Attached files

file filename
EX-23.1 - CONSENT OF INDEPENDENT AUDITORS (MALONE BAILEY LLP) - REGI U S INCex23-1.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - REGI U S INCex31-1.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - REGI U S INCex31-2.htm
EX-14.1 - CODE OF BUSINESS CONDUCT AND ETHICS - REGI U S INCex14-1.htm
EX-32.1 - CERTIFICATION OF JOHN G. ROBERTSON, PRESIDENT AND CHIEF EXECUTIVE OFFICER (PRINCIPAL EXECUTIVE OFFICER), PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - REGI U S INCex32-1.htm
EX-32.2 - CERTIFICATION OF JAMES VANDEBERG, CHIEF OPERATING OFFICER AND CHIEF FINANCIAL OFFICER (PRINCIPAL FINANCIAL OFFICER), PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - REGI U S INCex32-2.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

 
 (Mark One)
 

x
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended April 30, 2011
q
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______________________ to _______________________
 
Commission File No. 0-23920

REGI U.S., Inc.
(Exact name of registrant in its Charter)
 
Oregon
91-1580146
(State or Other Jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No)

#240-11780 Hammersmith Way
Richmond, BC V7A 5E9 Canada
(Address of Principal Executive Offices)

(604) 278-5996
Registrant’s telephone number
 

(Former Name, former address and former fiscal year, if changed since last report)



Securities registered pursuant to Section 12(b) of the Exchange Act: NONE

Securities registered pursuant to Section 12(g) of the Exchange Act:

Title of each class
Name of each Exchange on which registered:
 
Common
NASD Over the Counter Bulletin Board
Common
Frankfurt Stock Exchange

 
Indicate by check mark if the issuer is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:  Yes  q   No  x
 
 
 

 
 
Indicate by check mark if the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Act:  Yes  q     No  x
 
Indicate by check mark whether the registrant  (1) 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.

 (1)
Yes
x
 
No
 
(2)
Yes
x
 
No
 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  q     No  x

 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K       No  q
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filed, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer q
Accelerated filer q
Non-accelerated filer q
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 q        No x
 
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS
 
Not applicable

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of the issuer's common stock, no par value, as of August 15, 2011 was 28,758,824

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $6,033,683 as of October 31, 2010.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
None
 
 
 

 
REGI U.S., INC.
FORM 10-K
TABLE OF CONTENTS

   
Page
PART I
 
 
Item 1
Business
4
Item 1A
Risk Factors
14
Item 1B
Unresolved Staff Comments
20
Item 2
Properties
20
Item 3
Legal Proceedings
20
Item 4
(removed and reserved)
 
PART II
 
 
Item 5
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
20
Item 6
Selected Financial Data
22
Item 7
Management's Discussion and Analysis of Financial Condition and Results of Operations
22
Item 7A
Quantitative and Qualitative Disclosure about Market Risk
24
Item 8
Financial Statements and Supplementary Data
25
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
26
Item 9A
Controls and Procedures
26
Item 9B
Other Information
27
PART III
   
Item 10
Directors, Executive Officers and Corporate Governance
27
Item 11
Executive Compensation
32
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
38
Item 13
Certain Relationships and Related Transactions, and Director Independence
41
Item 14
Principal Accounting Fees and Services
44
PART IV
 
 
Item 15
Exhibits, Financial Statement Schedules
45
 
Signatures
47





 
 

 
FORWARD LOOKING STATEMENTS

THIS ANNUAL REPORT ON FORM 10-K, INCLUDING EXHIBITS THERETO, CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY THE WORDS "ANTICIPATES", "BELIEVES", "EXPECTS", "INTENDS", "FORECASTS", "PLANS", "FUTURE", "STRATEGY", OR WORDS OF SIMILAR MEANING. VARIOUS FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING STATEMENTS, INCLUDING THOSE DESCRIBED IN "RISK FACTORS" IN THIS FORM 10-K. WE ASSUME NO OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT ACTUAL RESULTS, CHANGES IN ASSUMPTIONS, OR CHANGES IN OTHER FACTORS, EXCEPT AS REGULATED BY LAW.

