UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended October 31, 2008
Commission File Number: 333-116324
ROTOBLOCK CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Nevada 20-08987999
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Employer Identification No.)
300 B Street, Santa Rosa, CA. 95401
(Address of Principal Executive Offices) (Zip Code)
(707) 578-5220
(Registrant's Telephone Number, Including Area Code)
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 whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ___ Accelerated filer ___ Non-accelerated filer X
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X
At October 31, 2008, there were 38,259,776 shares of our common stock issued and outstanding.
TABLE OF CONTENTS
| | | Page |
| | PART I - FINANCIAL INFORMATION | |
| | | |
| ITEM 1. | Consolidated Financial Statements | 3 |
| | | |
| ITEM 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| | | |
| ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | 23 |
| | | |
| ITEM 4. | Controls and Procedures | 23 |
| | | |
| | PART II - OTHER INFORMATION | |
| | | |
| ITEM 1. | Legal Proceedings | 23 |
| | | |
| ITEM 1A. | Risk Factors | 23 |
| | | |
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 24 |
| | | |
| ITEM 3. | Defaults Upon Senior Securities | 25 |
| | | |
| ITEM 4. | Submission of matters to a Vote of Security Holders | 25 |
| | | |
| ITEM 5. | Other Information | 25 |
| | | |
| ITEM 6. | Exhibits | 25 |
PART I - FINANCIAL INFORMATION
Item 1. Consolidated financial statements
The consolidated financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the period presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our registration statement annual report on Form 10-KSB for the fiscal year ended April 30, 2008, filed with the U.S. Securities and Exchange Commission on August 13, 2008, which can be found on the SEC website (www.sec.gov) under our name or SEC File Number 000-51428.
Rotoblock Corporation
(A Development Stage Company)
Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
31 October 2008
Rotoblock Corporation
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in U.S. Dollars)
_________________________________________________________________________________________________________________________________________________________________________________
| | | As at 31 October 2008 (Unaudited) | | As at 30 April 2008 (Audited) |
| | | $ | | $ |
| Assets | | | | |
| | | | | |
| Current | | | | �� |
| Cash and cash equivalents | | 27,223 | | 91,947 |
| Accounts receivable | | 183 | | 219 |
| Prepaid expenses | | 56,328 | | 26,072 |
| | | | | |
| | | 83,734 | | 118,238 |
| | | | | |
Patents (Note 3) | | 108,745 | | 108,745 |
Property and equipment (Note 4) | | 2,694 | | - |
| | | | | |
| | | 195,173 | | 226,983 |
| Liabilities | | | | |
| | | | | |
| Current | | | | |
| Accounts payable and accrued liabilities (Note 5) | | 10,100 | | 10,281 |
| Convertible promissory note payable (Note 7) | | - | | 10,000 |
| Due to related party (Note 9) | | 552 | | 658 |
| Interest payable (Note 6) | | 11,705 | | 11,705 |
| | | | | |
| | | 22,357 | | 32,644 |
| | | | | |
| Stockholders’ equity | | | | |
Capital stock (Note 11) | | | | |
| Authorized | | | | |
| 75,000,000 common shares, par value $0.001 | | | | |
| Issued and outstanding | | | | |
| 31 October 2008 – 38,259,776 common shares, par value $0.001 | | | | |
| 30 April 2008 – 36,196,442 common shares, par value $0.001 | | 38,260 | | 36,196 |
| Additional paid-in capital | | 4,973,225 | | 4,669,814 |
| Warrants | | 280,274 | | 114,303 |
| Accumulated comprehensive loss | | (4,198) | | (4,268) |
| Deficit, accumulated during the development stage | | (5,114,745) | | (4,621,706) |
| | | | | |
| | | 172,816 | | 194,339 |
| | | | | |
| | | 195,173 | | 226,983 |
Nature and Continuance of Operations (Note 1), Commitments (Note 13) and Subsequent Event (Note 15)
On behalf of the Board:
/s/ Chien Chih Liu, Director /s/ Richard Di Stefano, Director
The accompanying notes are an integral part of these consolidated financial statements.
Rotoblock Corporation
(A Development Stage Company)
Consolidated Statements of Operations
(Expressed in U.S. Dollars)
(Unaudited)
________________________________________________________________________________________________________________________________________________________________________________
| | | For the period from the date of inception on 2 September 2003 to 31 October 2008 (Unaudited) | | For the three months ended 31 October 2008 | | For the three months ended 31 October 2007 | | For the six months ended 31 October 2008 | | For the six months ended 31 October 2007 |
| | | $ | | $ | | $ | | $ | | $ |
| | | | | | | | | | | |
| Expenses | | | | | | | | | | |
| General and administrative (Schedule 1) | | 4,942,533 | | 102,320 | | 98,489 | | 493,039 | | 164,123 |
| | | | | | | | | | | |
| Net loss before other items | | (4,942,533) | | (102,320) | | (98,489) | | (493,039) | | (164,123) |
| | | | | | | | | | | |
| Other items | | | | | | | | | | |
| Excess of consideration over net assets purchased from Rotoblock Inc. (Note 1) | | (138) | | - | | - | | - | | - |
| Write-off of property and equipment | | (9,870) | | - | | - | | - | | - |
| Write-off of related party receivable | | (162,204) | | - | | - | | - | | - |
| | | | | | | | | | | |
| Loss for the period | | (5,114,745) | | (102,320) | | (98,489) | | (493,039) | | (164,123) |
| | | | | | | | | | | |
Basic and diluted loss per common share | | | | (0.003) | | (0.003) | | (0.013) | | (0.005) |
| | | | | | | | | | | |
Weighted average number of common shares used in per share calculations | | | | 38,158,689 | | 33,659,431 | | 37,764,377 | | 31,202,339 |
| | | | | | | | | | | |
| Comprehensive loss | | | | | | | | | | |
| Loss for the period | | (5,114,745) | | (102,320) | | (98,489) | | (493,039) | | (164,123) |
| Foreign currency translation adjustment | | (4,198) | | 66 | | 8 | | 70 | | 4 |
| | | | | | | | | | | |
| Comprehensive loss | | (5,118,943) | | (102,254) | | (98,481) | | (492,969) | | (164,119) |
| | | | | | | | | | | |
| Comprehensive loss per common share | | | | (0.003) | | (0.003) | | (0.013) | | (0.005) |
The accompanying notes are an integral part of these consolidated financial statements.
Rotoblock Corporation
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
(Unaudited)
_________________________________________________________________________________________________________________________________________________________________________________
| | For the period from the date of inception on 2 September 2003 to 31 October 2008 (Unaudited) | For the six months ended 31 October 2008 | For the six months ended 31 October 2007 |
| | | $ | | $ | | $ |
| | | | | | | |
| Cash flows from operating activities | | | | | | |
| Loss for the period | | (5,114,745) | | (493,039) | | (164,123) |
| Adjustments to reconcile loss to net cash used by operating activities | | | | | | |
| Contributions to capital by related party – expenses (Note 10) | | 250,000 | | 50,000 | | 50,000 |
| Depreciation | | 4,214 | | 246 | | - |
| Non-cash interest | | 11,705 | | - | | - |
| Shares issued for services (Notes 11 and 14) | | 1,305,122 | | 208,744 | | 77,238 |
| Stock-based compensation (Notes 11 and 14) | | 2,523,998 | | 147,446 | | 5,383 |
| Write-off of property and equipment | | 9,870 | | - | | - |
| Write-off of related party receivable | | 177,204 | | - | | - |
| Changes in operating assets and liabilities | | | | | | |
| (Increase) decrease in accounts receivable | | (183) | | 36 | | (13) |
| Increase (decrease) in accounts payable and accrued liabilities | | 10,102 | | (181) | | 12,938 |
| | | | | | | |
| | | (822,713) | | (86,748) | | (18,577) |
| | | | | | | |
| Cash flows used in investing activities | | | | | | |
| Purchase of equipment | | (16,778) | | (2,940) | | - |
| Purchase of patents | | (108,745) | | - | | - |
| | | | | | | |
| | | (125,523) | | (2,940) | | - |
| Cash flows from financing activities | | | | | | |
| Common shares issued for cash | | 886,941 | | 6,475 | | 18,000 |
| Warrants granted for cash | | 72,164 | | 18,525 | | - |
| Warrants exercised | | 10,000 | | - | | - |
| Convertible promissory note payable | | 10,000 | | - | | - |
| Increase (decrease) in due to related party | | 552 | | (106) | | 39 |
| | | | | | | |
| | | 979,657 | | 24,894 | | 18,039 |
| | | | | | | |
| Foreign exchange effect on cash | | (4,198) | | 70 | | 4 |
| | | | | | | |
| Increase (decrease) in cash and cash equivalents | | 27,223 | | (64,724) | | (534) |
| | | | | | | |
| Cash and cash equivalents, beginning of period | | - | | 91,947 | | 1,482 |
| | | | | | | |
| Cash and cash equivalents, end of period | | 27,223 | | 27,223 | | 948 |
Supplemental Disclosures with Respect to Cash Flows (Note 14)
The accompanying notes are an integral part of these consolidated financial statements.
