Rotoblock 10Q 2011 Q2 Quarterly report

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, 2011

Commission File Number: 000-51428

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 has submitted electronically and posted on its corporate website, if any, every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T during the 12 preceding months (or such shorter period that the registrant was required to submit and post such file). 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 ____ Smaller Reporting Company 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, 2011, there were a total of 58,629,787 shares of our common stock issued and outstanding. Of these shares, a total of 57,142,703 are restricted from trading, as defined under Rule 144 of the Securities Act of 1933, as amended.

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION

ITEM 1.	Interim Consolidated Financial Statements	3

ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	39

ITEM 4.	Controls and Procedures	39

	PART II - OTHER INFORMATION

ITEM 1.	Legal Proceedings	39

ITEM 1A.	Risk Factors	40

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

ITEM 3.	Defaults Upon Senior Securities	41

ITEM 5.	Other Information	41

ITEM 6.	Exhibits	42

PART I - FINANCIAL INFORMATION

Item 1. Interim Consolidated Financial Statements

The interim 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 annual report on Form 10-K for the fiscal year ended April 30, 2011, filed with the U.S. Securities and Exchange Commission on August 16, 2011, 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)

Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

Rotoblock Corporation

(A Development Stage Company)

Interim Consolidated Balance Sheets

(Expressed in U.S. Dollars)

(Unaudited)

		As at
	As at	30 April
	31 October	2011
	2011	(Audited)
	$	$

Assets

Current
Cash and cash equivalents	86,184	340,892
Amounts receivable	224	233
Prepaid expenses	40,417	20,417

	126,825	361,542

Available-for-sale investments (Note 4)	1,033,050	887,915

Property and equipment (Note 5)	102,049	108,850

	1,261,924	1,358,307

Liabilities

Current
Accounts payable and accrued liabilities (Note 6)	57,589	45,847
Convertible promissory note (Notes 4 and 7)	2,206,137	2,145,644
Due to related party (Note 8)	673	702

	2,264,399	2,192,193

Stockholders' deficiency
Capital stock (Note 10)
200,000,000 common shares, par value $0.001
50,000,000 preferred shares, par value $0.001
Issued and outstanding
31 October 2011 - 58,629,787 common shares, par value $0.001
30 April 2011 - 5,710,311 common shares, par value $0.001	5,703	5,706
Additional paid-in capital	5,965,378	5,966,209
Warrants (Note 10)	1,401,514	1,401,514
Accumulated other comprehensive loss	28,798	(116,356)
Deficit, accumulated during the development stage	(8,403,868)	(8,090,959)

	(1,002,475)	(833,886)

	1,261,924	1,358,307

Nature and Continuance of Operations (Note 1),Commitments and Contingency(Note 12) andSubsequent Events (Note 15)

On behalf of the Board: /s/Chien Chih Liu, Director /s/ Andrew Chow, Director

The accompanying notes are an integral part of these interim consolidated financial statements.

Rotoblock Corporation

(A Development Stage Company)

Interim 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 2011	For the three month period ended 31 October 2011	For the three month period ended 31 October 2010	For the six month period ended 31 October 2011	For the six month period ended 31 October 2010
	$	$	$	$	$

Expenses
General and administrative (Schedule 1)	8,129,815	153,395	195,677	312,909	445,680

Net loss before other items	(8,129,815)	(153,395)	(195,677)	(312,909)	(445,680)

Other items
Excess of consideration over net assets purchased from Rotoblock Inc. (Note 1)	(138)	-	-	-	-
Other income	5,520	-	-	-	5,520
Forgiveness of debt	-	-	-	-	29,918
Gain on disposal of property (Notes 5, 9, 10 and 13)	1,384	-	-	-	-
Write-off of patents (Note 3)	(108,745)	-	-	-	-
Write-off of property and equipment	(9,870)	-	-	-	-
Write-off of related party receivable	(162,204)	-	-	-	-

Net loss for the period	(8,403,868)	(153,395)	(195,677)	(312,909)	(410,242)

Basic and diluted loss per common share		(0.03)	(0.03)	(0.05)	(0.06)

Weighted average number of common shares used in per share calculations (Note 2)		5,710,311	6,586,540	5,710,311	6,386,668

Comprehensive loss
Net loss for the period	(8,403,868)	(153,395)	(195,677)	(312,909)	(410,242)
Foreign currency translation adjustment	(4,252)	16	(6)	19	6
Unrealized gain (loss) on available-for-sale investments (Note 4)	33,050	118,111	(162,019)	145,135	2,636

Comprehensive loss for the period	(8,375,070)	(35,268)	(357,702)	(167,755)	(407,600)

Basic and diluted comprehensive loss per common share		(0.01)	(0.05)	(0.03)	(0.06)

The accompanying notes are an integral part of these interim consolidated financial statements.

Rotoblock Corporation

(A Development Stage Company)

Interim 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 2011	For the three month period ended 31 October 2011	For the three month period ended 31 October 2010	For the six month period ended 31 October 2011	For the six month period ended 31 October 2010
	$	$	$	$	$

Cash used in operating activities
Net loss for the period	(8,403,868)	(153,395)	(195,677)	(312,909)	(410,242)
Adjustments to reconcile loss to net cash used by operating activities:
Contributions to capital by realted party - expenses (Notes 9 and 13)	300,000	-	-	-	-
Depreciation (Note 5)	31,243	3,401	4,056	6,801	8,047
Forgiveness of debt	-	-	-	-	(29,918)
Gain on disposal of property (Notes 5, 9, 10 and 13)	(1,384)	-	-	-	-
Non-cash interest (Notes 7 and 13)	217,838	30,243	-	60,483	4,274
Shares issued for services (Notes 9 and 10)	2,197,653	-	-	-	-
Stock-based compensation (Note 10)	3,157,726	-	-	-	-
Warrants issued for services (Note 10)	33,000	-	-	-	-
Write-off of patents (Note 3)	108,745	-	-	-	-
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 amounts receivable	(224)	9	(3)	9	2
(Increase) decrease in prepaid expenses (Note 10)	(14,345)	(20,000)	48,769	(20,000)	104,908
Increase (decrease) in accounts payable and accrued liabilities (Note 6)	45,890	(3,875)	(12,083)	10,918	6,975
Increase (decrease) in due to related party (Note 8)	673	(26)	9	(29)	(8)
	(2,139,979)	(143,643)	(154,929)	(254,727)	(315,962)

Cash flows used in investing activities
Purchase of equipment (Note 5)	(16,778)	-	-	-	-
Investment in Samyang Optics Co. Ltd. (Note 4)	(1,000,000)	-	-	-	-
Purchase of patents (Note 3)	(108,745)	-	-	-	-
	(1,125,523)	-	-	-	-

Cash flows from financing activities
Common shares issued for cash (Note 10)	1,000,941	-	-	-	-
Warrants granted for cash (Note 10)	72,164	-	-	-	-
Warrants exercised (Note 10)	22,833	-	2,501	-	3,334
Convertible promissory note payable (Note 7)	2,010,000	-	-	-	-
Share subscriptions received in advance (Note 10)	250,000	-	-	-	-
	3,355,938	-	2,501	-	3,334

Foreign exchange effect on cash	(4,252)	16	(6)	19	6

Increase (decrease) in cash and cash equivalents	86,184	(143,627)	(152,434)	(254,708)	(312,622)

Cash and cash equivalents, beginning of period	-	229,811	764,882	340,892	925,070

Cash and cash equivalents, end of period	86,184	86,184	612,448	86,184	612,448

Supplemental Disclosures with Respect to Cash Flows (Note 13)

The accompanying notes are an integral part of these interim consolidated financial statements.

Rotoblock Corporation

(A Development Stage Company)

Schedule 1 – Interim 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 2011	For the three month period ended 31 October 2011	For the three month period ended 31 October 2010	For the six month period ended 31 October 2011	For the six month period ended 31 October 2010
	$	$	$	$	$

Consulting fees (Notes 9, 10 and 13)	1,479,399	30,000	66,303	60,000	134,908
Depreciation (Note 5)	31,243	3,401	4,056	6,801	8,047
Foreign exchange loss	1,545	-	-	-	-
Interest (Notes 7 and 13)	223,921	30,243	-	60,489	4,334
Investor relations (Notes 10 and 13)	389,878	-	406	-	406
Listing, filing and transfer agent fees	66,502	3,185	2,700	5,686	2,870
Management fees (Notes 9 and 13)	300,000	-	-	-	-
Office and sundry	75,919	1,624	1,212	2,268	2,328
Professional fees	608,684	23,140	10,488	50,435	18,648
Public relations and shareholder information (recovery)	194,473	(406)	-	2,814	100,000
Rent	79,205	-	-	-	-
Research and development	387,173	-	-	-	-
Salaries and wages (Notes 9, 10, 12 and 13)	646,654	41,251	56,717	72,502	87,968
Stock-based compensation (Notes 10 and 13)	3,157,726	-	-	-	-
Travel and entertainment	487,493	20,957	53,795	51,914	86,171

	8,129,815	153,395	195,677	312,909	445,680

The accompanying notes are an integral part of these interim consolidated financial statements.