The Company files annual reports and furnishes other information with the SEC. You may read and copy any document that we file at the SEC's Public Reference Room at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission at  (http://www.sec.gov). The Company also files information with the Canadian Securities Administrators via SEDAR (www.sedar.com).  The Company’s website is www.regtech.com.

PART I

ITEM 1. BUSINESS

General

We were organized under the laws of the State of Oregon on July 27, 1992 as Sky Technologies, Inc.  On August 1, 1994, our name was officially changed by a vote of a majority of our shareholders to REGI U.S., Inc.  Rand Energy Group Inc., a privately held British Columbia corporation ("Rand Energy") holds approximately 2.77% of the common shares of REGI. Rand Energy is controlled 51% by Reg Technologies Inc., a publicly held British Columbia corporation ("Reg Tech").  Reg Tech holds approximately 10.6% of the common shares of REGI.

We are a development stage company engaged in the business of developing and building an improved axial vane-type rotary engine known as the RadMax® rotary technology (the "Technology" or the “RadMax® Engine”), used in the design of lightweight and high efficiency engines, compressors and pumps. The Company has a project cost sharing agreement, whereby it will fund 50% of the further development of the RadMax® Engine and Reg Tech will fund 50%.

Our principal offices are located at 240-11780 Hammersmith Way, Richmond, British Columbia V7A 5E9, Canada. Our telephone number is (604) 278-5996 and our telefacsimile number is (604) 278-3409.  Our website is www.regtech.com.

We will likely need to raise additional capital in the future beyond any amount currently on hand and which may become available as a result of the exercise of warrants and options which are currently outstanding, in order to fully implement our intended plan of operations.
 
 
4

 
Business of the Company

Overview and History

We are engaged in the business of developing and building an improved axial vane-type rotary engine used in the design of lightweight and high efficiency engines, compressors and pumps. The worldwide intellectual and marketing rights to the RadMax® Engine, exclusive of the United States, are held by Reg Tech. The Company owns the U.S. marketing and intellectual rights and has a project cost sharing agreement, whereby it will fund 50% of the further development of the RadMax® Engine and Reg Tech will fund 50%.

Based upon testing work performed by independent organizations on prototype models, we believe that the RadMax® Engine holds significant potential in a number of other applications ranging from small stationary equipment to automobiles and aircraft. In additional to its potential use as an internal combustion engine, the RadMax® Engine design is being employed in the development of several types of compressors, pumps, expanders and other applications.

To date, several prototypes of the RadMax® Engine have been tested and additional development and testing work is continuing. We believe that such development and testing will continue until a commercially feasible design is perfected. There is no assurance at this time, however, that such a commercially feasible design will ever be perfected, or if it is, that it will become profitable. If a commercially feasible design is perfected, we do, however, expect to derive revenues from licensing the Technology relating to the RadMax® Engine regardless of whether actual commercial production is ever achieved. There is no assurance at this time, however, that revenues will ever be received from licensing the Technology even if it does prove to be commercially feasible.

We believe that a large market would exist for a practical rotary engine which could be produced at a competitive price and which could provide a good combination of fuel efficiency, power density and exhaust emissions.

Based on the market potential, we believe the RadMax® Engine is well suited for application to internal combustion engines, pumps, compressors and expansion engines. The mechanism can be scaled to match virtually any size requirement. This flexibility opens the door to large markets being developed.

We will be testing the RadMax® Engine technology for certain applications.  To date we have granted an option for a license for applications for a Fortune 1000 company who are evaluating the RadMax® Engine design and have assisted in the development and testing at no cost to the Company. The option for an exclusive license has lapsed and the non exclusive license is still pending until December 31, 2011.

Products and Projects
 
RadMax® Engine
 
The Company is working with Reg Technologies Inc. and a Fortune 1000 Company in developing a RadMax® Diesel Engine application based on a specification of its industry partner. Under the terms of a non disclosure, we are prohibited from publishing the name of the partner or discussing the partner’s specific application.
 