Rotoblock Corporation
(A Development Stage Company)
Consolidated Statements of Changes in Stockholders’ Equity
(Expressed in U.S. Dollars)
(Unaudited)
________________________________________________________________________________________________________________________________________________________________________________
| | Number of shares issued | Capital stock | Additional paid-in capital | Warrants | Accumulated comprehensive loss | Deficit accumulated during the development stage | Stockholders’ equity |
| | | | | $ | | $ | | $ | | $ | | $ | | $ |
| Balance at 2 September 2003 | | | | | | | | | | | | | | |
Shares issued for cash | | 7,000,000 | | - | | 534 | | - | | - | | - | | 534 |
Shares issued for cash | | 200,000 | | - | | 38,130 | | - | | - | | - | | 38,130 |
Adjustment to number of shares issued as a result of the acquisition of net assets of Rotoblock Inc. (Note 1) | | (7,200,000) | | - | | - | | - | | - | | - | | - |
| Shares issued in connection with the acquisition of net assets of Rotoblock Inc. (Note 1) | | 15,000,000 | | 15,000 | | (15,000) | | - | | - | | - | | - |
| Excess of consideration over net assets purchased from Rotoblock Inc. (Note 1) | | - | | - | | - | | - | | - | | (138) | | (138) |
| Foreign currency translation adjustment | | - | | - | | - | | - | | (1,918) | | - | | (1,918) |
Net loss for the period | | - | | - | | - | | - | | - | | (108,443) | | (108,443) |
| | | | | | | | | | | | | | | |
| Balance at 30 April 2004 (Unaudited) | | 15,000,000 | | 15,000 | | 23,664 | | - | | (1,918) | | (108,581) | | (71,835) |
Shares issued for cash ($0.05 per share) | | 10,000,000 | | 10,000 | | 490,000 | | - | | - | | - | | 500,000 |
Foreign currency translation adjustment | | - | | - | | - | | - | | (1,385) | | - | | (1,385) |
Net loss for the year | | - | | - | | - | | - | | - | | (306,193) | | (306,193) |
| | | | | | | | | | | | | | | |
| Balance at 30 April 2005 (Unaudited) | | 25,000,000 | | 25,000 | | 513,664 | | - | | (3,303) | | (414,774) | | 120,587 |
Shares issued for cash ($0.26 per share) (Note 11) | | 548,160 | | 548 | | 142,893 | | - | | - | | - | | 143,441 |
Shares issued for services rendered ($0.31 per share) (Note 11) | | 2,418,130 | | 2,418 | | 751,459 | | - | | - | | - | | 753,877 |
| Shares issued for inventory ($0.29 per share) (Note 11) | | 611,048 | | 611 | | 176,593 | | - | | - | | - | | 177,204 |
| Warrants exercised ($0.25 per share) (Note 11) | | 40,000 | | 40 | | 9,960 | | - | | - | | - | | 10,000 |
Stock-based compensation | | - | | - | | 1,901,177 | | - | | - | | - | | 1,901,177 |
| Foreign currency translation adjustment | | - | | - | | - | | - | | (950) | | - | | (950) |
Net loss for the year | | - | | - | | - | | - | | - | | (2,767,259) | | (2,767,259) |
| | | | | | | | | | | | | | | |
| Balance at 30 April 2006 | | 28,617,338 | | 28,617 | | 3,495,746 | | - | | (4,253) | | (3,182,033) | | 338,077 |
Shares issued for cash ($0.21 per share) (Note 11) | | 114,286 | | 114 | | 23,886 | | - | | - | | - | | 24,000 |
Shares issued for services rendered (Note 11) | | 1,709,262 | | 1,709 | | 190,356 | | - | | - | | - | | 192,065 |
| Contribution to capital by related parties – services (Notes 10 and 11) | | - | | - | | 100,000 | | - | | - | | - | | 100,000 |
| Stock-based compensation (Note 11) | | - | | - | | 414,711 | | - | | - | | - | | 414,711 |
| Foreign currency translation adjustment | | - | | - | | - | | - | | (5) | | - | | (5) |
Net loss for the year | | - | | - | | - | | - | | - | | (863,582) | | (863,582) |
| | | | | | | | | | | | | | | |
| Balance at 30 April 2007 | | 30,440,886 | | 30,440 | | 4,224,699 | | - | | (4,258) | | (4,045,615) | | 205,266 |
| | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
Rotoblock Corporation
(A Development Stage Company)
Consolidated Statements of Changes in Stockholders’ Equity - Cont’d
(Expressed in U.S. Dollars)
(Unaudited)
________________________________________________________________________________________________________________________________________________________________________________
| | Number of shares issued | Capital Stock | Additional paid-in capital | Warrants | Accumulated comprehensive loss | Deficit accumulated during the development stage | Stockholders equity |
| | | | | $ | | $ | | $ | | $ | | $ | | $ |
| | | | | | | | | | | | | | | |
| Balance at 30 April 2007 | | 30,440,886 | | 30,440 | | 4,224,699 | | - | | (4,258) | | (4,045,615) | | 205,266 |
Shares issued for cash ($0.07 per share) (Note 11) | | 2,580,000 | | 2,580 | | 171,781 | | - | | - | | - | | 174,361 |
| Warrants granted | | - | | - | | - | | 53,639 | | | | | | 53,639 |
Shares issued for services rendered (Notes 11 and 13) | | 3,175,556 | | 3,176 | | 173,334 | | - | | - | | - | | 176,510 |
| Contribution to capital by related parties – services (Notes 9 and 13) | | - | | - | | 100,000 | | - | | - | | - | | 100,000 |
| Stock-based compensation (Note 11) | | - | | - | | - | | 60,664 | | - | | - | | 60,664 |
| Foreign currency translation adjustment | | - | | - | | - | | - | | (10) | | - | | (10) |
| Net loss for the year | | - | | - | | - | | - | | - | | (576,091) | | (576,091) |
| | | | | | | | | | | | | | | |
| Balance at 30 April 2008 | | 36,196,442 | | 36,196 | | 4,669,814 | | 114,303 | | (4,268) | | (4,621,706) | | 194,339 |
| Shares issued for cash ($0.04 per share) (Note 11) | | 166,667 | | 167 | | 6,308 | | - | | - | | - | | 6,475 |
| Warrants granted | | - | | - | | - | | 18,525 | | - | | - | | 18,525 |
| Shares issued for services rendered (Notes 11 and 13) | | 1,796,667 | | 1,797 | | 237,203 | | - | | - | | - | | 239,000 |
| Shares issued for debt (Note 11) | | 100,000 | | 100 | | 9,900 | | - | | - | | - | | 10,000 |
| Contribution to capital by related parties – services (Notes 7 and 11) | | - | | - | | 50,000 | | - | | - | | - | | 50,000 |
Stock-based compensation (Notes 10 and 11) | | - | | - | | - | | 147,446 | | - | | - | | 147,446 |
| Foreign currency translation adjustment | | - | | - | | - | | - | | 70 | | - | | 70 |
| Net loss for the period | | - | | - | | - | | - | | - | | (493,039) | | (493,039) |
| | | | | | | | | | | | | | | |
| Balance at 31 October 2008 | | 38,259,776 | | 38,260 | | 4,973,225 | | 280,274 | | (4,198) | | (5,114,745) | | 172,816 |
The accompanying notes are an integral part of these consolidated financial statements.