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

1. Nature and Continuance of Operations

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 inAccounting Standards Codification (the “Codification” or “ASC”) 915-10, “Development Stage Entities”. 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 interim consolidated financial statements as at 31 October 2011 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 $312,909 for the six month period ended 31 October 2011 (31 October 2010 – $410,242) and has a working capital deficiency of $2,137,574 at 31 October 2011 (30 April 2011 – $1,830,651).

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. 300,000 common shares in exchange for the 144,000 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.

Effective 3 February 2009, the Company effected a one (1) for fifty (50) reverse stock split (Note 10). All share and warrant amounts presented in the interim consolidated financial statements and in the notes thereto have been adjusted to reflect the reverse stock split. The effect of the reverse stock split on 2003 to 2007 disclosures is unaudited.

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 interim consolidated financial statements are the historical consolidated financial statements of Rotoblock Inc.

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

On 10 May 2011, the Company entered into a share exchange agreement (the “SEA”) with DaifuWaste Management Holding Limited (“Daifu”), a privately held medical waste treatment company incorporated with limited liability in the Cayman Islands, wherein the Company agreed to issue to the stockholders of Daifu 52,922,812 common shares in exchange for all of the issued and outstanding common shares of Daifu. Upon completion of the SEA, Daifu will become a wholly-owned subsidiary of the Company. The shares were issued on 10 May 2011 and are being held in treasury by the Company pending completion of the SEA (Notes 10, 12, 13 and 15).

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 2012. 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 interim 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 2011, 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 interim 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 interim consolidated financial statements.

Basis of presentation

The interim consolidated financial statements of the Company have been prepared in accordance with U.S. GAAP and are expressed in U.S. dollars.

Principles of consolidation

These interim 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 (Note 1). All inter-company balances and transactions have been eliminated on consolidation.

Fiscal period

The Company’s fiscal year ends on 30 April.

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

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.

Property, equipment and depreciation

Property and equipment have been recorded at cost, net of accumulated depreciation (Note 5). 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:

Equipment 5 years at 20%

Vehicles 12 years at 8%

Long lived assets

Long-term assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360-10-35-15, “Impairment or Disposal of Long-Lived Assets”.

Management considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets will be written down to fair value. Fair value is generally determined using a discounted cash flow analysis.

Basic and diluted net income(loss) per share

The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 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 stockholders (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 excluded all dilutive potential shares if their effect is anti-dilutive.

54,744,325 of the common shares outstanding as at 31 October 2011 are contingently cancellable and have been excluded from the weighted average number of common shares outstanding (Note 10).

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

Comprehensive loss

ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at 31 October 2011, the Company has items that represent a comprehensive loss and, therefore, has included a schedule of comprehensive loss in the interim consolidated financial statements.

Income taxes

Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with ASC 740, “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.

Segments of an enterprise and related information

ASC 280, “Segment Reporting”establishes guidance 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. ASC 280 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 Codification and does not believe it is applicable at this time.

Stock-based compensation

Effective 1 January 2006, the Company adopted the provisions of ASC 718, “Compensation - Stock Compensation”, which establishes accounting for equity instruments exchanged for employee services. Under the provisions of ASC 718, 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). The Company adopted ASC 718 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, 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. The adoption of ASC 718 did not change the way the Company accounts for share-based payments to non-employees, with guidance provided by ASC 505-50, “Equity-Based Payments to Non-Employees”.

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

Foreign currency translation

The Company’s functional and reporting currency is U.S. dollars. The interim consolidated financial statements of the Company are translated to U.S. dollars in accordance with ASC 830, “Foreign Currency Matters”. 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 interim consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Research and development

Research and development costs are expensed as incurred.

Patents

The Company accounts for patent costs in accordance with ASC 350, “Intangibles - Goodwill and Other”. In accordance with that statement, intangible assets with estimable 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 ASC 350-35-14, “Recognition and Impairment of an Impairment Loss”.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP 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 financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates.

Comparative figures

Certain comparative figures have been adjusted to conform to the current period’s presentation.

Recent Accounting Pronouncements

In June 2011, the FASB issued Accounting Standards Update (“ASU”) No. 2011-05, “Presentation of Comprehensive Income”. This ASU presents an entity with the option to present the total of comprehensive income, the components of net income, and the component of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity/deficit. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU No. 2011-05 should be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after 15 December 2011. As ASU No. 2011-05 relates only to the presentation of Comprehensive Income, the Company does not expect the adoption of this update will have a material effect on its interim consolidated financial statements.

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement” to amend the accounting and disclosure requirements on fair value measurements. This ASU limits the highest-and-best-use measure to non-financial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums and discounts. Additionally, this update expands the disclosure on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of the fair value to changes in unobservable inputs. ASU No. 2011-04 is to be applied prospectively and is effective during interim and annual periods beginning after 15 December 2011. The Company does not expect the adoption of this update will have a material effect on its interim consolidated financial statements.

3. Patents

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 2011, no engines have been sold.

During the year ended 30 April 2010, the Company recorded a provision for a write-down in the amount of $108,745 related to the OPE Patents.

4. Available-for-Sale Investments

		Unrealized gain	Fair value
	Adjusted cost	Unrealized gain	31 October 2011	30 April 2011 (Audited)
	$	$	$	$

977,966 common shares of Samyang Optics Co., Ltd.	1,000,000	33,050	1,033,050	887,915

On 11 February 2010, the Company entered into an Investment Agreement with Samyang Optics Co., Ltd. (“Samyang”), a South Korean Corporation listed on the Korea Exchange, whereby Samyang loaned the Company $2,000,000 in the form of a convertible promissory note (Note 7). In turn, the Company acquired 977,966 common shares of Samyang valued at $1,000,000.

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

Available-for-sale investments are carried at fair value, with unrealized gains and losses recorded as other comprehensive income and other than temporary losses recognized in net income (Note 14). As of 31 October 2011, the shares of Samyang were measured at a fair value of $1,033,050 (30 April 2011 - $887,915) and resulted in an unrealized gain of $145,135 during the six month period ended 31 October 2011 (31 October 2010 – $2,636).

5. Property and Equipment

		Accumulated depreciation	Net book value
	Cost	Accumulated depreciation	31 October 2011	30 April 2011 (Audited)
	$	$	$	$

Equipment	52,940	17,108	35,832	39,850
Vehicles	75,000	8,783	66,217	69,000

	127,940	25,891	102,049	108,850

During the six month period ended 31 October 2011, total additions to property and equipment were $Nil (30 April 2011 - $Nil). During the six month period ended 31 October 2011, total dispositions of property and equipment were $Nil (30 April 2011 - $Nil).

On 24 November 2008, the Company entered into an Asset Purchase and Balance Sheet Enhancement Agreement with a related party (the “Related Party”) to acquire an undivided 25% tenancy-in-common interest in a property located in Merced, California (the “Property Agreement”). The purchase price of the land and building was $250,000 and was paid for by the issuance of 200,000 shares of common stock of the Company valued at $250,000. On 29 July 2009, the Company disposed of the land and building back to the Related Party for proceeds of $250,000 resulting in a gain of $1,384. As consideration, the Related Party returned the 200,000 shares of common stock of the Company valued at $250,000 and these shares were cancelled on 29 July 2009 (Notes 9, 10 and 13).

On 8 February 2010, the Company entered into an Asset Purchase Agreement with a non-related individual to acquire security and computer equipment valued at $50,000. The purchase price of the equipment was paid for by the issuance of 50,000 shares of common stock of the Company valued at $50,000 (Notes 10 and 13).

On 10 February 2010, the Company entered into an Asset Purchase Agreement with a non-related company to acquire a number of vehicles valued at $75,000. The purchase price of the vehicles was paid for by the issuance of 75,000 shares of common stock of the Company valued at $75,000 (Notes 10 and 13).

6. 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 Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

7. Convertible Promissory Note

On 11 February 2010, the Company entered into a Convertible Promissory Note Agreement (the “Convertible Promissory Note Agreement”) with Samyang for $2,000,000 cash (Note 4). The principal balance bears interest at a rate of 6% per annum. All unpaid principal, together with any unpaid and accrued interest will be due and payable on the earlier of 11 February 2012 or when such amounts are declared due and payable by Samyang (the “Promissory Note”).