We believe that the RadMax® Diesel Engine could achieve improved fuel consumption when compared to gasoline and turbine engines. This was based on a review by our thermodynamics engineer, Dr. Allen MacKnight, PhD, of published industry literature. Specifically, a given volume of diesel fuel contains approximately 30% more energy that the same volume of gasoline and diesel engines consume approximately 0.4 pounds of fuel for every horsepower hour. As a point of reference, all turbine engines consume approximately 0.8 pounds of fuel for every horsepower hour.
 
 
5

 
 
To bring the RadMax® Diesel Engine from concept to reality, a number of milestones, or steps, are required for ultimate qualification. These start with concept drawings and presentations, and lead to testing by independent agencies to validate the emissions, horsepower, and other critical metrics.
 
The Company entered into an agreement with a Fortune 1000 Company to evaluate and consider technical solutions in developing a RadMax® rotary engine technology for certain commercial and military applications.
 
The agreement gives the Fortune Company an option for 90 days after the completion of the evaluation period to execute a letter of intent for exclusive commercial and military markets. They have a period of 12 months after completion of the evaluation period to execute a letter of intent to a non-exclusive license for the REGI rotary engine for certain commercial and military markets.
 
Since the inception of the April 30, 2008 agreement, the Fortune 1000 Company and REGI U.S. engineers have been carrying out a joint technical assessment of the REGI U.S. RadMax® engine and their engineers made several improvements and changes. The Fortune Company has recommended Belcan Engineering (www.belcan.com) to complete an assessment of the new design and recommend any further changes before the fabrication of the engine commences.
 
The agreement with the Fortune 1000 Company was extended to December 31, 2010 to complete the evaluation and technical assessment of the REGI U.S. RadMax® Engine design. The project scope also includes a performance evaluation report that compares actual performance with the initial set of requirements that will be used to provide the basis for recommendations arising from the assessment pursuant to our evaluation agreement.
 
The Company believes the RadMax® Diesel Engine must be technologically superior to other engines that competitors offer and must have a competitive price/performance ratio to adequately penetrate its potential markets.
 
A number of rotary engines have been designed over the past 80 years but only one, the Wankel, has been able to achieve mechanical practicality and any significant market acceptance.
 
The Company’s engineers commenced and completed the detailed design modeling for the RadMax® Engine using COSMOS, a design and analysis tool, verifying and improving the design with respect to stress (finite element analysis), temperature (thermal analysis), and material properties (metallurgy).  The analysis provided by COSMOS will be applied against all RadMax® design components including the rotor, cam, stator, vanes, and seals.

Following completion of reviews by the evaluation company, and the COSMOS analysis, a Request for Proposals (RFP) was issued to three pre-qualified bidders to provide a fixed-price quotation versus a formal Statement of Work (SOW). The RFP was released 12 June 2009. We offered a 30-day period for review of drawings, and responses to questions. The closing date for receipt of the proposals was 28 July 2009. Proposals were received, a comparative analysis was performed, and we planned a fixed-price award. Following final review and approval by the evaluation company, we planned to make an award to the most responsible and compliant bidder.

 
6

 
Based on the progress of the design, the evaluation company revised its guidance. Instead of fabricating a prototype based on the initial design, we were directed to proceed with the design of a pre-production unit which would incorporate all enhancements necessary to achieve pre-production unit tests. We negotiated specific details of a statement of work for multiple analysis tasks.

The Company retained Belcan Engineering Services of Phoenix, AZ (www.belcan.com) to review the Fortune 1000 diesel engine design before production of the prototype. This thorough review will help to ensure a streamlined and timely fabrication process. Immediately following the design review, REGI would fabricate RadMax™ parts and assemblies, validate assembly operations, and conduct component, assembly, and system tests. Two technical meetings were held with Belcan Engineering Services. The following results were accomplished:

 
Familiarization with the RadMax™ Diesel Engine baseline design, including mechanical operation, friction
 
Contributors and sealing approach.
 