Rotoblock Corporation
(A Development Stage Company)
Schedule 1 – Consolidated General and Administrative Expenses
(Expressed in U.S. Dollars)
(Unaudited)
________________________________________________________________________________________________________________________________________________________________________________
| | For the period from the date of inception on 2 September 2003 to 31 October 2008 (Unaudited) | For the three months ended 31 October 2008 | For the three months ended 31 October 2007 | For the six months ended 31 October 2008 | For the six months ended 31 October 2007 |
| | | $ | | $ | | $ | | $ | | $ |
| | | | | | | | | | | |
| Consulting fees (Notes 10 and 14) | | 788,011 | | 2,362 | | 45,193 | | 120,239 | | 69,390 |
| Depreciation | | 4,214 | | 148 | | - | | 246 | | - |
| Foreign exchange loss | | 1,545 | | - | | - | | - | | - |
| Interest | | 16,571 | | 79 | | 99 | | 113 | | 232 |
| Investor relations (Note 11) | | 198,059 | | 24,197 | | - | | 54,181 | | - |
| Listing, filing and transfer agent fees | | 43,203 | | 3,060 | | 1,875 | | 6,755 | | 1,875 |
| Management fees (Notes 10 and 14) | | 250,000 | | 25,000 | | 25,000 | | 50,000 | | 50,000 |
| Office and sundry | | 57,661 | | 4,618 | | 332 | | 8,849 | | 559 |
| Professional fees | | 365,772 | | 14,899 | | 20,607 | | 35,434 | | 36,684 |
| Public relations and shareholder information | | 181,437 | | 14,622 | | - | | 37,033 | | - |
| Rent | | 79,205 | | - | | - | | - | | - |
| Research and development | | 314,256 | | - | | - | | - | | - |
Stock-based compensation (Notes 10, 11 and 14) | | 2,523,998 | | - | | 5,383 | | 147,446 | | 5,383 |
| Travel and entertainment | | 118,601 | | 13,335 | | - | | 32,743 | | - |
| | | | | | | | | | | |
| | | 4,942,533 | | 102,320 | | 98,489 | | 493,039 | | 164,123 |
The accompanying notes are an integral part of these consolidated financial statements.
Rotoblock Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
31 October 2008
________________________________________________________________________________________________________________________________________________________________________________
Rotoblock Corporation (the “Company”) was incorporated under the laws of the State of Nevada on 22 March 2004.
The Company is a development stage enterprise, as defined in Statements of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by Development Stage Enterprises”. The Company is focused on the development and manufacturing of a new type of patented oscillating piston engine and other energy-efficient and environmental equipment in China for distribution worldwide. No revenue has been derived during the organization period and the Company’s planned principle operations have not commenced.
The Company’s consolidated financial statements as at 31 October 2008 and for the six month period then ended have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has a loss of $493,039 for the six month period ended 31 October 2008 (31 October 2007 – $164,123) and has working capital of $61,377 at 31 October 2008 (30 April 2008 – $85,594).
On 30 March 2004, the Company entered into a Share Exchange Agreement (the “Agreement”) with Rotoblock Inc., a Canadian corporation, wherein the Company agreed to issue to the stockholders of Rotoblock Inc. 15,000,000 common shares in exchange for the 7,200,000 shares that constituted all the issued and outstanding shares of Rotoblock Inc. Effective 30 March 2004, Rotoblock Inc. completed the reverse acquisition under the Agreement with the Company.
Immediately after the acquisition, the management of Rotoblock Inc. took control of the board and office positions of the Company, constituting a change of control. Because the former owners of Rotoblock Inc. gained control of the Company, the transaction would normally have been considered a purchase by Rotoblock Inc. However, since the Company was not a business, the transaction was not considered to be a business combination, and the transaction was accounted for as a recapitalization of Rotoblock Inc. and the issuance of stock by Rotoblock Inc. for the assets and liabilities of the Company. The value of the net assets of the Company acquired by Rotoblock Inc. was the same as their historical book value, being a deficiency of $138.
Rotoblock Inc. was incorporated on 2 September 2003, under the laws of Canada. The accompanying consolidated financial statements are the historical consoldiated financial statements of Rotoblock Inc.
Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. However, based on its prior demonstrated ability to raise capital, management believes that the Company’s capital resources should be adequate to continue operating and maintaining its business strategy during the fiscal year ending 2009. However, if the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
At 31 October 2008, the Company has suffered losses from development stage activities to date. Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful. Accordingly, the Company must rely on its management to perform essential functions without compensation until a business operation can be commenced. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| 2. | Significant Accounting Policies |
The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements.
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and are expressed in U.S. dollars.
Basis of consolidation
These consolidated financial statements include the accounts of the Company from the date of reverse acquisition on 30 March 2004, and its wholly owned Canadian subsidiary, Rotoblock Inc. since its date of incorporation on 2 September 2003. All inter-company balances and transactions have been eliminated on consolidation (Note 1).
Fiscal period
The Company’s fiscal year ends on 30 April.
Risks and uncertainties
The Company operates in an emerging industry that is subject to market acceptance and technological change. The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological and other risks associated with operating an emerging business, including the potential risk of business failure.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original maturities of three months or less.
Rotoblock Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
31 October 2008
________________________________________________________________________________________________________________________________________________________________________________
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, prepaid expenses, accounts payable and accrued liabilities, amounts due to related party and interest payable. Unless otherwise noted, it is management’s opinion that this Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair value of these financial instruments approximate their carrying values, unless otherwise noted.
Concentrations and credit risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash, accounts payable, interest payable, and amounts due to related party. The Company places its cash with financial institutions of high credit worthiness. At times, its cash with a particular financial institution may exceed any applicable government insurance limits. The Company’s existence and survival presently depends on its acquisition of certain patents (Note 3).
Derivative financial instruments
The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Income taxes
Deferred income taxes are reported for timing differences between items of income or expense reported in the consolidated financial statements and those reported for income tax purposes in accordance with SFAS No. 109, “Accounting for Income Taxes”, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax losses and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.
Basic and diluted net loss per share
The Company computes net income (loss) per share in accordance with SFAS No. 128, “Earnings per Share”. SFAS No. 128 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
Comprehensive loss
SFAS No. 130, “Reporting Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements.
| | Equipment and depreciation |
Equipment has been recorded at cost, net of accumulated depreciation. Improvements are capitalized and maintenance, repairs and minor replacements are expensed
as incurred. Depreciation is determined using a declining-balance basis over its estimated useful life of 5 years at 20% (Note 4).
Long lived assets
SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. It establishes guidelines for determining recoverability based on future net cash flows from the use of the asset and for the measurement of the impairment loss. Impairment loss under SFAS No. 144 is calculated as the difference between the carrying amount of the asset and its fair value. Any impairment loss is recorded in the current period in which recognition criteria are first applied and met. Under the successful efforts method of accounting for oil and gas operations, the Company must periodically assess it proved properties for impairments by comparing the aggregate net book carrying amount of all proved properties with their aggregate future net cash flows. The statement requires that the impairment review be performed on the lowest level of asset groupings for which there are identifiable cash flows.
Segments of an enterprise and related information
SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”, supersedes SFAS No. 14, “Financial Reporting for Segments of a Business Enterprise”. SFAS No. 131 establishes standards for the way that public companies report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements issued to the public. It also establishes standards for disclosures regarding products and services, geographic areas and major customers. SFAS No. 131 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company has evaluated this SFAS and does not believe it is applicable at this time.
Rotoblock Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
31 October 2008
_______________________________________________________________________________________________________________________________________________________________________________
Foreign currency translation
The Company’s functional and reporting currency is the U.S. dollar. The consolidated financial statements of the Company are translated to U.S. dollars in accordance with SFAS No. 52, “Foreign Currency Translation”. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations. Unrealized exchange gains and losses arising from such translations are deferred until realization and are included as a separate component of shareholders’ equity as a component of comprehensive income or loss. Upon realization, the amount deferred is recognized in income in the period when it is realized.
