Quarterly Report

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Results of Operations

For the three and nine months ended January 31, 2006 and since the date of inception, we have generated no revenues.

We incurred total operating expenses of $388,702 for the three months ended January 31, 2006, as compared to $54,326 for the three months ended January 31, 2005. The increase for the period ended January 31, 2006was attributed to $397,815 in stock-based compensation, increases in consulting fees, professional fees, investor relations and promotion expense in the marketing efforts of our engine and technology. The balance of the expenses consisted of general operating expenses, including research and development expenses, and accounting fees incurred in connection with the day-to-day operation of our business and the preparation and filing of our periodic reports.

Our total comprehensive loss for the three month period ended January 31, 2006 was $386,483, or $0.01 per share, as compared to a comprehensive loss of $86,634, or $0.01 per share, for the three month period ended January 31, 2005. We have incurred a total net loss of $2,919,944 from the date of incorporation on September 2, 2003 to January 31, 2006.

There was no cash provided by investing activities for the three month period ended January 31, 2006.

Cash provided by financing activities for the nine month period ended January 31, 2006 was $107,560, consisting of $125,441 received in connection with the issuance of common stock; $15,000 deposit received in advance of share issuance; $1,704 in advances payable; and ($34,585) in amounts due to related parties.

During the nine-month period ended January 31, 2006, we completed a private placement of 488,160 common shares valued between $0.14 and $0.36 per share. Total proceeds to us was $125,441.

During the nine-month period ended January 31, 2006, we issued 2,396,071 shares for services valued at $746,377.

On November 1, 2005, we entered into a consulting agreement with an unrelated party for a one-year term ending November 1, 2006.

During November and December, 2005, we completed a private placement of 98,160 common shares valued between $0.14 and $0.27 per share. Total proceeds to us was $25,441. We also granted 2,160 share purchase warrants with an exercise price of $0.50 per share expiring November 29, 2007 and December 23, 2007.

On November 11, 2005, we entered into an agreement with an unrelated party for a one-year term ending November 11, 2006 for printing work. Compensation for the contract is 100,000 shares valued at $0.50 per share.

On November 15, 2005, we entered into a contract with an unrelated party for the purchase of certain inventory for a related party in exchange of 611,048 shares valued at $0.29 per share for a total value of $177,204.

On December 2, 2005, we entered into a consulting agreement with an unrelated party for a one-year term ending December 2, 2006. As compensation for the contract we granted 125,000 share purchase warrants with an exercise price of $0.50 per share expiring on December 2, 2007.

On January 10, 2006, we issued 2,500,000 share purchase warrants to four officers with an exercise price of $0.25 per share expiring on January 12, 2011.

On January 10, 2006, we entered into a consulting agreement with an unrelated party for a one-year term ending January 10, 2007. As compensation for the contract, we granted 250,000 share purchase warrants with an exercise price of $0.25 per share expiring on January 12, 2011.

On January 10, 2006, we entered into a consulting agreement with an unrelated party for a one-year term ending January 10, 2007. As compensation for the contract, we granted 250,000 shares valued at $0.15 per share and 250,000 share purchase warrants with an exercise price of $0.25 per share expiring on January 12, 2011.

On January 10, 2006, we entered into a consulting agreement with an unrelated party for legal services. As compensation for the contract, we granted 16,667 shares valued at $0.15 per share.

On January 23, 2006, we entered into an agreement with an unrelated party to pay a commission bonus. As compensation for the contract, granted 68,287 shares valued at $0.31 per share.

At January 31, 2006, there were no common stock purchase options outstanding.

Our ability to continue as a going concern is wholly dependent on our ability to complete our engine, successfully market the technology and generate revenues.

During the current period, we issued a total of 9,502,160 new incentive share purchase warrants with an exercise price of $0.25 and $0.50 per share to directors, officers, consultants and employees. At January 31, 2006, the following share purchase warrants were outstanding:

<CAPTION>
Price
Number of per Expiry Date
Warrants Share
-----------------------------------------------
5,000,000 $0.50 November 26, 2006
2,000,000 $0.50 August 11, 2007
1,125,000 $0.50 August 23, 2007
3,000,000 $0.50 August 24, 2007
250,000 $0.50 September 28, 2007
1,154 $0.50 November 29, 2007
125,000 $0.50 December 5, 2007
1,006 $0.50 December 23, 2007
3,000,000 $0.25 January 12, 2011
----------
14,502,160
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Subsequent to the period ended, we entered into a consulting agreement with an unrelated party for a three-month term ending May 7, 2006. As compensation for the contract, we granted 22,059 shares valued at $0.34 per share.
We also issued 60,000 shares valued at $0.30 per share to an unrelated party, of which $15,000 was deposited prior to January 31, 2006. The remaining amount of $3,000 was paid subsequent to the period end.