All principal, together with all accrued and unpaid interest, shall automatically convert into common shares of the Company at a price of $1.10 per share on 11 February 2012 or such other date designated by Samyang at its discretion.

On 13 May 2010, the Company issued 1,818,181 common shares valued at $1.10 per share in error in contemplation of the conversion of the Promissory Note by Samyang. These shares have been returned to treasury and the Company cancelled the 1,818,181 common shares issued in error during the six month period ended 31 October 2011 (Notes 10, 12 and 13).

During the six month period ended 31 October 2011, the Company accrued $60,483 (31 October 2010 - $4,274) in interest related to the Promissory Note (Note 13). The balance of the Promissory Note as at 31 October 2011 consists of principal and accrued interest of $2,000,000 (30 April 2011 - $2,000,000) and $206,137 (30 April 2011 - $145,644), respectively.

8. Due to Related Party

As at 31 October 2011, the amount due to a related party is $673 (30 April 2011 - $702), which is payable to a former director and stockholder of the Company. This balance is non-interest bearing, unsecured and has no fixed terms of repayment.

9. Related Party Transactions

During the six month period ended 31 October 2011, officers and directors of the Company made contributions to capital for management fees of $Nil (31 October 2010 - $Nil, cumulative - $300,000) (Note 13).

During the six month period ended 31 October 2011, the Company paid/accrued $62,502 (31 October 2010 – $62,502) to related parties for salaries and wages.

On 24 November 2008, the Company entered into a Property Agreement with a Related Party to acquire an undivided 25% tenancy-in-common interest in a property located in Merced, California. The purchase price of the land and building was $250,000 and was paid for by the issuance of 200,000 shares of common stock of the Company valued at $250,000. On 29 July 2009, the Company disposed of the land and building back to the Related Party for proceeds of $250,000 resulting in a gain of $1,384. As consideration, the Related Party returned the 200,000 shares of common stock of the Company valued at $250,000 and these shares were cancelled on 29 July 2009 (Notes 5, 10 and 13).

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

10. Capital Stock

Effective 3 February 2009, the Company effected a one (1) for fifty (50) reverse stock split (Note 1).All share and warrant amounts presented in the interim consolidated financial statements and in the notes thereto have been adjusted to reflect the reverse stock split. The effect of the reverse stock split on 2003 to 2007 disclosures is unaudited.

Authorized capital stock consists of 200,000,000 common shares with par value of $0.001 per share and 50,000,000 preferred shares with par value of $0.001 per share.

i. During the year ended 30 April 2009, the Company issued 1,000 common shares valued at $4.00 per common share for $4,000 in consulting services (Note 13).

ii. During the year ended 30 April 2009, the Company issued 6,400 common shares valued at $15.00 per common share for $96,000 in investor relations (Note 13). These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.

iii. During the year ended 30 April 2009, the Company issued 16,000 units valued at $4.00 per common share each 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 $7.50 expiring 12 May 2013 with a fair value of $147,446. As at 31 October 2011, 16,000 of the share purchase warrants in this series remain outstanding. These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933 (Note 13).

iv. During the year ended 30 April 2009, the Company issued 1,333 common shares valued at $7.50 per common share each for $10,000 for legal services (Note 13).

v. During the year ended 30 April 2009, the Company issued 1,000 common shares valued at $7.50 per common share for $7,500 in public relations (Note 13). These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.

vi. During the year ended 30 April 2009, the Company issued 3,200 common shares valued at $7.50 per common share for $24,000 in consulting expense to a related party (Note 13).

vii. During the year ended 30 April 2009, the Company issued 5,000 common shares valued at $5.50 per common share for $27,500 in consulting to a related party (Note 13). These shares were 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 Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

viii. During the year ended 30 April 2009, the Company issued 3,333 units valued at $7.50 per unit for total cash proceeds of $25,000. 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 $12.50 per share for a period of five years from the date of offering with a fair value of $18,525. As at 31 October 2011, 3,333 of the share purchase warrants in this series remain outstanding. These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.

ix. During the year ended 30 April 2009, the Company issued 2,000 common shares valued at $5.00 per common share for $10,000 in repayment for a convertible promissory note (Note 13).

x. During the year ended 30 April 2009, the Company issued 2,000 common shares valued at $3.00 per common share for $6,000 in consulting expense (Note 13).

xi. During the year ended 30 April 2009, the Company issued 200,000 shares of common stock valued at $1.25 per share purchase for land and building from a Related Party valued at $250,000 (Notes 5, 9 and 13). These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.

xii. During the year ended 30 April 2009, the Company issued 5,000 common shares valued at $1.00 per common share for $5,000 in legal services (Note 13).

xiii. During the year ended 30 April 2009, the Company issued 150,000 common shares valued $1.00 per common share at $150,000 in retainer for consulting expenses to two related parties (Note 13). This amount has been expensed during the years ended 30 April 2010 and 2009. These shares were 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 2010, the Related Party returned to treasury 200,000 shares of common stock of the Company valued at $1.25 per common share for a total value of $250,000, related to the disposal of land and building acquired from a Related Party pursuant to the Property Agreement entered into on 24 November 2008. These shares were cancelled on 29 July 2009 (Notes 5, 9 and 13).

xv. During the year ended 30 April 2010, the Company issued 6,552 common shares valued at $0.61 per common share for cash of $4,000. These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.

xvi. During the year ended 30 April 2010, the Company issued 13,333 common shares valued at $0.75 per common share for cash of $10,000. These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.

xvii. During the year ended 30 April 2010, the Company issued 3,500,083 common shares valued at prices from $0.15 to $1.00 per common share for $676,675 in consulting expense and salaries and wages (Note 13).

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

xviii. During the year ended 30 April 2010, the Company issued 550,000 common share purchase warrants valued at $633,728 for stock-based compensation. Each common share purchase warrant entitles the holder to purchase one common share at a price of $0.25 to $1.00 for a period of five years from the date of offering. As at 31 October 2011, 550,000 of the share purchase warrants in these series remain outstanding (Note 13).

xix. During the year ended 30 April 2010, the Company issued 8,585,083 common share purchase warrants valued at $469,113 for consulting services. Each common share purchase warrant entitles the holder to purchase one common share at a price of $0.25 to $1.00 for a period of five or ten years from the date of offering. As at 31 October 2011, 8,565,083 of the share purchase warrants in these series remain outstanding (Notes 9 and 13).

xx. During the year ended 30 April 2010, the Company issued 28,572 units valued at $1.75 consisting of one share and two warrants for total cash proceeds of $50,000. Each whole common share purchase warrant entitles the holder to purchase an additional common share at a price of $2.50 per share for a period of five years up to 22 July 2014. These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. As at 31 October 2011, 57,144 share purchase warrants in this series remain outstanding.

xxi. During the year ended 30 April 2010, the Company issued 28,572 shares valued at $1.75 for total cash proceeds of $50,000. These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.

xxii. During the year ended 30 April 2010, the Company entered into an Asset Purchase Agreement with anon-related individual to acquire security and computer equipment valued at $50,000. The purchase price of the equipment was paid for by the issuance of 50,000 shares of common stock of the Company valued at $50,000 (Notes 5 and 13).

xxiii. During the year ended 30 April 2010, the Company entered into an Asset Purchase Agreement with a non-related company to acquire a number of vehicles valued at $75,000. The purchase price of the vehicles was paid for by the issuance of 75,000 shares of common stock of the Company valued at $75,000 (Notes 5 and 13).

xxiv. During the year ended 30 April 2011, the Company issued 30,000 warrants valued at $33,000 for services rendered. Each whole common share purchase warrant entitles the holder to purchase a common share at a price of $0.25 per share for a period of five years. During the year ended 30 April 2011, the Company issued 18,000 common shares valued at $0.25 per common share for cash of $4,500 upon exercise of the share purchase warrants. These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933. As at 31 October 2011, 12,000 warrants in this series remain outstanding.

xxv. During the year ended 30 April 2011, the Company issued 13,336 common shares valued at $0.25 per common share for proceeds of $3,333 upon exercise of warrants. These shares were 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 Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

xxvi. During the year ended 30 April 2011, the Company issued 1,818,181 common shares valued at $1.10 per common share in error in contemplation of the conversion of the Promissory Note by Samyang. These shares have been returned to treasury and the Company cancelled these 1,818,181 common shares issued in error during the six month period ended 31 October 2011 (Notes 7, 12 and 13).