Stock-based compensation
Effective 1 January 2006, the Company adopted the provisions of SFAS No. 123(R), “Share-Based Payment,” which establishes accounting for equity instruments exchanged for employee services. Under the provisions of SFAS No. 123(R), stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees’ requisite service period (generally the vesting period of the equity grant). Before 1 January 2006, the Company accounted for stock-based compensation to employees in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and complied with the disclosure requirements of SFAS No. 123, “Accounting for Stock-Based Compensation.” The Company adopted SFAS No. 123(R) using the modified prospective method, which requires the Company to record compensation expense over the vesting period for all awards granted after the date of adoption, and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. Accordingly, consolidated financial statements for the periods prior to 1 January 2006 have not been restated to reflect the fair value method of expensing share-based compensation. Adoption of SFAS No. 123(R) does not change the way the Company accounts for share-based payments to non-employees, with guidance provided by SFAS No. 123 (as originally issued) and Emerging Issues Task Force Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.”
Research and development
Research and development costs are expensed as incurred.
Patents
The Company accounts for patent costs in accordance with SFAS No. 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 No. 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 (Note 3).
Use of estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates.
Recent accounting pronouncements
In May 2008, the Financial Accounting Standards Board (the “FASB”) issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts – an interpretation of FASB Statement No. 60 (“SFAS 163”). SFAS No. 163 provides enhanced guidance on the recognition and measurement to be used to account for premium revenue and claim liabilities and related disclosures and is limited to financial guarantee insurance (and reinsurance) contracts, issued by enterprises included within the scope of FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. SFAS 163 also requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. SFAS 163 is effective for financial statements issued for fiscal years and interim periods beginning after 15 December 2008, with early application not permitted. The Company does not expect SFAS 163 to have an impact on its consolidated financial statements.
In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS 162”). SFAS No. 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) for nongovernmental entities. Prior to the issuance of SFAS 162, GAAP hierarchy was defined in the American Institute of Certified Public Accountants (“AICPA”) Statement on Auditing Standards No. 69, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles (“SAS 69”). SAS 69 has been criticized because it is directed to the auditor rather than the entity. SFAS 162 addresses these issues by establishing that the GAAP hierarchy should be directed to entities because it is the entity, not its auditor, that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Company does not expect SFAS 162 to have a material effect on its consolidated financial statements.
Rotoblock Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
31 October 2008
_________________________________________________________________________________________________________________________________________________________________________________
On 15 September 2003, the Company entered into an option agreement (the “Option”) to purchase certain patents related to the Oscillating Piston Engine (the “OPE Patents”). Under the terms of the Option, the Company is required to pay $100,000 in cash by 31 May 2004 (paid) plus interest at the rate of 24% per annum calculated from 31 January 2004 until the $100,000 cash was paid (total interest paid – $8,745), and $1,500,000 in cash by 2 June 2007.
On 25 October 2006, the Company negotiated an extension to exercise the Option by thirty seven months. Pursuant to the amended option agreement the Company must pay a royalty of $50 per engine on the sale of up to 10,000 oscillating piston engines (“OPE”), a royalty of $20 per engine on the sale of up to 100,000 OPE, and a royalty of $2 per engine thereafter. As at 31 October 2008, no engines have been sold.
| | | Balance at 31 October 2008 | | Balance at 30 April 2008 (Audited) |
| | | $ | | $ |
| | | | | |
| Patent costs to date | | 108,745 | | 108,745 |
| Accumulated depreciation | | - | | - |
| | | | | |
| | | 108,745 | | 108,745 |
| 4. | Property and Equipment |
| | | Balance at 31 October 2008 | | Balance at 30 April 2008 (Audited) |
| | | $ | | $ |
| | | | | |
| Property and Equipment | | 2,940 | | - |
| Accumulated depreciation | | 246 | | - |
| | | | | |
| | | 2,694 | | - |
During the six month period ended 31 October 2008, total additions to property and equipment were $2,940 (31 October 2007 – $Nil).
| 5. | Accounts Payable and Accrued Liabilities |
Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.
Rotoblock Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
31 October 2008
________________________________________________________________________________________________________________________________________________________________________________
On 30 March 2004, the Company entered into a loan agreement, as amended, for $500,000, of which $350,000 was received by 30 November 2004. During the fiscal year ended 30
April 2007, the principal portion of the loan was repaid in full. The loan was secured by all the assets of the Company, bore interest at 5% per annum and was payable on
demand. Accrued interest on the loan has been calculated at $11,705; however, this amount has not yet been paid to the lender (Note 13).
During the year ended 30 April 2007, the Company entered into a convertible promissory note agreement for $10,000 cash. The note was non-interest bearing, unsecured and
repaid in 100,000 common shares of the Company on 12 August 2008 (Note 11).
| 8. | Joint Venture Agreement |
On 27 January 2006, the Company entered into a letter of intent with Apollo Energy Systems, Inc. for the purpose of developing hybrid electric car technology. All
administrative and legal costs would be shared, and an operational cost sharing pan will be based on partner contribution. No significant activities occurred in the joint
venture during the year ended 30 April 2008 and the six month period ended 31 October 2008.
On 28 August 2006, the Company entered into a letter of intent with Autocraft Industries, Inc. (“AIG”) for the purpose of developing energy efficient propulsion systems
for on and off road vehicles. No significant activities occurred in the joint venture during the year ended 30 April 2008 and the six month period ended 31 October 2008.
In May 2008, the Company signed a term sheet to acquire 51 percent majority interest in Hikom Gottel Corporation for US $25,000,000 in cash and stock options. The final
purchase price is subject to an independent audit, which will be carried out during the acquisition proceedings.
No significant activities related to these agreements occurred during the six month period ended 31 October 2008.
As at 31 October 2008, the amount in due to a related party consists of $552 (30 April 2008 – $658) payable to a former director and stockholder of the Company. This balance is non-interest bearing, unsecured, and has no fixed terms of repayment.
Rotoblock Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
31 October 2008
________________________________________________________________________________________________________________________________________________________________________________
| 10. | Related Party Transactions |
During the six month period ended 31 October 2008, officers and directors of the Company made contributions to capital for management fees of $50,000 (30 April 2008 - $100,000, cumulative - $250,000). These amounts
have been recorded as an increase in expenditures and an increase in additional paid-in capital (Note 14).
During the six month period ended 31 October 2008, the Company issued 1,210,000 shares for a fair value of $115,500 to related parties that were included in consulting expenses (Note 14).
During the six month period ended 31 October 2008, the Company granted 800,000 warrants for a fair value of $147,446 to related parties that was included in stock based compensation expense (Notes 11 and 14).
Authorized capital stock consists of 75,000,000 common shares with par value of $0.001 per share.
