Cam(TM) Air Conditioning Compressor.
"The unit performed as designed and met our expectations" stated Paul Lamarche,
our project engineer. The test was to evaluate the Rand Cam(TM) Compressor
cooling cycle using the non-polluting 134A Freon.
January 17, 1997 Reg Technologies, Inc. reported that a series of programs
commenced on the Rand Cam(TM) Compressor and Diesel Engine as follows:
. The AIR CONDITIONING COMPRESSOR has been successfully tested at 3,700 RPM
with 260 PSI, the best result to date. The next stage for the compressor
testing will take place at the ETL test facilities in Cortland, NY.
. The DIESEL ENGINE PROTOTYPE testing will commence after an engineering
analysis which is now being completed in Detroit, MI by Paul Lamarche, our
engineering consultant.
. The MEDICAL APPLICATION COMPRESSOR DESIGN has been completed and the
fabricating of the prototype model is to commence this month.
. Three SMALL BUSINESS INNOVATIONS RESEARCH (SBIR) program applications have
been submitted to the US government for funding by Pat Badgley, Vice
President of Research & Development, for the Rand Cam(TM) Engine. The
funding is for the US Department of Defence motorcycle, boat and small
airplane applications.
Several companies in Europe, Asia, and India have also expressed interest in
license agreements for the Rand Cam(TM) Engine motorcycle. This month our
engineers will commence a design for a prototype motorcycle Rand Cam(TM) Engine.
DECEMBER 27, 1996 Reg Technologies, Inc. reported that the Company has received
a year ending 1996 outline of the Rand Cam(TM) Air Conditioning Compressor
development test program from Paul Lamarche, our engineering consultant.
An extensive testing and hardware development program was instituted on November
2, 1996 reaching the performance goals of the specs set by the automotive
industry to qualify the Rand Cam(TM) air conditioning compressor.
A set of an excess of twenty tests were performed at various speeds, using
various materials, and two phases of hardware models.
Phase 1 / Aluminum housing with a pin track, guide to dynamically locate
the vanes.
Phase 2 / Cast Iron housing with the vanes self locating against the cams.
-7-
<PAGE>
..3..
NOVEMBER 1, 1996 Global Aircraft Corporation has verbally notified REGI U.S./Reg
Technologies that the NASA GAP Proposal was not awarded to Global/REGI/Reg Tech.
The NASA GAP program was applied for to provide one dollar of support for every
dollar spent by Reg/REGI for a light weight aircraft engine.
Therefore, Global will not receive a world wide unlimited license for aviation
applications of the Rand Cam(TM) Engine pursuant to our agreement.
OCTOBER 28, 1996 Reg Technologies, Inc. announced that an agreement with the
Quincy Compressor Division, a Coltec Industries Company, has been completed to
build a low pressure compressor for medical applications.
OCTOBER 2, 1996 Reg Technologies, Inc. reported that the modifications
recommended by Paul Lamarche, our engineering consultant, and Patrick Badgley,
our Vice President for REGI Research & Development on the Rand Cam(TM) project,
has commenced at Five Star Industries in Detroit, MI an Aerospace components
developer.
OCTOBER 1, 1996 Reg Technologies, Inc. announced that the Rand Cam(TM) Diesel
Engine commenced testing on Thursday, September 26, 1996. The Rand Cam(TM)
Diesel Engine was tested at Adiabatics, Inc. in Columbus, Indiana.
The Engine was installed in an engine test cell which has a 50 horsepower D.C.
dynamometer which can motor the engine over a wide speed range as well as absorb
power from the engine. The test stand has an in-line, strain gage type
torquemeter for measuring the power transmitted in the shaft from the engine to
the dynamometer. The test cell was completed instrumentation to measure speed,
temperatures and pressures. The data gathered on a computer data logger.
Based on the report by Patrick Badgley, Vice President in charge of Research &
Development the first test was very positive and the hardware looks very good.
The completion date for the said modifications is within 2-3 weeks. The
modifications are now underway and the second series of tests will commence as
soon as the modifications are completed.
SEPTEMBER 13, 1996 Reg Technologies, Inc. announced that a progress report was
received from Paul Lamarche, our engineering consultant, regarding the latest
test results on the Rand Cam(TM) Compressor at ETL Labs in Cortland, NY.
The compressor was run at 1,200 RPM, 2,000 RPM, 3,000 RPM and 4,000 RPM. The
system worked very well as far as keeping the hardware cool. The compressor
remained at room temperature during the test runs.
On Test #1 the compressor was run at 1,200 RPM and 2,000 RPM on Test #2 and was
reported to be successful. The data showed that the discharge temperatures were
higher than the suction temperature. This meant that the compressor was
functioning properly.
JULY 15, 1996 Reg Technologies, Inc. announced that we have agreed to a
cooperative agreement to participate with Global Aircraft Corporation in the
NASA GAP program.
The GAP program concept would be based on an $8.5 million (US) program which
would consist of $5 million for Rand Cam(TM) engine development. Global support
would be targeted at $3.5 million for design, construction, and testing of the
airplane which will serve as the demonstration platform for our Rand Cam(TM)
engine.
-8-
<PAGE>
..4..
NASA will provide one dollar of support for every dollar Reg/REGI spends plus
provide additional NASA technical support at no cost to Reg/REGI.