xxvii. During the year ended 30 April 2011, the Company issued 1,000,000 common shares valued at $0.25 per common share related to share subscriptions received in advance in the prior year in the amount of $250,000 (Note 13). These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.

xxviii. During the year ended 30 April 2011, the Company issued 30,000 common shares valued at $1.02 per common share for $30,600 in consulting fees (Note 13). These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.

xxix. During the year ended 30 April 2011, a total of 59,200 previously outstanding share purchase warrants expired.

xxx. During the year ended 30 April 2011, the Company issued 3,334 common shares valued at $0.25 per common share in error. As at 30 April 2011, the Company is in the process of obtaining the 3,334 common shares to be returned to treasury for cancellation. On 14 July 2011, the Company cancelled these 3,334 common shares issued in error (Notes 12 and 13).

xxxi. During the year ended 30 April 2011, the Company issued 3,334 common shares valued at $Nil per common share in error. As at 31 October 2011, the Company is in the process of obtaining the 3,334 common shares to be returned to treasury for cancellation (Notes 12, 13 and 15).

xxxii. During the year ended 30 April 2011, the Company issued 20,000 common shares valued at $0.25 per common share for proceeds of $5,000 upon exercise of warrants. These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933.

xxxiii. During the six month period ended 31 October 2011, the Company issued 52,922,810 common shares valued at $1.58 to the shareholders of Daifu in contemplation of the completion of the terms of the SEA. These shares are being held in treasury pending the completion of the SEA. These shares were restricted from trading for a period of one year as defined by Rule 144 of the United States Securities Act of 1933 (Notes 1, 12, 13 and 15).

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

Share Purchase Warrants

The following share purchase warrants were outstanding at 31 October 2011. Certain of these share purchase warrants expired subsequent to the period end (Note 15).

	Exercise price	Number of warrants	Remaining contractual life (years)
	$

Warrants	7.50	50,000	0.11
Warrants	12.50	7,600	0.86
Warrants	7.50	20,000	1.42
Warrants	7.50	16,000	1.53
Warrants	12.50	3,333	1.68
Warrants	0.25	25,000	2.71
Warrants	0.25	25,000	2.73
Warrants	0.50	200,000	2.73
Warrants	2.50	57,144	2.73
Warrants	0.25	2,181,750	3.29
Warrants	1.00	50,000	3.29
Warrants	0.25	333,333	3.33
Warrants	1.00	300,000	3.38
Warrants	0.25	12,000	3.46
Warrants	0.25	6,000,000	8.39

		9,281,160

The following is a summary of warrant activities during the six month period ended 31 October 2011 and during the year ended 30 April 2011:

	Number of warrants	Weighted average exercise price
		$

Outstanding and exercisable at 1 May 2010	9,361,694	0.58
Granted	30,000	0.25
Exercised	(51,334)	0.25
Expired	(59,200)	12.5

Outstanding and exercisable at 30 April 2011	9,281,160	0.38

Weighted average fair value of warrants granted during the year		1.1



	Number of warrants	Weighted average exercise price
		$

Outstanding and exercisable 1 May 2011	9,281,160	0.38
Granted	-	-
Exercised	-	-
Expired	-	-

Outstanding and exercisable 31 October 2011	9,281,160	0.38

Weighted average fair value of warrants granted during the period		-

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

The weighted average grant date fair value of warrants issued during the six month period ended 31 October 2011 amounted to $Nil per warrant (30 April 2011 - $1.10 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 2011	As at 30 April 2011 (Audited)

Risk free interest rate	-	2.47%
Expected life	-	5.0 years
Annualized volatility	-	603%
Expected dividends	-	-

Restricted Common Shares

As at 31 October 2011, a total of 58,629,787 common shares are outstanding. Of these, 57,142,703 were restricted from trading as defined under Rule 144 of the United States Securities Act of 1933.

During the year ended 30 April 2011, the Company issued 1,818,181 common shares valued at $1.10 per common share in error in contemplation of the conversion of the Promissory Note by Samyang. These shares have been returned to treasury and the Company cancelled these 1,818,181 common shares issued in error during the six month period ended 31 October 2011 (Notes 7, 12 and 13).

During the year ended 30 April 2011, the Company issued 3,334 common shares valued at $0.25 per common share and 3,334 common shares valued at $Nil per common share in error. On 14 July 2011, the Company cancelled these 3,334 common shares issued in error. As at 31 October 2011, the Company is in the process of obtaining another 3,334 common shares to be returned to treasury for cancellation (Notes 6, 12 and 15).

During the six month period ended 31 October 2011, the Company issued 52,922,810 common shares valued at $1.58 to the shareholders of Daifu in contemplation of the completion of the terms of the SEA.

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

These shares are being held in treasury pending the completion of the SEA (Notes 1, 12 and 13).

11. Income Taxes

The Company has losses carried forward for income tax purposes to 31 October 2011. There are no current or deferred tax expenses for the six month period ended 31 October 2011 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 2011	For the six month period ended 31 October 2010
	$	$

Deferred tax asset attributable to:
Current operations	109,518	143,585
Change in valuation allowance	(102,759)	(142,593)
Foreign exchange	(6,759)	(992)

Net refundable amount	-	-

The composition of the Company’s deferred tax asset as at 31 October 2011 and 30 April 2011 is as follows:

	As at 31 October 2011	As at 30 April 2011 (Audited)
	$	$

Net operating loss carry forward	4,740,157	4,454,281

Statutory federal income tax rate	25% - 35%	25% - 35%
Effective income tax rate	0%	0%

Deferred tax asset	1,602,013	1,499,254
Less: Valuation allowance	(1,602,013)	(1,499,254)
	-	-

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

The potential income tax benefit of these losses has been offset by a full valuation allowance.

As at 31 October 2011, the Company has unused non-capital losses for Canadian tax purposes of approximately $570,414 that are available to offset future taxable income. This unused non-capital loss carry forward balance for income tax purposes expires between the years 2014 and 2032.

As at 31 October 2011, the Company has unused net operating losses for U.S. federal income tax purposes of approximately $4,169,743 that are available to offset future taxable income. This unused net operating loss carry forward balance for income tax purposes expires between the years 2025 and 2032.

12. Commitments and Contingency

	i.	On 15 November 2007, the Company filed its intention to register 100,000 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 $4.50 per common share

	ii.	The Company is committed to issuing 25,000 shares valued at $3,750 pursuant to the one-year consulting agreement for consulting services

	iii.	During the year ended 30 April 2011, the Company issued 3,334 common shares valued at $0.25 per common share and 3,334 common shares valued at $Nil per common share in error. On 14 July 2011, the Company cancelled these 3,334 common shares issued in error. As at 31 October 2011, the Company is in the process of obtaining another 3,334 common shares to be returned to treasury for cancellation (Notes 10, 13 and 15)

	iv.	During the year ended 30 April 2011, the Company issued 1,818,181 common shares valued at $1.10 per common share in error in contemplation of the conversion of the Promissory Note by Samyang. These shares have been returned to treasury and the Company cancelled these 1,818,181 common shares issued in error during the six month period ended 31 October 2011 (Notes 7, 10 and 13)

	v.	During the six month period ended 31 October 2011, the Company issued 52,922,810 common shares valued at $1.58 to the shareholders of Daifu in contemplation of the completion of the terms of the SEA. These shares are being held in treasury pending the completion of the SEA (Notes 1, 10, 13 and 15)

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

13. Supplemental Disclosures with Respect to Cash Flows

	For the period from the date of inception on 2 September 2003 to 31 October 2011	For the three month period ended 31 October 2011	For the three month period ended 31 October 2010	For the six month period ended 31 October 2011	For the six month period ended 31 October 2010
	$	$	$	$	$

Cash paid during the period for interest	11,362	-	-	-	-
Cash paid during the period for income taxes	-	-	-	-	-

During the six month period ended 31 October 2011, officers and directors of the Company made contributions to capital for management fees of $Nil (31 October 2010 - $Nil) (Note 9).

During the six month period ended 31 October 2011, the Company issued 52,922,810 common shares valued at $1.58 to the shareholders of Daifu in contemplation of the completion of the terms of the SEA. These shares are being held in treasury pending the completion of the SEA (Notes 1, 10, 12 and 15).

During the six month period ended 31 October 2011, the Company accrued $60,489 (31 October 2010 - $4,334) in interest related to the Promissory Note (Note 7).

During the year ended 30 April 2011, the Company issued 30,000 common shares valued at $1.02 per common share for $30,600 in consulting fees (Note 10).