| i. | During the year ended 30 April 2004, the Company issued 15,000,000 common shares pursuant to the acquisition of the net assets of Rotoblock Inc. (Note 1). Theses shares are restricted from trading as defined in Rule 144 of the United States Securities Act of 1933. |
| ii. | During the year ended 30 April 2005, the Company issued 10,000,000 units at a price of $0.05 per unit. Each unit consists of one common share and one-half common share purchase warrant. Each whole common share purchase warrant entitles the holder to purchase an additional common share at a price of $0.50 per share for a period of two years from the date of offering. As at 31 October 2008, none of the share purchase warrants in this series remain outstanding. |
| iii. | During the year ended 30 April 2006, the Company issued 548,160 common shares valued at prices in the range of $0.14 and $0.36 per share for total cash proceeds of $143,411. |
| iv. | During the year ended 30 April 2006, the Company issued 40,000 common shares at a price of $0.25 per share upon the exercise of previously outstanding share purchase warrants. As at 31 October 2008, 2,960,000 share purchase warrants in this series remain outstanding. |
| v. | During the year ended 30 April 2006, the Company issued 611,048 common shares valued at a price of $0.29 per share for the acquisition of inventory. |
| vi. | During the year ended 30 April 2006, the Company issued 2,418,130 common shares for services valued at $753,877. |
| vii. | During the year ended 30 April 2007, the Company issued 114,286 restricted common shares at a price of $0.21 per share. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. |
| viii. | During the year ended 30 April 2007, the Company issued 24,513 common shares at a price of $0.19 per share for consulting services. |
| ix. | During the year ended 30 April 2007, the Company issued 150,000 common shares at a price of $0.19 per share for marketing services. |
| x. | During the year ended 30 April 2007, the Company issued 33,333 common shares for legal services valued at $5,000. Of this amount, $868 was expensed during the six months ended 31 October 2008 (30 April 2008 – $1,140; Cumulative – $5,000). |
| xi. | During the year ended 30 April 2007, the Company issued 57,820 common shares valued at $5,782 for consulting services. |
| xii. . | During the year ended 30 April 2007, the Company issued 69,000 common shares val ued at $6,210 for consulting services. |
Rotoblock Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
31 October 2008
_________________________________________________________________________________________________________________________________________________________________________________
| xiii. | During the year ended 30 April 2007, the Company issued 75,000 common shares at a price of $0.10 per share for consulting services. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. |
| xiv. | During the year ended 30 April 2007, the Company issued 800,000 common shares at a price of $0.12 per share for public relations services. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. |
| xv. | During the year ended 30 April 2007, the Company issued 192,363 common shares valued at $15,389 for rent. |
| xvi. | During the year ended 30 April 2007, the Company issued 135,850 common shares valued at $10,868 for consulting services. |
| xvii. | During the year ended 30 April 2007, the Company issued 93,750 common shares valued at $7,500 for public relations. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. |
| xviii. | During the year ended 30 April 2007, the Company issued 77,633 common shares valued at $4,658 for consulting services. |
| xix. | During the year ended 30 April 2007, the Company issued 2,500,000 share purchase warrants to officer and directors of the Company with fair value of $219,824. Each share purchase warrant entitles the holder to purchase an additional common share at a price of $0.15 up to 7 December 2011. |
| xx. | During the year ended 30 April 2008, the Company issued 1,580,000 private placement restricted common shares at a price of $0.05 per share for total cash proceeds of $78,000. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. |
| xxi. | During the year ended 30 April 2008, the Company issued 200,000 common shares valued at $0.02 per share for consulting services. |
| xxii. | During the year ended 30 April 2008, the Company issued 1,000,000 common shares valued at $0.05 per share for $50,000 in consulting services. Of this amount, $24,454 was expensed during the six months ended 31 October 2008 (30 April 2008 - $25,546, cumulative - $50,000). |
| xxiii. | During the year ended 30 April 2008, the Company issued 300,000 common shares valued at $0.05 per share for public relations services. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. Of this amount, $15,000 was expensed during the prior year. |
| | |
| xxiv. | During the year ended 30 April 2008, the Company issued 200,000 common shares valued at $0.02 per share for $4,000 for consulting services. |
| xxv. | During the year ended 30 April 2008, the Company issued 380,000 share purchase warrants with a fair value of $5,383. Each share purchase warrant entitles the holder to purchase an additional common share at a price of $0.25 up to 6 September 2012. |
| xxvi. | During the year ended 30 April 2008, the Company issued 128,538 common shares valued at $0.13 per share for $16,710 for consulting services. Of this amount, $643 was expensed during the six month period ended 31 October 2008 (30 April 2008 – $16,067, cumulative – $16,710). |
| xxvii. | During the year ended 30 April 2008, the Company issued 84,211 common shares valued at $0.09 per share for $8,000 for consulting services. |
| xxviii. | During the year ended 30 April 2008, the Company issued 29,474 common shares valued at $0.09 per share for $2,800 for consulting services. Of this amount, $108 was expensed during the period (30 April 2008 – $2,692, cumulative – $2,800). |
| xxix. | During the year ended 30 April 2008, the Company issued 666,666 units at a price of $0.15 per unit for total cash proceeds of $100,000. Each unit consists of one restricted common share and one-half common share purchase warrant. Each whole common share purchase warrant entitles the holder to purchase an additional common share at a price of $0.25 per share for a period of five years from the date of offering with a fair value of $25,793. As at 31 October 2008, 333,334 of the share purchase warrants in this series remain outstanding. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. |
| xxx. | During the year ended 30 April 2008, the Company issued 333,334 units at a price of $0.15 per unit for total cash proceeds of $50,000. Each unit consists of one restricted common share and one common share purchase warrant. Each whole common share purchase warrant entitles the holder to purchase an additional common share at a price of $0.25 per share for a period of five years from the date of offering with a fair value of $22,463. As at 31 October 2008, 333,334 of the share purchase warrants in this series remain outstanding. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. |
| xxxi. | During the year ended 30 April 2008, the Company issued 100,000 common shares valued at $0.08 per share for $8,000 for consulting services. |
| xxxii. | During the year ended 30 April 2008, the Company issued 133,333 common shares valued at $0.06 per share for $8,000 for consulting services. |
| xxxiii. | During the year ended 30 April 2008, the Company issued 1,000,000 units valued at $0.06 per unit for consulting services. Each unit consists of one restricted common share and one common share purchase warrant. Each whole common share purchase warrant entitles the holder to purchase an additional common share at a price of $0.15 per share for a period of five years from the date of offering with a fair value of $60,664. As at 31 October 2008, 1,000,000 of the share purchase warrants in this series remain outstanding. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. |
| | |
| xxxiv. | During the six month period ended 31 October 2008, the Company issued 50,000 common shares valued at $0.08 per share for $4,000 for consulting services. Of this amount, $3,758 was expensed during the six month period ended 31 October 2008 (30 April 2008 – $Nil, cumulative – $3,758), and the remaining $242 was classified as prepaid expense which will be expensed as the consulting services are received in subsequent periods. |
| xxxv . | During the six month period ended 31 October 2008, the Company issued 320,000 common shares valued at $0.30 per share for $96,000 in investor relations. Of this amount, $54,181 was expensed during the six month period ended 31 October 2008 (30 April 2008 - $Nil, cumulative - $54,181), and the remaining $41,819 was classified as prepaid expense which will be expensed as the investor relations services are received in subsequent periods. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. |
Rotoblock Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
31 October 2008