Shared understanding of the vane actuation system.
 
Determination of vane loads in compressor and engine applications
 
Preliminary evaluation of thermodynamics and determination of potential hot spots
 
Evaluation of compression ratio, and recommendations for design modifications
 
Assessment of all bearings – main bearings which control all rotating components, linear bearings which control the vane actuators, and journal bearings which facilitate wheel operations on the fixed stators.

Belcan’s technical assignment is to optimize the design of the diesel engine application which comprises the vanes, push rods, and a lift block that interface with a stator.  The review of the RadMax engine thermodynamics and vane-actuation systems were performed first. All recommendations resulting from these reviews were evaluated and changes into the RadMax engine baseline were incorporated as appropriate.
 
The design review covered thermodynamic engineering work, material selections, sealing solutions, component geometry, mechanical integration, operating limitations and a vital assembly review. Participants included representatives from Belcan Engineering Services, the Fortune 1000 Company, and REGI U.S., Inc.
 
The resultant thermodynamics report included recommendations for RadMax™ Engine materials, thicknesses, tolerances, and coatings. One specific recommendation is to fabricate the cam using lighter weight materials to take advantage of its improved thermal conductivity.

The Company next announced that Path Technologies Inc. of Painesville, Ohio, was selected to fabricate the prototype RadMax™ Diesel Engine. Path Technologies was the most competitive fully responsive bidder following a process of drawing and manufacturing processes evaluation. This process is a crucial initial step to get the most qualified supplier on board to produce unique RadMax™ Diesel Engine parts.

Path Technologies recently produced RadMax™ Pump parts for Reg Technologies Inc. That prior experience was one of the major considerations in the evaluation and selection process.

As the next step, the Company met with representatives of the Fortune 1000 company in June 2010 and conducted a 100% review of the engine analysis, design, and fabrication plans. At the completion of the review, REG Technologies announced that the design review indicates the acceptance of the demonstration RadMax™ Diesel Engine Design, subject to a few minor action items to be resolved in the next 30 days. The objective of the review was to obtain approval to commence fabrication of the demonstration diesel engine.
 
 
7

 
All action items were resolved within 30 days. A revised drawing package and computer models of the updated components were submitted to the Fortune 1000 company for final review.
 
In parallel, engineers from Reg Technologies Inc. and REGI US Inc met to perform a 100% pre-fabrication review of every component and assembly. In this review each dimension, tolerance, and material is verified.

We retained Belcan Engineering Services of Phoenix, AZ to review the Fortune 1000 diesel engine design before production of the prototype, which review was to help to ensure a streamlined and timely fabrication process.  Following the design review, the next step will be to fabricate RadMax Engine parts and assemblies, validate assembly operations, and conduct component, assembly, and system tests.  After multiple technical meetings with Belcan Engineering Services, the following results have been accomplished:

 
familiarization with the RadMax Engine baseline design, including mechanical operation, friction;
 
contributors and sealing approach;
 
shared understanding of the vane actuation system;
 
determination of vane loads in compressor and engine applications;
 
preliminary evaluation of thermodynamics and determination of potential hot spots;
 
evaluation of compression ratio, and recommendations for design modifications; and
 
assessment of all bearings – main bearings which control all rotating components, linear bearings which control the vane actuators, and journal bearings which facilitate wheel operations on the fixed stators.

Belcan’s technical assignment was to optimize the design of the diesel engine application which comprises the vanes, push rods, and a lift block that interface with a stator.  The review of the RadMax Engine thermodynamics and vane-actuation systems were performed first.  All recommendations resulting from these reviews were evaluated and changes into the RadMax Engine baseline were incorporated as appropriate.

The design review covered thermodynamic engineering work, material selections, sealing solutions, component geometry, mechanical integration, operating limitations and a vital assembly review.

The resultant thermodynamics report included recommendations for RadMax Engine materials, thicknesses, tolerances, and coatings.  One specific recommendation is to fabricate the cam using lighter weight materials to take advantage of its improved thermal conductivity.