Liquidity and Capital Resources

We expect our current cash in the bank of $22,516, plus monies we expect to receive from exercise of warrants during the ensuing year to satisfy our cash requirements until we complete our engine technology and are able to generate revenues. We expect to be able to satisfy our cash requirements for at least the next twelve months without having to raise additional funds or seek bank loans; however, there we cannot guarantee that the funds will be sufficient. We may have to raise additional monies through sales of our equity securities or through loans from banks or third parties to continue our business plans; however, no such plans have yet been implemented.

Our total stockholders' equity at January 31, 2006, was $563,602.

We do not intend to purchase any significant property or equipment, nor incur any significant changes in employees during the next six months.

Plan of Operation

We are a development stage company formed to develop and market a new type of patented oscillating piston engine. The oscillating piston engine (OPE) weighs only a fraction of a conventional engine and requires no valves or valve train, nor a cumbersome water cooling system. However, despite its lighter weight, to date we have not yet perfected the technology or proven that the oscillating piston engine can function as well as a conventional engine.

We have acquired the prototype engine and certain rights to the patents from the inventor and engineering team through an Option Agreement that gives us the rights to further develop the engine to the point where it can successfully be marketed and sold. We do not currently own all of the intellectual property or patents related to the OPE and the underlying technology and the proceeds of our current offering will not provide us with enough capital to buy these intellectual property and patent rights. However, the Option Agreement also grants us the right to purchase the patents underlying the technology at any time on or before 18 or 36 months from the date of the initial payment of the $100,000 deposit (May 31, 2004) for $1,000,000, if within 18 months, or $1,500,000 if within 36 months. In addition, the option may be assigned or transferred to another party without the prior approval of the Optionor. During the term of the option, we have the exclusive right to manufacture and market all products covered by the patents. We are in the process of testing and improving on the patented design. However, the engine, which has not had a test run since 1995, has not been tested in a vehicle or other device; has experienced critical mechanical failures in the past; and may experience more failures in the future.

We are in the development stage; have not yet generated any revenues and have sustained net losses of $2,919,944 since inception. Our business plans are to develop the technology and build a prototype engine that can be sublicensed or sold to third party manufacturers for amounts sufficient to generate the funds to purchase the patent rights subject of the option agreement; however, if we are unable to do so prior to the expiration date of the option, we would need to raise additional capital through loans or equity sales, or rely on receipt of the cash we would receive from exercise of any warrants sold in our current offering to exercise the option. In addition, based on our current development plans, we will not generate any revenues or profits over the next 12 months while we are completing and testing the engine and technology. Our auditors have expressed substantial doubt about our ability to continue as a going concern.

We currently plan to complete the design, construction and testing of our second generation engine during 2006, however, there is no guarantee we will ever be successful in developing an engine that will merit the further development of our proposed final third generation engine, which is currently planned for late 2006 or early 2007. In any such event, our business plans would fail.

It should be noted that there is no certainty that we will be successful in carrying out any of the business strategies above and the proceeds we received from our current equity securities offering will not be sufficient to fund all of our business plans listed above. Additionally, it should be noted that the completion of the second generation engine is not expected to result in any sales, or otherwise generate any revenues.

Critical Accounting Policies

The unaudited financial statements as of January 31, 2006 included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. It is suggested that these financial statements be read in conjunction with our April 30, 2005 audited financial statements and notes thereto, which can be found in our Form 10K-SB Annual Report, filed on the SEC website at www.sec.gov under our SEC File No. 333-116324.

We have accounted for patent costs in accordance with Statement of Financial Accounting Standards (SFAS) 142 - "Goodwill and Other Intangible Assets". In accordance with that statement, intangible assets with estimatable lives, such as a patent, are amortized on a straight-line basis over the estimated useful lives and are reviewed for impairment in accordance with SFAS 144 - "Accounting for the Impairment of Long-Lived Assets". The patent costs will be amortized over their estimated useful lives upon exercise of the option.

We have also adopted SFAS No. 52, Foreign Currency Translation, which requires that the translation of the applicable foreign currency into U.S. dollars be performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. The gains or losses resulting from such translation are included in the consolidated statements of stockholders' equity and comprehensive income.