________________________________________________________________________________________________________________________________________________________________________________
| xxxvi. | During the six month period ended 31 October 2008, the Company issued 800,000 common shares valued at $0.08 per unit for $64,000 as compensation to the chief executive officer of the company. Each unit consists of one restricted common share and one common share purchase warrant. Each warrant entitles the holder to purchase one additional common share of the Company at a cost of $0.15 expiring 12 May 2013 with a fair value of $147,446. As at 31 October 2008, 800,000 of the share purchase warrants in this series remain outstanding. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. (Notes 11 and 14). |
| xxxvii. | During the six month period ended 31 October 2008, the Company issued 66,667 common shares valued at $0.15 per share for a $10,000 legal retainer. Of this amount, $1,503 was expensed during the period ended 31 October 2008 (30 April 2008 - $Nil, cumulative - $1,503), and the remaining $8,497 was classified as prepaid expense which will be expensed as the legal services are received in subsequent periods. |
| xxxviii. | During the six month period ended 31 October 2008, the Company issued 50,000 common shares valued at $0.15 per share for $7,500 in public relations. Of this amount, $7,500 was expensed during the six month period ended 31 October 2008 (30 April 2008 – $Nil, cumulative – $7,500). These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. |
| xxxix. | During the six month period ended 31 October 2008, the Company issued 133,333 common shares valued at $0.15 per share for $20,000 in consulting expense to a related party. |
| xl. | During the six month period ended 31 October 2008, the Company issued 250,000 common shares valued at $0.11 per share for $27,500 in bonus to a related party. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. |
| xli. | During the six month period ended 31 October 2008, the Company issued 166,667 common shares valued at $0.15 per share for total cash proceeds of $25,000. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. |
| xlii. | During the six month period ended 31 October 2008, the Company issued 100,000 common shares valued at $0.10 per share for $10,000 in convertible promissory notes. |
| xliii. | During the six month period ended 31 October 2008, the Company issued 26,667 common shares valued at $0.15 for $4,000 in consulting expense to a related party (Note 7). |
| xliv. | During the six month period ended 31 October 2008, the Company issued 100,000 common shares valued at $0.06 per share for $6,000 in consulting expense. Of this amount, $230 was expensed during the period (30 April 2008 - $Nil, cumulative - $230), and the remaining $5,770 was classified as prepaid expense which will be expensed as consulting services in subsequent periods. |
Details of common shares issued for services are as follows:
| Date Issued | | Number of shares | | Value | | Price per share | Service |
| | | | | $ | | $ | |
| 24 August 2005 | | 250,000 | | 95,000 | | 0.38 | Consulting* |
| 24 August 2005 | | 25,000 | | 9,500 | | 0.38 | Computer and IT |
| 24 August 2005 | | 50,000 | | 19,000 | | 0.38 | Public relations |
| 24 August 2005 | | 25,000 | | 9,500 | | 0.38 | Investor relations |
| 24 August 2005 | | 300,000 | | 114,000 | | 0.38 | Legal |
| 24 August 2005 | | 250,000 | | 95,000 | | 0.38 | Consulting* |
| 24 August 2005 | | 25,000 | | 9,500 | | 0.38 | Accounting |
| 28 September 2005 | | 104,171 | | 29,168 | | 0.28 | Investor relations |
| 29 September 2005 | | 100,000 | | 25,000 | | 0.25 | Consulting |
| 29 September 2005 | | 150,000 | | 37,500 | | 0.25 | Consulting* |
| 27 October 2005 | | 327,586 | | 95,000 | | 0.29 | Investor relations |
| 28 October 2005 | | 99,360 | | 24,840 | | 0.25 | Rent |
| 1 November 2005 | | 50,000 | | 14,000 | | 0.28 | Public relations |
| 1 November 2005 | | 125,000 | | 35,000 | | 0.28 | Consulting |
| 2 November 2005 | | 80,000 | | 23,200 | | 0.29 | Consulting |
| 14 November 2005 | | 100,000 | | 50,000 | | 0.50 | Printing |
| 12 January 2006 | | 250,000 | | 37,500 | | 0.15 | Consulting |
| 12 January 2006 | | 16,667 | | 2,500 | | 0.15 | Legal |
| 25 January 2006 | | 68,287 | | 21,169 | | 0.31 | Commission bonus |
| 7 February 2006 | | 22,059 | | 7,500 | | 0.34 | Consulting |
| 30 June 2006 | | 24,513 | | 4,658 | | 0.19 | Consulting |
| 3 July 2006 | | 150,000 | | 28,500 | | 0.19 | Investor relations |
| 10 August 2006 | | 33,333 | | 5,000 | | 0.15 | Legal |
| 3 October 2006 | | 57,820 | | 5,782 | | 0.10 | Consulting |
| 20 October 2006 | | 69,000 | | 6,210 | | 0.09 | Consulting |
| 10 November 2006 | | 75,000 | | 7,500 | | 0.10 | Public relations |
| 29 November 2006 | | 800,000 | | 96,000 | | 0.12 | Public relations |
| 22 December 2006 | | 192,363 | | 15,389 | | 0.08 | Rent |
| 2 January 2007 | | 135,850 | | 10,868 | | 0.08 | Consulting |
| 7 February 2007 | | 93,750 | | 7,500 | | 0.08 | Public relations |
| 3 April 2007 | | 77,633 | | 4,658 | | 0.06 | Consulting |
| 29 October 2007 | | 400,000 | | 8,000 | | 0.02 | Consulting* |
| 30 October 2007 | | 1,000,000 | | 50,000 | | 0.05 | Consulting |
| 30 October 2007 | | 300,000 | | 15,000 | | 0.05 | Public relations |
| 9 November 2007 | | 128,538 | | 16,710 | | 0.13 | Consulting |
| 10 December 2007 | | 84,211 | | 8,000 | | 0.09 | Consulting* |
| 11 December 2007 | | 29,474 | | 2,800 | | 0.09 | Consulting |
| 7 February 2008 | | 100,000 | | 8,000 | | 0.08 | Consulting* |
| 1 April 2008 | | 133,333 | | 8,000 | | 0.06 | Consulting* |
| Subtotal | | 6,302,948 | | 1,062,452 | | | |
Rotoblock Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
31 October 2008
__________________________________________________________________________________________________________________________________________________________________________________
| Date Issued | | Number of shares | | Value | | Price per share | Service |
| | | | | $ | | $ | |
| 1 April 2008 | | 1,000,000 | | 60,000 | | 0.06 | Consulting* |
| 20 May 2008 | | 50,000 | | 4,000 | | 0.08 | Consulting |
| 20 May 2008 | | 320,000 | | 96,000 | | 0.30 | Investor relations |
| 20 May 2008 | | 800,000 | | 64,000 | | 0.08 | Consulting* |
| 9 June 2008 | | 66,667 | | 10,000 | | 0.15 | Legal |
| 9 June 2008 | | 50,000 | | 7,500 | | 0.15 | Public relations |
| 9 June 2008 | | 133,333 | | 20,000 | | 0.15 | Consulting* |
| 3 July 2008 | | 250,000 | | 27,500 | | 0.11 | Consulting* |
| 4 September 2008 | | 26,667 | | 4,000 | | 0.15 | Consulting* |
| 20 October 2008 | | 100,000 | | 6,000 | | 0.06 | Consulting |
| Total | | 9,099,615 | | 1,361,452 | | | |
*Common shares issued for services from related parties.
Share Purchase Warrants
The following share purchase warrants were outstanding at 31 October 2008:
| | | Exercise price | | Number of warrants | | Remaining contractual life (years) |
| | | $ | | | | |
| | | | | | | |
Warrants | | 0.25 | | 2,960,000 | | 2.21 |
Warrants | | 0.15 | | 2,500,000 | | 3.11 |
Warrants | | 0.25 | | 380,000 | | 3.85 |
Warrants | | 0.25 | | 333,334 | | 4.23 |
Warrants | | 0.15 | | 1,000,000 | | 4.42 |
Warrants | | 0.25 | | 333,334 | | 4.44 |
Warrants | | 0.15 | | 800,000 | | 4.56 |
Warrants | | 0.25 | | 166,667 | | 4.68 |
| | | | | | | |
| | | | | 8,473,335 | | |
The following is a summary of warrant activities during the periods ended 30 April 2008 and 31 October 2008:
| | | Number of warrants | | Weighted average exercise price |
| | | | | $ |
| | | | | |
Outstanding and exercisable at 30 April 2007 | | 11,962,160 | | 0.45 |
| | | | | |
Granted | | 2,046,668 | | 0.20 |
Exercised | | - | | - |
Expired | | (6,502,160) | | 0.50 |
| | | | | |
Outstanding and exercisable at 30 April 2008 | | 7,506,668 | | 0.34 |
| | | | | |
Weighted average fair value of warrants granted during the year ended 30 April 2008 | | | | 0.06 |
| | | | | |
Outstanding and exercisable at 30 April 2008 | | 7,506,668 | | 0.34 |
| | | | | |
Granted | | 966,667 | | 0.18 |
Exercised | | - | | - |
Expired | | - | | - |
| | | | | |
Outstanding and exercisable at 31 October 2008 | | 8,473,335 | | 0.32 |
| | | | | |
Weighted average fair value of warrants granted during the period ended 31 October 2008 | | | | 0.18 |
Rotoblock Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
31 October 2008
_________________________________________________________________________________________________________________________________________________________________________________
The weighted average grant date fair value of warrants issued during the period ended 31 October 2008 amounted to $0.18 per warrant (30 April 2008 – $0.06 per warrant). The
fair value of each warrant granted was determined using the Black-Scholes option pricing model and the following assumptions:
| | | | | As at 31 October 2008 | | As at 30 April 2008 |
| | | | | | | |
Risk free interest rate | | | | 3.02 % - 3.28% | | 2.65 % - 3.72% |
Expected life | | | | 5.0 years | | 5.0 years |
Annualized volatility | | | | 153% - 158% | | 119% - 150% |
Expected dividends | | | | - | | - |
Restricted Common Shares
During the six month period ended 31 October 2008, the Company issued 2,063,334 common shares (30 April 2008 – 5,755,556 common shares). Of these, 1,586,667 common shares
30 April 2008 – 3,880,000 common shares) were restricted from trading as defined under Rule 144 of the United States Securities Act of 1933.
As at 31 October 2008, a total of 38,259,776 common shares are outstanding. Of these, 26,104,982 were restricted from trading as defined under Rule 144 of the United States
Securities Act of 1933.