In June 2010, REGI met with representatives of the Fortune 1000 company and conducted a review of the engine analysis, design, and fabrication plans. At the completion of the review, we announced that the design review indicates the acceptance of the demonstration RadMax Engine, subject to a few minor action items that have since been resolved. The objective of the review was to obtain approval to commence fabrication of the demonstration diesel engine. A revised drawing package and computer models of the updated components were submitted to the Fortune 1000 Company for final review.

 
8

 
On August 12, 2010, following two years of technical assessments and design reviews, the engineering team confirmed that the RadMax Engine engineering drawings were complete, additional technical reviews were not necessary and we would proceed with building the RadMax demonstration prototype. Commercial item procurement, parts fabrication and preparation for prototype testing are underway. Our target is to complete prototype fabrication and start initial testing early 2011 after completion of our planned financing.  This event represents the completion of another significant milestone.

After completion of our Request for Proposals to three pre-qualified bidders to provide a fixed-price quotation we selected Path Technologies Inc. (“Path Tech”), of Painesville, Ohio, to fabricate the prototype RadMax Engine. Upon the commencement of the fabrication stage, we will integrate those parts, along with other commercial items (fuel injection, for example) to produce the prototype engine.

In February, 2011, we paid Path Technologies for the purchase order to commence fabrication to complete the cam and actuator for the RadMax™ demonstration diesel engine model.

On March 8, 2011 we provided a fabrication progress report of the RadMax™ assembly via news release, reporting the initial fabrication progress is as follows:

 
All specified material has been ordered
 
All connecting tubes have been final machined to their outside and inside geometric tolerances
 
The connecting tubes have been masked for subcontracted flame spray plating services
 
Each of the 24 vane blocks have been trued, which means three axis sides are perfectly parallel to their opposite sides and perpendicular to each other
 
The outside dimensions of the vane portion has been fabricated in a wire EDM Process

On May 18, 2011 we had the second fabrication progress report for the prototype RadMax Diesel Engine, whereby we estimated that approximately one-third of all fabrication work was complete, resulting in us being ahead of schedule and under budget.

As at May 18, 2011, the fabrication progress was as follows:

 
-
The Rotors had completed their first-pass rough turning process within .030-inch of final. As at May 18, 2011, the following Rotor fabrication operations had been completed: Outer surface, Neck, Driveshaft Slot, and Combustion Chamber.
 
-
The Cams had completed their initial rough turning passes. The reason for the two-pass turning process was because the metal “moves” (stretches or deforms) after the machining process. To maintain our high-tolerance requirements, the two-passes were required.
 
-
Fabrication of the 24 Vane-Actuator assemblies was complete. This included completion of the Vanes, Connecting Tubes, Axles, Wheels, Wrist Pins, and integration with commercial wheel bearings.

Following completion of the vanes, flame spray plating of the connecting tubes, fabrication of the apex seals, wheel assemblies, and attaching parts, the actuator components will be ready for sub component testing.

Next components planned for fabrication are the cam assemblies, rotor assemblies, stator assemblies, and enclosure assemblies. Following each of these fabrications the components will be tested. Upon successful testing of the components the entire RadMax™ engine will be prepared for friction testing, lubrication flow testing, cooling flow testing, and compression testing.

Upon successful completion of the entirety of tests performed on the RadMax™ engine, fuel and engine certification tests will be conducted by an independent recognized facility.
 
 
9

 
RadMax® Pump
 
The Company actively pursued the development of the RadMax® Pump from early 2007 until March 2008. From September 2007 until March 2008, the Company worked with an industry partner in the water pump industry. The partner evaluated the Pump as a potential new product offering as part of its fire engine chemical dispersant product line. The evaluation and test period ended when the partner had a change in its senior management and their leading advocate left the company. Until there is further interest established in the RadMax® Pump by an end user, no further work is anticipated.
 