During the year ended 30 April 2011, the Company issued 30,000 warrants valued at $33,000 for services rendered. Each whole common share purchase warrant entitles the holder to purchase a common share at a price of $0.25 per share for a period of five years (Note 10).

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

During the year ended 30 April 2010, the Company issued 3,500,083 common shares valued at prices from $0.15 to $1.00 per common share for $676,675 in consulting expense and salaries and wages (Notes 9 and 10).

During the year ended 30 April 2010, the Company issued 550,000 common share purchase warrants valued at $633,728 as stock-based compensation. Each common share purchase warrant entitles the holder to purchase one common share at a price of $0.25 to $1.00 for a period of five years from the date of offering (Note 10).

During the year ended 30 April 2010, the Company issued 8,585,083 common share purchase warrants valued at $469,113 for consulting services. Each common share purchase warrant entitles the holder to purchase one common share at a price of $0.25 to $1.00 for a period of five or ten years from the date of offering (Notes 9 and 10).

During the year ended 30 April 2010, the Company rescinded the 200,000 common shares valued at $1.25 per share for a total value of $250,000 which had been issued to acquire an undivided 25% tenancy-in-common interest in land and buildings located in Merced, California from a Related Party (Notes 5, 9 and 10).

During the year ended 30 April 2010, the Company entered into an Asset Purchase Agreement with a non-related individual to acquire security and computer equipment valued at $50,000. The purchase price of the equipment was paid for by the issuance of 50,000 shares of common stock of the Company valued at $50,000 (Notes 5 and 10).

During the year ended 30 April 2010, the Company entered into an Asset Purchase Agreement with a non-related company to acquire a number of vehicles valued at $75,000. The purchase price of the vehicles was paid for by the issuance of 75,000 shares of common stock of the Company valued at $75,000 (Notes 5 and 10).

During the year ended 30 April 2010, the Company entered into the Convertible Promissory Note Agreement with Samyang for $2,000,000 cash. The principal balance bears interest at a rate of 6% per annum. All unpaid principal, together with any unpaid and accrued interest is due and payable on the earlier of 11 February 2012 or when such amounts are declared due and payable by the investor (Notes 4, 7 and 10).

During the year ended 30 April 2009, the Company issued 2,000 common shares valued at $5.00 per share for $10,000 in convertible promissory notes (Note 10).

During the year ended 30 April 2009, the Company issued a total of 190,933 common shares and 16,000 common share purchase warrants valued at $394,000 for consulting, investor relations services, compensation, legal services and public relation services (Note 10).

14. Financial Instruments

The carrying value of cash and cash equivalents, amounts receivable, accounts payable, due to related party and convertible promissory note approximates fair value due to the short term maturity of these financial instruments.

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

Credit Risk

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and amounts receivable. The Company deposits cash and cash equivalents with high credit quality financial institutions as determined by rating agencies and amounts receivable consist of Goods and Services Tax receivable of $224 (30 April 2011 - $233).

Currency Risk

The Company’s functional and reporting currency is the U.S. dollar. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

If the Canadian dollar had weakened (strengthened) against the U.S. dollar, with all other variables held constant, by 100 basis points (1%) at year end, the impact on net loss and other comprehensive loss would have been $46 higher ($46 lower).

The Company has not, to the date of these interim consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Interest Rate Risk

The Company has cash balances and an interest-bearing debt. It is management’s opinion that the Company is not exposed to significant interest risk arising from these financial instruments.

Liquidity Risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities. The Company is reliant upon successful financing as its sole source of cash. The Company has received financing from private placements in the past; however, there is no assurance that it will be able to do so in the future.

15. Subsequent Events

a. The Company is in the process of obtaining 3,334 common shares issued in error to be returned to treasury for cancellation (Notes 10, 12 and 13).

b. On 11 November 2011, the parties to the SEA entered into an Amended and Restated Agreement and Plan of Share Exchange (the “Amended and Restated Share Exchange Agreement”) whereby the terms of the SEA were amended and restated in their entirety. Pursuant to the terms of the Amended and Restated Share Exchange Agreement, the Daifu Shareholders have now agreed to transfer 100% of the outstanding shares of Daifu to the Company in exchange for the issuance of 73,801,525 shares of the common stock to the Daifu shareholders. All outstanding warrants (the “Rotoblock Warrants”) of the Company to purchase in the aggregate 9,281,160 shares of common stock of the Company will be left intact and remain outstanding after the share exchange.

Rotoblock Corporation

(A Development Stage Company)

Notes to Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2011

As a result of the share exchange, Daifu will become a wholly-owned subsidiary of the Company and the Daifu Shareholders will acquire approximately 83.1% of the Company’s issued and outstanding common stock and common stock equivalents (including the share underlying the Rotoblock Warrants). The closing of the transactions contemplated by the Amended and Restated Share Exchange Agreement are subject to standard closing conditions, which the parties expect to be completed no later than 30 November 2011 (Notes 1, 10, 12 and 13).

c. On 10 December 2011, a total of 50,000 share purchase warrants with an exercise price of $7.50 expired (Note 10).

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations of Registrant should be read in conjunction with our unaudited interim consolidated financial statements included elsewhere in this report. Certain statements we make in this section may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. You should carefully consider these forward-looking statements in light of our unaudited condensed consolidated financial statements, related notes and other financial information appearing elsewhere in this report and our other filings with the Commission.

Overview of our Business

Rotoblock Corporation was incorporated in the State of Nevada on March 22, 2004. We were formed to engage in the development and licensing of an Oscillating Piston Engine (OPE) and are still in the development stage.

On February 11, 2010, we entered into an Investment Agreement with Samyang Optics Co. Ltd. (“Samyang”), a South Korean Corporation listed on the Korea Exchange, whereby Samyang loaned the Company $2,000,000 in the form of a convertible promissory note. In turn, the Company acquired 977,966 shares of Samyang for the amount of $1,000,000.

The funds are being used for our development activities.

On May 10, 2011, we entered into a Share Exchange Agreement (the “SEA”) with DaifuWaste Management Holding Limited (“Daifu”), a privately held medical waste treatment company incorporated with limited liability in the Cayman Islands, wherein we agreed to issue to the stockholders of Daifu 52,922,812 shares of our common stock in exchange for all of the issued and outstanding shares of common stock of Daifu.

On November 11, 2011, the parties entered into an Amended and Restated Agreement and Plan of Share Exchange (the “Amended and Restated Share Exchange Agreement”) whereby the terms of the SEA were amended and restated in their entirety. Pursuant to the terms of the Amended and Restated Share Exchange Agreement, the Daifu Shareholders agreed to transfer 100% of the outstanding shares of Daifu to us in exchange for the issuance of 73,801,525 shares of the common stock to the Daifu shareholders. All outstanding warrants (the “Rotoblock Warrants”) of the Company to purchase in the aggregate 9,281,160 shares of common stock of the Company will be left intact and remain outstanding after the share exchange transaction is completed.

On November 18, 2011, we completed our acquisition of daifuWaste Management Holdings Limited, a Cayman Islands company ("Daifu”) with the shareholders of Daifu, which own shares constituting 100% of the issued and outstanding ordinary and preferred shares of Daifu, and Chien Chih Liu, our principal controlling shareholder. Pursuant to the terms of the Share Exchange Agreement, the Daifu Shareholders transferred all of their Daifu Shares to us in exchange for the issuance of 73,801,525 shares of our common stock, par value $0.001 per share, to the Daifu Shareholders. The shares were issued on May 10, 2011 and were held in treasury by us pending completion of the SEA. Daifu is now a wholly-owned subsidiary of the Company.

Prior to completion of the Share Exchange, we were a development stage enterprise whose operations relate to the development, manufacture and marketing of the Oscillating Piston Engine (OPE) technology and other energy-efficient and environmental equipment in China. The OPE patented internal combustion engine is different than conventional reciprocating engine technology in that the current oscillating piston design incorporates four pairs of pistons. Each of these eight pistons is alternately attached, through two oppositely rotating adjacent discs, to two coaxial drive shafts extending from the center of one face of the cylinder block. Each piston is attached to a single disc such that four non-adjacent pistons are rigidly affixed to the upper disc and the remaining four to the lower. Each concentric shaft is attached, respectively, to the connecting discs. The OPE technology is also a departure from conventional engine design, resulting in fewer moving parts, has allowed us to produce an engine with reduced frictional losses, which if proven in testing, could lead to increased reliability, improved performance and longer engine life.

We are in the process of improving the OPE technology to make the engine more efficient, economical and environmentally friendly in an effort to make it attractive to engine manufacturers to either acquire the technology or negotiate license agreements to use the technology. We have made several changes to the prototype engine. All parts except the crankshaft and engine block have been redesigned.