The Company has losses carried forward for income tax purposes to 31 October 2008. There are no current or deferred tax expenses for the period ended 31 October 2008 due
to the Company’s loss position. The Company has not reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for
financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors,
including the Company’s ability to generate taxable income within the net operating loss carry forward period. Management has considered these factors in reaching its
conclusion as to the valuation allowance for financial reporting purposes.
The provision for refundable federal income tax consists of the following:
| | | For the six month period ended 31 October 2008 | | For the six month period ended 31 October 2007 |
| | | $ | | $ |
| | | | | |
Deferred tax asset attributable to: | | | | |
Current operations | | 167,633 | | 55,802 |
Contributions to capital by related party – expenses | | (17000) | | (17,000) |
Stock-based compensation | | (50,132) | | (1,830) |
Less: Change in valuation allowance | | (100,501) | | (36,972) |
| | | | | |
Net refundable amount | | - | | - |
Rotoblock Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
31 October 2008
________________________________________________________________________________________________________________________________________________________________________________
The composition of the Company’s deferred tax asset as at 31 October 2008 and 30 April 2008 is as follows:
| | | As at 31 October 2008 | | As at 30 April 2008 |
| | | | | (Audited) |
| | | $ | | $ |
| | | | | |
Net operating loss carry forward | | 2,340,748 | | 2,045,154 |
| | | | | |
Statutory federal income tax rate | | 34% | | 34% |
Effective income tax rate | | 0% | | 0% |
| | | | | |
Deferred tax asset | | 795,854 | | 695,352 |
Less: Valuation allowance | | (795,854) | | (695,352) |
| | | | | |
Net deferred tax asset | | - | | - |
The potential income tax benefit of these losses has been offset by a full valuation allowance.
As at 31 October 2008, the Company has unused non-capital losses for Canadian tax purposes of approximately $449,898 that are available to offset future taxable income. This unused non-capital loss carry forward balance for
income tax purposes expires between the years 2012 and 2018.
As at 31 October 2008, the Company has unused net operating losses for U.S. federal income tax purposes of approximately $1,890,850 that are available to offset future taxable income. This unused net operating l
loss carry forward balance for income tax purposes expires between the years 2024 and 2028.
13. Commitments
| i. | On 30 March 2004, the Company entered into a loan agreement, as amended, for $500,000, of which $350,000 was received by 30 November 2004. During the 2006 fiscal year, the principal portion of the loan was paid out in full. The loan was secured by all the assets of the Company, bore interest at 5% per annum and was payable on demand. Accrued interest on the loan has been calculated at $11,705; however, this amount has not yet been paid to the lender (Note 6). |
| ii. | On 15 November 2007, the Company filed its intention to register 5,000,000 common shares of the Company to be covered under S8 Registration for future issuances to any and all consultants, employees, attorneys, officers and directors of the Company at a proposed maximum offering price of $0.09 per common share (Note 14). |
14. Supplemental Disclosure with Respect to Cash Flows
| | | For the period from the date of inception on 2 September 2003 to 31 October 2008 (Unaudited) | | For the six month period ended 31 October 2008 | | For the six month period ended 31 October 2007 |
| | | $ | | $ | | $ |
| | | | | | | |
Cash paid during the year for interest | | 11,362 | | - | | - |
Cash paid during the year for income taxes | | 1,790 | | 1,790 | | - |
During the six month period ended 31 October 2008, officers and directors of the Company made contributions to capital for management fees of $50,000 (30 April 2008 – $100,000; cumulative – $250,000) (Note 10).
During the six month period ended 31 October 2008, the Company issued 100,000 common shares valued at $0.10 per share for $10,000 in convertible promissory notes (Note 11).
The Company has issued common shares of the Company for services rendered (Notes 10 and 11).
On 15 November 2007, the Company filed its intention to register 5,000,000 common shares of the Company to be covered under S8 Registration for future issuances to any and all consultants, employees, attorneys, officers and directors of the Company (Note 13).
During the six month period ended 31 October 2008, the Company granted 800,000 warrants for a fair value of $147,446 to related parties that was included in stock based compensation expense (Notes 10 and 14).
15. Subsequent Event
On 24 November 2008, the Company entered into an Asset Purchase and Balance Sheet Enhancement Agreement with Chien Chih-Liu, a related party, to acquire an undivided 25% tenancy-in-common interest in a property located in Merced, California. The purchase price of the property of $25,000 was paid by the issuance of 10,000,000 shares of common stock of the Company valued at $0.025 per share.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
We are still in the development stages of our business and have generated no revenues since inception. Our net losses since inception are $5,114,745. Our auditors have raised substantial doubt about our ability to continue as a going concern. We cannot provide assurance that we will ultimately achieve profitable operations or become cash flow positive, or be able to raise additional equity capital if and when needed; however, based on our prior demonstrated ability to raise capital, we believe that our current capital resources will be adequate to continue operating maintaining our business operations for the fiscal year ending April 30, 2009.
Three month period ended October 31, 2008 as compared to the three month period ended October 31, 2007
For the three month period ended October 31, 2008, we incurred a net operating loss of $102,320, or $0.003 per share, as compared to a net loss of $98,489, or $0.003 per share, for the three month period ended October 31, 2007.
We incurred total expenses of $102,320 for the three months ended October 31, 2008, as compared to total expenses of $98,489 for the three months ended October 31, 2007. Our expenses consisted of $14,622 in public relations and shareholder services for the preparation and dissemination of shareholder information (2007 - Nil, cumulative - $181,437); $14,899 in professional fees (2007 - $20,607, cumulative - $365,772), generally consisting of fees for legal, accounting and outside services paid in connection with the preparation and filing of our periodic reports with the SEC; $25,000 was expensed as the fair market value of management fees for services contributed by our officers and directors (2007 - $25,000, cumulative - $250,000); $24,197 in investor relations (2007 - Nil, cumulative - $198,059); $2,362 in consulting fees (2007 - $45,193, cumulative - $788,011); and $13,335 for travel and entertainment expense (2007 - Nil, cumulative - $118,601). The balance of general and administrative expenses were attributed to miscellaneous office expense and filing fees incurred in connection with our day-to-day operations.
Our expenses increased during the three months ended October 31, 2008, as compared to the three months ended October 31, 2007, mainly due to increased expenses for public relations, investor relations and travel expenses incurred in connection with the marketing of our product line. However, stock-based compensation for services and consulting decreased substantially during the three months ended October 31, 2008, as we have been unable to compensate our officers, directors, employees and service providers with cash and have been issuing common stock and warrants for their services rendered.
Liquidity and Capital Resources
We currently have $27,223 in cash in the bank and are continuing to seek sources of funding to continue our business operations. It is expected we will continue to need further funding until we complete a final prototype to bring to market for sale or enter into an agreement with a joint venture partner to complete our plans. We are currently researching both options; however, no definitive agreements have yet been entered into. We currently plan to fund future operations by public offerings or private placement of equity and/or debt securities as we have done in the past. However, there can be no assurance that debt or equity financing will be available to us on acceptable terms to meet these requirements, as and when needed. Our auditors have expressed substantial doubt about our ability to continue as a going concern.
We do not own any real estate and do not intend to purchase any significant property or equipment, nor incur any significant changes in employees during the next 12 months.
Cash provided by financing activities for the six months ended October 31, 2008 was $24,894, attributed to private sales of our common stock and common stock units, including share purchase warrants.
At October 31, 2008, the amount in due to a related party was $552 payable to a former director and stockholder of the company. This balance is non-interest bearing, unsecured, and has no fixed terms of repayment.
On March 30, 2004, we entered into a loan agreement for $500,000, of which $350,000 was received by November 30, 2004. During the 2006 fiscal year, the principal portion of the loan was paid out in full. The loan was secured by all the assets of the company, bore interest at 5% per annum and was payable on demand. Accrued interest on the loan has been calculated at $11,705; however, this amount has not yet been paid to the lender and is still due and payable as of the filing of this report.
On April 30, 2007, we entered into a convertible promissory note agreement, for $10,000 cash. The note was non-interest bearing, unsecured and repaid with 100,000 shares of common stock on August 12, 2008.
We anticipate no material commitments for capital expenditures in the near term. Management is not aware of any trend in its industry or capital resources, which may have an impact on its income, revenue or income from operations.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements or contractual or commercial commitments.