The Company then focused all of its technical resources on validating the seals for a compressor application, leading towards the technology incorporation in the RadMax® engine.
 
In February 2009 the pump was set up in the Company’s Richmond, B.C. laboratory, for demonstration to interested parties. It is a fully functional prototype capable of pumping twice its internal volume every revolution. Future development would take the form of customization based on interest from another industry partner. Commercialization requires tooling to significantly reduce the cost of the pump in a production environment.  Until there is further interest established in the RadMax™ Pump by an end user, no further work is anticipated.
 
RadMax® Compressor
 
The Company actively pursued the development of high pressure metal seals using the RadMax® Compressor from July 2007 until September 2007. The technical concept of high pressure metal seals was validated in a prototype compressor test bed that was fabricated from residual hardware. There was no immediate interest by an industry partner to continue a joint development of the RadMax® Compressor. Until there is further interest established in the RadMax® Compressor by an end user, no further work will be conducted.
 
The compressor is a fully functional prototype design capable of 48 individual compression events every revolution, which represent twice its internal volume. Future development would take the form of customization based on interest from another industry partner. Commercialization requires tooling to significantly reduce the cost of the compressor in a production environment.  Until there is further interest established in the RadMax™ Compressor by an end user, no further work will be conducted.
 
Corporate
 
The Company was invited and attended the Clinton Global Initiative (“CGI”) Fifth Anniversary Meeting, established by President Bill Clinton. The RadMax™ Engine Technology was approved for presentation at the CGI Meeting in New York City from September 22 – 25, 2009. The Company is pleased to be able to support CGI’s commitment of reducing the effects of global warming by continuing to pursue commercializing the fuel efficient RadMax™ Engine Technology.
 
The U.S. Patent and Trademark office issued patent number US7896630B2 on March 1, 2011, approving 23 claims of RadMax diesel engine technology. The new design claims are far more advanced than the existing Rand Cam technology patents, and give the Company an additional 20 years of patent technology protection.
 
 
 
10

 
Competition and Alternative Technologies
 
We currently face and will continue to face competition in the future from established companies engaged in the business of developing, manufacturing and marketing engines and other products. While not a highly competitive business in terms of numbers of competitors, the business of developing engines of a new design and attempting to either license or produce them is nonetheless difficult because most existing engine producers are large, well financed companies which are very concerned about maintaining their market position. Such competitors are already well established in the market and have substantially greater resources than us. Internal combustion engines are produced by automobile manufacturers, marine engine manufacturers, heavy equipment manufacturers and specialty aircraft and industrial engine manufacturers. We expect that our engine would be used mainly in industrial and marine applications.

Except for the Wankel rotary engine built by Mazda of Japan, no competitor, that we are aware of, presently produces in a commercial quantity any rotary engine similar to the engines we are developing. The Wankel rotary engine is similar only in that it is a rotary engine rather than a reciprocating piston engine. Without substantially greater financial resources than is currently available to us, however, it is very possible that it may not be able to adequately compete in the engine business. One competitor, Rotary Power International, is presently producing the first production SCORE rotary (Wankel type) engines. Our RadMax® Diesel Engine is more fuel efficient, smaller, quieter, costs less to produce and will have fewer exhaust emissions.

We believe that if and when our engine is completely developed, in order to be successful in meeting or overcoming competition which currently exists or may develop in the future, our engine will need to offer superior performance and/or cost advantages over existing engines used in various applications.

We believe strong competition can be expected in the engine market with new patents being taken out on a continuous basis and that we may have a time advantage over some of the competitive products as far as niche markets which we may enter, however there is no way to accurately determine or predict whether this situation is or will continue to be true.

The conventional piston type internal combustion engine is the prime competitor of the RadMax® Diesel Engine. Due to the substantial infrastructure built up to support the standard combustion engine, substantial barriers to entry exist into this market.

A number of the new engine designs over the last decade have offered advantages on the thermodynamics front (e.g. more efficient use of energy through better combustion, better heat transfer, etc.). In the case of the RadMax® Diesel Engine, its strong point it believed to be in its mechanism, not in its thermodynamics. Whether or not the engine's mechanism alone will provide the competitive edge necessary to result in a marketable and successful product is unknown at this time.