JULY 8, 1996 Reg Technologies, Inc. announced that the fabricating is completed
and assembling of the Diesel Engine is now underway. Testing will take place
under the direction of the major designer of the diesel engine, Pat Badgley,
Vice President of REGI U.S. Inc.'s Research and Development. Paul Lamarche, PhD,
of Detroit, has been contracted by REGI to assist in the testing of the Rand
Cam(TM) Diesel Engine. His experience includes the successful testing of the
Rand Cam(TM) Gasoline prototype in Detroit, in January of 1995, whereas one hour
of testing resulted in positive torque outputs and good throttle response.
The Rand Cam(TM) Diesel Engine will be a demonstrator model to prove that the
technology is real. The engine has twelve vanes, no vane seals, continuous
injection, K-Miller cycle, extended combustion and is designed to power a 60KW
generator.
This demonstration model will be used to attract license and joint venture
agreements for the Company.
MAY 23, 1996 Reg Technologies, Inc. announced that the Rand Cam(TM) compressor
is back at ETL in Cortland, NY from our fabricating facilities in California.
ETL, an experienced compressor testing company, and Pat Badgley, our engineer,
has recommended some minor modifications. The fabricating facilities in
California reports that there have been no leaks and it is rotating freely.
Preliminary testing will begin to test the compressor as an air conditioning
unit for automobiles commencing this evening and will continue through Friday,
May 24, 1996. The Rand Cam(TM) air conditioning unit is a very quiet and smooth
unit and is 1/2 the size of existing air conditioning units used in automobiles
today.
FUTURE PLANS FOR 1997 The Company plans on completing the development of the
Rand Cam(TM) Compressor and Diesel Engine prototypes for demonstration purposes
to potential license and/or joint venture companies.
Results of operations for the nine months ended January 31, 1997 compared to the
- --------------------------------------------------------------------------------
nine months ended January 31, 1996
- ----------------------------------
There were no revenues from product licensing during the periods.
The net loss in 1997 decreased by $214,798 to $388,532 compared to $603,330 in
1996. The decreased net loss in 1997 was due to administrative expenses which
decreased by $26,494 to $188,670 as compared to $215,164 in 1996. The major
components of this decrease was due to a decrease in advertising of stock by
$83,314 to $8,505 as compared to $91,819 in 1996; professional fees increased by
$33,415 to $76,772 as compared to $43,357 in 1996. During 1997, research and
development costs decreased by $188,304 to $199,862 compared to $388,166 in
1996. The decrease was due to very low prototype construction activity during
1997 as compared to extensive completion of prototypes in 1996. Prototype costs
decreased by $225,966 to $42,477 compared to 268,443 in 1996.
Results of operations for the three months ended January 31, 1997 compared to
- -----------------------------------------------------------------------------
the three months ended January 31, 1996
- ---------------------------------------
There were no revenues from product licensing during the periods.
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<PAGE>
..5..
The net loss in 1997 decreased by $19,514 to $109,499 compared to $129,013 in
1996. The decreased net loss in 1997 was due to administrative expenses which
decreased by $23,150 to $44,272 as compared to $67,422 in 1996. The major
components of this decrease was due to a decrease in investor relations and
advertising stock of $21,594 to $23,401 as compared to $44,995 in 1996. Research
and development costs remained constant for both 1997 and 1996.
Liquidity
- ---------
During the nine months ended January 31, 1997, the Company financed its
operations, in part, from proceeds from two private placements whereby the
Company received $40,000 and issued 20,000 shares at $2.00 per share and
received $217,500 and issued 145,000 shares at $1.50 per share. During the
period the Company received $13,700 pursuant to options exercised and issued
137,000 shares at $.10 per share. A total of $278,100 was received, and 185,400
shares issued, pursuant to warrants exercised at $1.50 per share. The Company's
financial resources, including an opening cash balance as at April 30, 1996 of
$2,768, totalled $552,068. Cash used, as a result of the net loss for the
period, totalled $355,218, after adjustments to reconcile net loss to cash.
During the period the Company spent $13,625 on patent protection costs and
$182,019 paying down an amount owing to an affiliate. After the above cash
outflows the Company was left with $1,206 as at January 31, 1997. On January 17,
1997 a private placement was negotiated for 100,000 units at $1.20 per unit.
Each unit consists of one share and one two-year warrant entitling the investors
to purchase one additional share at $1.20 in the first year and $1.40 in the
second year. These funds will be used for further development of the Rand Cam
(TM) Engine, pay off January 31, 1997 net accounts payable totalling $37,521 and
to provide working capital.
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<PAGE>
..6..
PART II Other Information
Item 1. Legal Proceedings
- ------- -----------------
None
Item 2. Changes in Securities
- ------- ---------------------
None
Item 3. Defaults upon Senior Securities
- ------- -------------------------------
None
Item 4. Submissions of Matters to a Vote of Security Holders
- ------- ----------------------------------------------------
None
Item 5. Other Information
- ------- -----------------
None
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
None
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<PAGE>
..7..
Signatures
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: March 13, 1997 REGI U.S., INC.
By: /s/ John G. Robertson
------------------------------------------
John G. Robertson, President
(Principal Executive Officer)
By: /s/ Jennifer Lorette
------------------------------------------
Jennifer Lorette, Chief Financial Officer
(Principal Financial Officer)
-12-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 1,206
<SECURITIES> 0
<RECEIVABLES> 799
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 67,274
<PP&E> 65,204
<DEPRECIATION> 15,924
<TOTAL-ASSETS> 116,654
<CURRENT-LIABILITIES> 103,589
<BONDS> 0
0
0
<COMMON> 2,841,900
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 116,554
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 388,532
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (388,532)
<INCOME-TAX> 0
<INCOME-CONTINUING> (388,532)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (388,532)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