We will continue the research, development and testing efforts, with test runs of the engine, until it is certain that there has been completed the best, most efficient model. This goal will be considered to be reached when the engine demonstrates a power to weight ratio of 2:1.

We have an option to acquire all of the rights, title and interest in and to a patented technology and prototype engine the Oscillating Piston Engine (OPE). We do not own the patents or rights underlying the patents, but rather, have been granted the use thereof and an option to purchase the rights. Pursuant to the terms of the agreement, the options may also be assigned to a third party without consent of the Estate of the Optionor. The patent options will allow us to develop products in the following areas: the basic Oscillating Piston Engine, Oscillating Piston Engine for a ducted fan for aircraft, boats or hovercraft, Oscillating Piston Engine for an electrical charging system for electrically powered vehicle, Oscillating Piston Engine for Pumping Systems and Oscillating Piston Engines as a power source for helicopters.

Since we have been a development stage enterprise, we have limited assets and no revenues have been recognized until the products are sold.

Rotoblock Inc., is Registrant's wholly-owned subsidiary and is a Canadian corporation which was incorporated on September 2, 2003. We acquired all of the outstanding shares of Rotoblock, Inc. on March 30, 2004 in exchange for issuing 300,000 shares of our Common Stock to the shareholders of Rotoblock, Inc. Daifu, our wholly-owned subsidiary, was incorporated in the Cayman Islands on August 1, 2000. Daifu owns 100% of daifuWaste Management Holding (“daifuWaste Samoa”), which was incorporated in Samoa on October 3, 2007. daifuWaste Samoa owns: (i) 100% of daifuWaste Solutions Inc. (“daifuWaste Solutions”), a company incorporated in the British Virgin Islands (“BVI”) on August 11, 2000, (ii) 100% of daifiWaste Investment Limited (“daifuWaste Investment”), a company incorporated in Samoa on October 3, 2007, and (iii) 95% of Hydroclave China Inc. (“Hydroclave”), a company incorporated in the BVI on July 15, 2002. daifuWaste Solutions owns 100% of dafuWaste Investment (Hong Kong) Limited (“daifuWaste HK”), a company incorporated in Hong Kong on March 6, 2000. daifuWaste HK owns 100% of the equity of Puhua Kangjian Environment Technology (Shenzhen) Limited (“PHKJ”), a wholly foreign owned entity incorporated in the PRC on September 15, 2003.

As a result of the Share Exchange, Daifu became our wholly owned subsidiary and we acquired the business and operations of PHKJ, its PRC subsidiary. PHKJ designs, develops and sells medical waste treatment non-incinerator systems in China.

Our current corporate structure is set forth below:

Rotoblock Corporation
(Nevada)
100%

100%		100%
diafu Waste Management		Rotoblock, Inc
Holding Limited (Cayman)		(Canada)
(Cayman Islands)

	100%
	diafu Waste Management
	Holding Limited
	(Samoa)


95%	100%	100%
Hydoclave China, Inc	diafuWaste Solutions, Inc	diafuWaste Investment Limited
(BVI)	(BVI)	(Samoa)


	100%
	diafuWaste Investment Hong Kong
	(Hong Kong)


	100%
	Puha Kangjian Environmental Technology

Business of our Wholly-Owned Subsidiary

Daifu's goal is to become the leading medical waste management company in PRC, by leveraging our existing leadership position as a medical waste technology provider to expand the company from a solution provider to service-solution provider.

Daifu is a holding company that only operates through our direct Chinese subsidiary. Through our Chinese subsidiary, we design, develop, manufacture and sell medical waste treatment (“MWT”) non-incinerator systems in China. We market, sell and service our 5 series of(HAI ZHUO KE)” branded medical waste treatment systems in China. There are over 10 sets of systems in operation in China currently. Our client bases are hospitals and non-hospital medical institutions in China, including No. 302 Hospital in Beijing, a leading hospital in China. We also donated a mobile MWT system to Sichuan province, the most populous province in China, after the May 2008 earthquake.

Daifu has started to expand to servicing by investing and acquiring centralized medical service centers in China. We are prepared to make additional investments in medical service centers after becoming a public company with access to more funding sources.

Daifu Products

Daifu markets sells and services its 5 series of(HAI ZHUO KE)” branded medical waste treatment (MWT) non-incinerator system in China. The MWT system we manufacture and sell is based on the licensed technology from Hydroclave Systems Corp. (“Hydroclave Canada”), a Canadian company that specializes in MWT and Special Waste Treatment (“SWT”). The systems works under high-pressure and high-temperature environment and use steam to sterilize and disinfect the medical waste materials. The medical waste is also shredded into small proportions during the treatment. After the treatment, the medical waste is non-recognizable and harmless and ready for landfill. The daifu technology has the advantages of high-efficiency, environment-friendly and low operation and maintenance cost. Also, the daifu system is in full compliance with the specification and emission requirements issued by World Health Organization (WHO) and “The Technical Specifications Regarding the High-Temperature Steam Centralized Treatment of Medical Waste”, issued by China Ministry of Environment Protection (MEP).

Daifu Product Series

The daifu MWT non-incinerator system has the following series, capacity and applications:

Series Name	Working Temperature (C)	Batch Name (L)	Batch Capacity (Kg)	Application
H25 Series	134	700	115	In-house hospital; mobile system; or small centralized waste management facility
H35 Series	134	1000	160	In-house hospital; mobile system; or small centralized waste management facility
H65 Series	134	1800	300	Centralized waste management facility
H100 Series	134	2800	450	Centralized waste management facility
H250 Series	134	7000	1200	Centralized waste management facility

Daifu has registered the trademark of(HAI ZHUO KE) with the Trademark Office of the State Administration for Industry and Commerce of China. Daifu uses the trademark for the sales and marketing of its products. The trademark expires in May 2013 and may be renewed thereafter.

Working Principle of Our Products

The(HAI ZHUO KE)-branded MWT non-incinerator system applies high-temperature and high-pressure steam to treat all kinds of medical waste materials. To achieve the goal of thorough and even sterilization of infectious waste material, we applied 2 principles when designing our systems:

· The waste is treated in a continual mixing and fragmenting hot vessel, to ensure that all waste particles from small needles to bulk liquid infectious wastes are subjected thoroughly and evenly to a heat temperature that kills micro organisms;

· Instead of exposing the medical waste to be treated to direct steam, indirect steam is used. The indirect steam ensures uniform heat and allows the waste to generate its own steam from its moisture. The indirect process also greatly reduces emission of hazardous materials into the air.

Components of the Daifu System

The Daifu MWT system is usually made up of the following components:

Sterilizer

The system is the main component. The sterilizer sterilizes the waste with high temperature and pressure and simultaneously fragments and dries the waste to reduce significantly the weight and volume of the waste. The sterilize has 2 different styles: 1) front loading systems and 2) top loading systems.

Boiler

The boiler generates the high temperature steam used in the sterilizer. The boiler can be operated using various fuel types based on availability and customer preferences. The most common fuels are oil, natural gas, propane, coal or diesel. Steam from the boiler can also be used to heat water for the Container Cleaning System.

Conveyor

The conveyer moves the treated waste from the sterilizer to the shredder and to a compactor or a collection container or truck. The conveyors are custom designed and built to suit the specific installations.

VOC Waste Gas Filter System

The filter system is an important component that condenses and filters the pressurized gases generated during treatment of the medical waste in the sterilizer. Volatile organic compounds (“VOCs”) are produced during the high temperature treatment and must be filtered before being released to the atmosphere. This specially engineered system ensures that these gases are cooled below 40°C and filtered to release environmentally non-harmful emissions to the atmosphere.

Shredder

The shredder (or grinder) is used to further reduce the size of the waste fragments after the treatment cycle. The waste is already fragmented and considerably reduced in size within the sterilizer’s treatment cycle. However, some local regulations or landfill operators require additional shredding to ensure the fragments are “unrecognizable” to prevent reclamation of any waste residues.

Container Cleaning System

The cleaning system is automated and is used to clean the soiled waste bins that are used to transport the waste to the facility from the hospitals or other sources. A chain conveyor method conveys the soiled waste bins through a series of high pressure hot water sprays and then through another series of sprays that chemically sanitize the containers. The excess water is blown off to dry the waste bins before they are shipped back to customers for reuse.

Control Panel

The control panel fully automates the system by using state-of-the-art logic controllers and a large touch screen. The panel is designed for ease of use and requires minimal operator training. Smaller remote panels can be used for ease of access by connection to the main control panel. The system logs all treatment cycle data and is accessible via the internet, making data retrieval convenient and allowing technicians to troubleshoot remotely.