Since we do not have management experience in manufacturing engines, it hopes to be able to follow the same strategy as that of other companies such as Orbital and Wankel, where it would be licensing its technology and would therefore not be directly engaged in manufacturing.

 
11

 
An extensive manufacturing study has not been performed to date and it could turn out that the costs to manufacture are prohibitive for one or more reasons. However, the computer modeling done can be utilized to generate manufacturing drawings which could be used to obtain preliminary costing estimates.

The development of our business and its ability to maintain its competitive and technical position has depended and will depend, in part, upon its ability to attract and retain qualified scientific, engineering, managerial and manufacturing personnel.

Significant competition exists from engine manufacturers and engineering firms specializing in the development of internal combustion engines technology for the automotive, marine, motorcycle and small engine industry. Such competition also exists in the pump and compressor markets which may utilize the Rand Cam technology in their products. Many of these companies have substantially greater resources for research, development and manufacturing than us. It is possible that our competitors may succeed in developing technologies and products that are more effective or commercially acceptable. We believe, based on its testing of the RadMax® Diesel Engine that the engine is a superior overall engine package to the reciprocating piston engine. This assessment is made on the basis of the RadMax® Diesel Engine’s potential for reduced engine weight and packaging volume, improved performance, and possibly lower manufacturing costs.

Technology development is taking place on many fronts and competitors may have, unknown to us, a product or products under development which may be technologically superior to ours which may be more acceptable to the market. Competition with engines employing Rand Cam technology may also include other lean burn engines, electric motors, gas turbine engines, solar power and hybrid vehicles, and may include concepts not yet known to us.

Environmental Matters
 
Laws and regulations relating to protection of the environment have not had a material impact on our business.
 
Availability of Raw Materials
 
Since we are not in production and there are no plans at this time for us to enter the actual engine manufacturing business, raw materials are not of present concern. At this time, however, there does not appear to be any foreseeable problem with obtaining any materials or components, which may be required in the manufacture of its potential products.
 
Marketing Strategy
 
We intend to pursue the development of the RadMax® Diesel Engine by entering into licensing and/or joint venture arrangements with other larger companies, which have the financial resources to maximize the potential of the technology. We have no current plans to become actively involved in either manufacturing or marketing any engine or other product which it may ultimately develop to the point of becoming a commercial product.

Our current objective is to complete and test the RadMax® Diesel Engine. Based on the successful testing, the prototypes will be used for presentation purposes to potential license and joint venture partners.

We expect revenue from license agreements with the potential end users based on the success of the design from the compressor, pump, and diesel engine prototypes. Based on of successful testing of the RadMax prototypes, we expect to have joint venture or license agreements finalized, which would result in royalties to us. However, there is no assurance that the tests will be successful or that we will ever receive any such royalties.
 
 
12

 
Dependence on Certain Commercial Agreements
 
We do not have any material agreements upon which we are dependent.

Patents

U.S. patent 5,429,084 was granted on July 4, 1995, to James McCann, Brian Cherry, Patrick Badgley and four other individuals for various improvements incorporated in the RC/DC Engine, This patent has been assigned to us. The patent to the original Rand Cam engine, U.S. Patent 4,401,070, was issued on August 30, 1983 to James McCann and the marketing rights were held by Rand Energy Group, Inc.  Reg Technologies Inc. has the worldwide rights, excluding the United States, which are owned by REGI U.S., Inc. pursuant to agreements with Rand Energy Group, Inc.

The RC/DC Engine is composed basically of a disk shaped rotor with drive shaft, which turns, and the housing or stator, which remains stationary. The rotor has two or more vanes that are mounted perpendicular to the direction of rotation and slide back and forth through it. As the rotor turns, the ends of the vanes ride along the insides of the stator housing which have wave-like depressions, causing the vanes to slide back and forth. In the process of turning and sliding, combustion chambers are formed between the rotor, stator walls and vanes where the fuel/air mixture is injected, compressed, burned and exhausted.