Plan of Operations
In May 2008, we signed a term sheet to acquire 51% majority interest in Hikom Gottel Corporation for $25,000,000 US in cash and stock options. The final purchase price is subject to an independent audit, which will be carried out during the acquisition proceedings. As of the filing of this report, no significant activities occurred related to this agreement during the six month period ended October 31, 2008.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a non-accelerated filer and a smaller reporting company, as defined in Rule 12b-2 of the of the Securities Exchange Act of 1934, and as such, are not required to provide the information under this item.
Item 4. Controls and Procedures
Critical Accounting Policies
The consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Management believes the disclosures made are adequate to make the information not misleading. The consolidated financial statements and accompanying notes are prepared in accordance with the United States generally accepted accounting principles. Preparing consolidated financial statements requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are affected by Management's application of accounting policies. These important accounting policies include the successful efforts method of accounting for property and equipment, revenue recognition, accounting for income taxes and foreign currency translation.
Management maintains disclosure controls and procedures designed to ensure that we are able to timely collect the information we are required to disclose in our reports filed with the U.S. Securities and Exchange Commission.
As of the end of the period covered by this report, we performed an evaluation, under the supervision and with the participation of our Management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon the evaluation, our Principal Executive Officer and Principal Accounting Officer concluded that the current disclosure controls are effective in timely alerting us to any material information required to be included in our periodic SEC filings.
We also maintain a system of internal controls designed to provide reasonable assurance that (i) transactions are executed in accordance with Management's general and specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with the United States generally accepted accounting principles and to maintain accountability for assets; (ii) access to assets is permitted only in accordance with Management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. We believe that our internal controls are effective to provide reasonable assurance that our consolidated financial statements are fairly presented in conformity with generally accepted accounting principals. Since our most recent evaluation, there have been no changes in our internal controls or in other factors that could significantly affect our internal controls, nor were any corrective actions required with regard to significant deficiencies and material weaknesses.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any pending legal proceeding. We were named as a defendant filed by a former consultant for breach of contract during the fiscal year ended April 30, 2008; however, on June 3, 2008, the lawsuit was resolved with no financial damages to us.
Our securities are highly speculative and involve a high degree of risk, including among other items the risk factors described in our annual report on Form 10K-SB, filed on August 13, 2008. You should carefully consider those risk factors and other information in our annual report on Form 10-KSB and this quarterly report before deciding to invest in our securities. We are unaware of any material changes in or additional risk factors since the filing of our annual report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Following are descriptions of all unregistered equity securities issued and/or sold during the six month period ended October 31, 2008:
During the six month period ended October 31, 2008, we issued 50,000 shares of common stock, valued at $0.08 per share, in exchange for $4,000 in consulting services. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.
During the six month period ended October 31, 2008, we issued 320,000 shares of common stock, valued at $0.30 per share, in exchange for $96,000 in investor relations services. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.
During the six month period ended October 31, 2008, we issued 800,000 common stock units, valued at $0.08 per unit, in exchange for $64,000 as compensation to our chief executive officer of the company. Each unit consists of one restricted share of common stock and one common stock purchase warrant. Each common stock purchase warrant entitles the holder to purchase one additional share of common stock at a cost of $0.15, expiring May 12, 2013. As of October 31, 2008, 800,000 of the common stock purchase warrants remain outstanding. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.
During the six month period ended October 1, 2008, we issued 66,667 shares of common stock, valued at $0.15 per share, in exchange for a $10,000 legal retainer. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.
During the six month period ended October 31, 2008, we issued 50,000 shares of common stock, valued at $0.15 per share, in exchange for $7,500 in public relations services. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933
During the six month period ended October 31, 2008, we issued 133,333 shares of common stock, valued at $0.15 per share, in exchange for $20,000 in consulting services to a related party. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.
During the six month period ended October 31, 2008, we issued 250,000 shares of common stock, valued at $0.11 per share, in exchange for $27,500 in a bonus to a related party. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.
During the six month period ended 31 October 2008, the Company issued 166,667 common shares valued at $0.15 per share for total cash proceeds of $25,000. These shares are restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.
During the six month period ended 31 October 2008, the Company issued 100,000 common shares valued at $0.10 per share for $10,000 in convertible promissory notes.
During the six month period ended 31 October 2008, the Company issued 26,667 common shares valued at $0.15 for $4,000 in consulting expense to a related party (Note 7).
During the six month period ended 31 October 2008, the Company issued 100,000 common shares valued at $0.06 per share for $6,000 in consulting expense. Of this amount, $230 was expensed during the period (30 April 2008 - $Nil, cumulative - $230), and the remaining $5,770 was classified as prepaid expense which will be expensed as consulting services in subsequent periods.
Following are details of the common stock and common stock purchase units issued for services during the six month period ended October 31, 2008:
| Date issued | | Number of shares | | Value $ | | Price per share $ | Service Rendered |
| 20 May 2008 | | 50,000 | | 4,000 | | 0.08 | Consulting |
| 20 May 2008 | | 320,000 | | 96,000 | | 0.30 | Investor relations |
| 20 May 2008 | | 800,000 | | 64,000 | | 0.08 | Consulting* |
| 9 June 2008 | | 66,667 | | 10,000 | | 0.15 | Legal |
| 9 June 2008 | | 50,000 | | 7,500 | | 0.15 | Public relations |
| 9 June 2008 | | 133,333 | | 20,000 | | 0.15 | Consulting* |
| 3 July 2008 | | 250,000 | | 27,500 | | 0.11 | Consulting* |
| 4 September 2008 | | 26,667 | | 4,000 | | 0.15 | Consulting* |
| 20 October 2008 | | 100,000 | | 6,000 | | 0.06 | Consulting |
| Total | | 1,796,667 | | 239,000 | | | |
*Common stock issued for services from related parties
Following are details of the common stock purchase warrants outstanding at October 31, 2008
| | | Exercise price | | Number of warrants | | Remaining contractual life (years) |
| | | $ | | | | |
| | | | | | | |
| Warrants | | 0.25 | | 2,960,000 | | 2.21 |
| Warrants | | 0.15 | | 2,500,000 | | 3.11 |
| Warrants | | 0.25 | | 380,000 | | 3.85 |
| Warrants | | 0.25 | | 333,334 | | 4.23 |
| Warrants | | 0.15 | | 1,000,000 | | 4.42 |
| Warrants | | 0.25 | | 333,334 | | 4.44 |
| Warrants | | 0.15 | | 800,000 | | 4.56 |
| Warrants | | 0.25 | | 166,667 | | 4.68 |
| | | | | | | |
| | | | | 8,473,335 | | |
There were no stock options issued or outstanding at October 31, 2008.
Item 3. Default Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information - - Subsequent Events
On November 24, 2008, subsequent to the period ended October 31, 2008, we entered into an Asset Purchae and Balance Sheet Enhancement Agreement with Chien Chih-Liu, a related party, to acquire an undivided 25% tenancy-in-common interest in a property located in Merced, California. The purchase price of the property of $25,000 was paid by issuance of 10,000,000 shares of our common stock, valued at $0.025 per share.
Item 6. Exhibits
The following Exhibits 3(i) and 3 (ii), marked with an asterisk and required to be filed hereunder, are incorporated herein by reference and can be found in their entirety in our original Form SB-2 Registration Statement, filed on 6/7/04 under our SEC File Number 333-116324 on the SEC website at www.sec.gov. Exhibit 99.1 can be found in its entirety in our Form 10K-SB for the fiscal year ended April 30, 2006, filed on 7/31/06. These exhibits are incorporated herein by this reference.
Exhibit No. Description
* 3(i) Articles of Incorporation
* 3(ii) Bylaws
31.1 Sec. 302 Certification of Principal Executive Officer/CEO
31.2 Sec. 302 Certification of Principal Accounting Officer/CFO
32.1 Sec. 906 Certification of Principal Executive Officer/CEO
32.2 Sec. 906 Certification of Principal Accounting Officer/CFO
*99 Agreement with Obvio! Automotoveiculos S.A.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ROTOBLOCK CORPORATION, Registrant
/s/ Chien Chih Liu
By: Chien Chih Liu, Chief Executive Officer
/s/ Richard Di Stefano
By: Richard Di Stefano, Principal Accounting Officer
Dated: December 12, 2008
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