Technical Advantages of the System

Compared to other MWT techniques, such as incinerator, microwaving and heat-pressure, the Daifu system has the following advantages:

· Zero-emission of Dioxin, the most toxic elements often found in medical wastes treatment;

· The sterilization result passes the industrial standard of LOG4 (for which the survival probability rate after-treatment is 1:10,000), reaching LOG6 (for which the survival probability rate is 1:1,000,000) to LOG8 (for which the survival probability rate is 1:100,000,000);

· The steam generated can be recycled and reused, thus saving energy and cost;

· Low operating and maintenance cost and low emission;

· Complete automated operation, ensuring safety;

· No emission of any toxic, hazardous and infectious substances into the air;

· Greatly reduce the volume and weight of disposable post-treatment waste.

Manufacturing

Currently Daifu OEMs the manufacture of its system through third-party partners, including Tianjin Huatai Pressure Container Corporation Ltd. (“Tianjin Huatai”) and Zhejiang Muopeng Machinery Corporation, Ltd (“Zhejiang Muopeng”). Tianjin Huatai is mainly responsible for the manufacturing of the sterilizer. Zhejiang Muopeng is mainly responsible for the manufacturing of the periphery components, such as the conveyor and loading platform. Daifu purchases the control panel and other parts from third-party suppliers based on quality, price and other terms.

When Daifu gets a firm order with a deposit from a client, it places the order with manufacturing partners. The usual manufacturing time is between 30 and 60 days. Daifu has been satisfied with its partners from working with them for over 5 years. Daifu also has a plan to acquire a specialized pressurized vessel company in China so that it can start to manufacture its systems internally. The discussion with the target is underway and Daifu hopes to complete an acquisition soon.

Environmental Protection

Daifu’s manufacturing operations are subject to PRC environmental laws and regulations on air emission, solid waste emission, sewage and waste water, discharge of waste and pollutants, and noise pollution. These laws and regulations include Law of the PRC on Environmental Protection, Law of the PRC on the Prevention and Control of Water Pollution, Law of the PRC on the Prevention and Control of Atmospheric Pollution, Law of the PRC on the Prevention and Control of Pollution from Environmental Noise and Law of the PRC on the Prevention and Control of Environmental Pollution of Solid Waste. Daifu is also subject to periodic monitoring by relevant local government environmental protection authorities.

According to these environmental laws and regulations, all business operations that may cause environmental pollution and other public hazards are required to incorporate environmental protection measures into their operations and establish a reliable system for environmental protection. The operations must adopt measures to prevent and control pollution levels and harm caused to the environment in the form of waste gas, waste water and solid waste, dust, malodorous gas, radioactive substance, noise, vibration and electromagnetic radiation generated in the course of production, construction or other activities. Companies in the PRC are also required to carry out an environment impact assessment before starting construction of production facilities and the installation of pollution treatment facilities. The assessment shows that the construction or instruction will meet the relevant environmental standards and treat pollutants before discharge.Daifu has done the required environment impact assessment before selecting our OEM third-party partners and all of our third-party partners have obtained all the required permits and environmental approvals.

Health and Safety Matters

The PRC Production Safety Law (the “Production Safety Law”) requires that our third-party partners maintain safe working conditions under the Production Safety Law and other relevant laws, administrative regulations, national standards and industrial standards. Daifu’s third-party partners are required to offer education and training programs to their employees about production safety. The design, manufacture, installation, use and maintenance of our safety equipment must conform to applicable national and industrial standards. In addition, its third-party partners are required to provide employees with safety and protective equipment that meet national and industrial standards and to supervise and educate employees to wear or use such equipment according to the prescribed rules.

Daifu complies with all applicable labor and safety laws and regulations and has implemented internal safety guidelines and operating procedures.

Daifu also complies with the new PRC Labor Contract Law, which came into effect on January 1, 2008, and does not believe this new law will have any adverse impact on our business and operations. Since daifu started business, no employee has been involved in any major accident at work, and we have never been subject to governmental disciplinary actions over the labor protection issues.

Daifu Research and Development Efforts

Daifu currently operate one research and development center located in Beijing. As of October 31, 2011, Daifu had 6 research and development staff (all of whom hold college degrees in mechanical engineering and automation) who independently manage new product development projects. The research and development center’s mission is to develop advanced system, lower emission and achieve higher efficiency in treatment process, and to provide training. Daifu has also recruited renowned experts in the industry to be its technology advisors. Their contribution and insights have helped to develop new and advanced products.

Sales Process

We have established a sales network nationwide which is composed of sales representatives, agents and third-party partners. Most of our projects are centralized municipal waste treatment centers. The centers usually finance the projects through special government bonds. Daifu also sells to hospitals and medical institutions

nationwide. It usually obtain the potential project leads through contacts in various cities. Daifu then contacts the contractor who will operate the waste treatment centers. Daifu works with the contractor to incorporate its technology and specifications in the feasibility study that is prepared by the local Development and Reform Commission (DRC). Then the feasibility study is presented to the provincial (municipal) DRC for environmental impact study and submitted to the National Development and Reform Commission (NDRC) for evaluation and approval. The NDRC has the final authority to approve the project and allocate the government bonds for the construction. Usually the NDRC only approve the projects presented to it twice per year.

After the project is approved and the funds allocated, the local contractor will start the project design process. In this process, Daifu works together with the contractor to include its technology and specifications into the final design. Then a bidding process for the equipment of the treatment center takes place. If Daifu wins the bid, it starts the manufacturing process and delivers the system to the contractor based on the time frame of the contract. An indicative sales cycle for our system is between 6 to 12 months, depending on the size and sophistication of the system.

Once Daifu wins the bid and signs the sales contract with a customer, it asks them to pay a deposit between 30% and 50% of the total contract value. When the system is delivered, 90% to 95% of the total contract value is paid. The balance is held to cover the warranty and will be paid at the end of the warranty period (typically 12 months), provided that no warranty repairs are required from the operation of the system and all technical specifications are met to the satisfaction of the owner and operator.

Sales and Marketing Strategy

In the future, Daifu's sales and marketing strategy will focus on the following aspects:

Strengthen its sales efforts by hiring more sales representatives

Daifu plans to hire more full-time sales representatives and to establish more branch offices in China, especially in the regions that have established market awareness and reputation, such as in Southeastern China. This will improve its contacts with existing and potential clients, as well as enable collection of market intelligence for potential clients.

Expand is nationwide agents and business partner networks

Besides establishing in-house sales force, Daifu will also depend on its agents and business partner network for sales leads and market intelligence. As discussed above, the sales process for selling its systems is usually complicated and multiple government bodies and regulators are involved. This complexity means that Daifu has to rely on its local contacts for the most recent and accurate market information. Establishing a reliable and long-term sales agent network nationwide is critical for future growth.

Improve the name-recognition of Daifu and its products

Since Daifu started operations in 2001, it has witnessed the growth and development of the MWT industry in China, as well as the gradual increase in the awareness of the need to protect the environment in China. The general population in China is becoming more aware about environmental protection issues. Daifu believes that this development is a good trend for Daifu. Through participating in related conferences and exhibitions, as well as making selective social welfare donations, such as to the earthquake-struck regions of Sichuan Province, Daifu will try to increase the market awareness of its technology and system and improve its competitive position as a result.

Next Step: Entry into Waste Management Services

Daifu wants to become the leading medical waste management company in PRC, by leveraging its present leadership position as a medical waste technology provider and expanding its business from a solution provider to a service+ solution provider. Daifu estimates that the medical waste market is a RMB 5 billion market, in both equipment and services.

Competition

The market for MWT systems is still relatively new and fragmented in China. No company, either foreign or Chinese, dominates the industry. A few foreign companies are seeking to take advantage of the growth of the Chinese environment protection market. The foreign companies include Bondtech of USA, Webeco of Germany and Ecodas of France.

Only a few domestic companies are in the industry because of the newness of the market. Some of the domestic competitors are state-owned.and tend to be aggressive in prices when bidding on projects. The domestic companies include Shandong Xinhua, Chongqing Zhide Boiler and Tianjin Green Tech.

Daifu competes on the basis of price and quality of our products, the ability to produce a diverse range of products and customer service. Our high-temperature, high-pressure treatment technology is more advanced and environment-friendly than the competing technologies, such as incineration, vacuuming or microwaving.

Results of Operations

We are still in the development stages of our business and have generated no revenues since inception and have incurred total net losses since inception of $8,403,868. 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 and become cash flow positive, or that we will be able to continue to raise additional equity capital if and when needed to continue our business operations; however, based on our prior demonstrated ability to raise capital, we believe that our current capital resources will be adequate to continue operating our business for at least the remainder of our fiscal year ending April 2012.

Three and six month period ended October 31, 2011 as compared to the three and six month period ended October 31, 2010

For the three month period ended October 31, 2011, we incurred net operating losses of $153,395, or $0.03 per share, as compared to net operating losses of $195,677, or $0.03 per share, for the three month period ended October 31, 2010.

Our total operating expenses were all general and administrative expenses incurred in the normal day-to-day operations of our business as follows:

	For the period from the date of inception on 2 September 2003 to 31 October 2011	For the three month period ended 31 October 2011	For the three month period ended 31 October 2010	For the six month period ended 31 October 2011	For the six month period ended 31 October 2010
	$	$	$	$	$

Consulting fees (Notes 9, 10 and 13)	1,479,399	30,000	66,303	60,000	134,908
Depreciation (Note 5)	31,243	3,401	4,056	6,801	8,047
Foreign exchange loss	1,545	-	-	-	-
Interest (Notes 7 and 13)	223,921	30,243	-	60,489	4,334
Investor relations (Notes 10 and 13)	389,878	-	406	-	406
Listing, filing and transfer agent fees	66,502	3,185	2,700	5,686	2,870
Management fees (Notes 9 and 13)	300,000	-	-	-	-
Office and sundry	75,919	1,624	1,212	2,268	2,328
Professional fees	608,684	23,140	10,488	50,435	18,648
Public relations and shareholder information (recovery)	194,473	(406)	-	2,814	100,000
Rent	79,205	-	-	-	-
Research and development	387,173	-	-	-	-
Salaries and wages (Notes 9, 10, 12 and 13)	646,654	41,251	56,717	72,502	87,968
Stock-based compensation (Notes 10 and 13)	3,157,726	-	-	-	-
Travel and entertainment	487,493	20,957	53,795	51,914	86,171

	8,129,815	153,395	195,677	312,909	445,680

Our total operating expenses decreased by $42,282 during the three month period ended October 31, 2011, as compared to the three month period ended October 31, 2010, primarily due to the decreases in consulting and professional fees.

Liquidity, Capital Resources and Cash Flows

We currently have $86,184 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 the final prototype of our product 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 successfully. 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. 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.

There was no cash provided by investing or financing activities for the three month period ended October 31, 2011.

At October 31, 2011, we have an amount due to a related party for $673, payable to a former director and stockholder of the company. This balance is non-interest bearing, unsecured, and has no fixed terms of repayment.

Available-for-Sale Investments

On February 11, 2010, we entered into an Investment Agreement with Samyang Optics Co., Ltd. (“Samyang”), a South Korean Corporation listed on the Korea Exchange, whereby Samyang loaned us $2,000,000 in the form of a convertible promissory note. The principal balance of the note bears interest at the rate of 6% per annum. All unpaid principal, together with any unpaid and accrued interest is due and payable on the earlier of February 11, 2012 or when demand is made by Samyang. All principal, together with all accrued and unpaid interest, shall automatically convert into shares of our common stock, valued at a price of $1.10 per share, on February 11, 2012 or on demand by Samyang. At October 31, 2011, the total amount of principal and accrued interest due and payable on the note was $2,206,137. In turn, under the terms of the Investment Agreement, we acquired 977,966 common shares of Samyang, valued at $1,000,000. Available-for-sale investments are carried at fair value, with unrealized gains and losses recorded as other comprehensive income and other than temporary losses recognized in net income. As of October 31, 2011, the fair value of the shares of Samyang were as follows:

		Unrealized loss	Fair value
	Adjusted cost	Unrealized loss	31October 2011	30 April 2011 (Audited)
	$	$	$	$

977,966 common shares of Samyang Optics Co., Ltd.	1,000,000	33,050	1,033,050	887,915

Commitments/Contingencies

We are committed to issuing 25,000 shares valued at $3,750 under a one-year consulting agreement for consulting services.

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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting issuer (as defined in Item 10(f)(1) of Regulation S-K), we are not required to report quantitative and qualitative disclosures about market risk specified in Item 305 of Regulation S-K.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 ("Exchange Act”) is recorded, processed, summarized and reported within the specified time periods. Our Principal Executive Officer and our Principal Financial Officer (collectively, the "Certifying Officers”) are responsible for maintaining our disclosure controls and procedures. Prior to the filing of this quarterly report, our Certifying Officers evaluated the effectiveness of our disclosure controls and procedures for the period covered by this report. Based on the evaluation, our Certifying Officers concluded that our disclosure controls and procedures were effective to provide reasonable assurance that (a) information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and (b) that the information is accumulated and communicated to our management, including the Certifying Officers, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceeding.

Item 1A. Risk Factors

As a smaller reporting company, we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the six month period ended October 31, 2011, we issued 52,922,810 shares of our common stock, valued at $1.58 per share, to the shareholders of daifuWaste Management Holding Limited, a privately held medical waste treatment company headquartered in Beijing, China (“daifuWaste”), pursuant to the terms of a Share Exchange Agreement we entered into with daifuWaste on May 10, 2011, amended on November 11, 2011.

All outstanding warrants (the “Rotoblock Warrants”) to purchase in the aggregate 9,281,160 shares of common stock of the Company have been left intact and remain outstanding after the Share Exchange. As a result of the Share Exchange, Daifu became our wholly-owned subsidiary and the Daifu Shareholders acquired approximately 83.1% of our issued and outstanding common stock and common stock equivalents (including the shares underlying the Rotoblock Warrants).

At October 31, 2011, a total of 58,629,787 shares of common stock were issued and outstanding. Of these shares, 57,142,703 are considered "restricted securities" under the Securities Act of 1933, as amended.

Following are details of the common stock purchase warrants outstanding at October 31, 2011:

	Exercise price	Number of warrants	Remaining contractual life (years)
	$

Warrants	7.50	50,000	0.11
Warrants	12.50	7,600	0.86
Warrants	7.50	20,000	1.42
Warrants	7.50	16,000	1.53
Warrants	12.50	3,333	1.68
Warrants	0.25	25,000	2.71
Warrants	0.25	25,000	2.73
Warrants	0.50	200,000	2.73
Warrants	2.50	57,144	2.73
Warrants	0.25	2,181,750	3.29
Warrants	1.00	50,000	3.29
Warrants	0.25	333,333	3.33
Warrants	1.00	300,000	3.38
Warrants	0.25	12,000	3.46
Warrants	0.25	6,000,000	8.39

		9,281,160

Following is a summary of our warrant activities during the three and six month period ended October 31, 2011:

	Number of warrants	Weighted average exercise price
		$

Outstanding and exercisable 1 May 2011	9,281,160	0.38
Granted	-	-
Exercised	-	-
Expired	-	-

Outstanding and exercisable 31 October 2011	9,281,160	0.38

Weighted average fair value of warrants granted during the period		-

The weighted average grant date fair value of warrants issued during the six month period ended October 31, 2011 amounted to $Nil 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 2011	As at 30 April 2011 (Audited)

Risk free interest rate	-	2.47%
Expected life	-	5.0 years
Annualized volatility	-	603%
Expected dividends	-	-

Item 3. Default Upon Senior Securities

None.

Item 5. Other Information

Nominating Committee

At the present time, we do not have a standing nominating committee or a committee performing similar functions. At the present stage of our business development, it is the view of our Board of Directors that such a committee would be of little assistance in recommending nominations for director-nominees. In addition, at the present time we do not have a defined policy or procedure for shareholders to submit recommendations or nominations for directors. The Board of Directors believes that, given the current stage of our development, a specific nominating policy would be premature and of little assistance until the Company’s operations develop to a more advanced level. We do not currently have any specific or minimum criteria for the selection of nominees to the Board of Directors and the Board does not have any specific process or procedure for evaluating such nominees. The Board of Directors assesses all candidates, whether submitted by management or shareholders and makes recommendations for election or appointment.

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 June 7, 2004 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 July 31, 2006. 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/PEO
31.2		Sec. 302 Certification of Principal Accounting Officer/PFO
32.1		Sec. 906 Certification of Principal Executive Officer/PEO
32.2		Sec. 906 Certification of Principal Accounting Officer/PFO
99 *		Agreement with Obvio! Automotoveiculos S.A
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

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

Dated: December 14, 2011

/s/ Richard Di Stefano

By: Richard Di Stefano, Principal Accounting Officer

Dated: December 14, 2011

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Rotoblock (RTBC) Inactive 10-Q2011 Q2 Quarterly report

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