Two additional patents have been issued for improvements to the engine including: U.S. Patents 5,509,793 “Rotary Device with Slidable Vane Supports, issued April 24, 1996 and 5,551,853 “Axial Vane Rotary Device and Sealing System” issued September 3, 1996.

The world wide patents cover Canada and several countries in Europe, namely, Germany, France, Great Britain, and Italy.
 
The U.S. Patent and Trademark office issued patent number US7896630B2 on March 1, 2011, approving 23 claims of RadMax diesel engine technology. The new design claims are far more advanced than the existing Rand Cam technology patents, and give the Company an additional 20 years of patent technology protection.
 
Royalty Payments

The August 1992 Agreement calls for us to pay Rand Energy Group Inc. semi-annually a royalty of 5% of any net profits to be derived by us from revenues received as a result of its license of the Original Engine. The August 1992 Agreement also calls for us to pay Brian Cherry a royalty of 1% semi-annually any net profits derived by us from revenue received as a result of our licensing the Original Engine.

Other provisions of the April 1993 Agreement call for is (a) to pay to Rand Energy Group Inc. a continuing royalty of 5% of the net profits derived from the Technology by us and (b) to pay to Brian Cherry a continuing royalty of 1% of the net profits derived by us from the Technology.

Pursuant to the letter of understanding dated December 13, 1993, among us, Rand Energy Group Inc. and REGI U.S. with West Virginia University Research Corporation (WVURC), WVURC will receive 5% of all net profits from sales, licenses, royalties or income derived from the patented technology relating to the Original Engine and the RC/DC Engine.

 
13

 
Research and Development

Research and development work on the RadMax® Engine is coordinated and funded by Reg Tech and the Company as to 50% each.  We plan to contract with outside individuals, institutions and companies to perform most of the additional research and development work which we may require to benefit from our rights to the RadMax® Engine. During the last two fiscal years, we spent $291,903 on research and development. During the past year, development costs have been assumed by a third party who is evaluating the RadMax® Diesel Engine design.

Employees

We do not have any employees; the Company and Reg Technologies share the cost of several part-time employees.  Several part-time consultants were contracted. Our legal, accounting, marketing and administrative functions are contracted out to consultants.
 
Item 1A.   RISK FACTORS

You should carefully consider the following risks and the other information in this Report and our other filings with the SEC before you decide to invest in us or to maintain or increase your investment.

The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties may also adversely impact and impair our business. If any of the following risks actually occur, our business, results of operations, or financial condition would likely suffer. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment.

We face risks related to general domestic and global economic conditions and to the current credit crisis.

We rely on our ability to raise capital through the sale of our securities.  However, the current uncertainty arising out of domestic and global economic conditions, including the recent disruption in credit markets, poses a risk to the economies in which we operate. Our the ultimate success will depend upon our ability to raise additional capital or to have other par­ties bear a portion of the required costs to further develop or exploit the potential market for our products.  Reg Tech and REGI have agreed to provide the necessary funds for the development of the RadMax® Engine prototypes and our other operations until joint venture or license agreements can be completed.

We are a development stage enterprise.

We are a development stage enterprise and are subject to all of the attendant business risks associated with a development stage enterprise, including constraints on financial and personnel resources, lack of established credit facilities, and uncertainties regarding product development and future revenues. We will continue to be subject to all the risks attendant to a development stage enterprise for the foreseeable future, including competition, complications and setbacks in the development program, and the need for additional capital.

We have reported losses in each year since its inception. At April 30, 2011, we had an accumulated deficit of $10,782,477 in accordance with US GAAP. Our history consists almost entirely of development of its products funded entirely from the sale of our Common Stock in the absence of revenues. We anticipate that it will continue to incur substantial additional operating losses for at least the next 12 months and expects cumulative losses to increase as our development efforts expand.

 
14

 
Although we anticipate receiving future revenues from the sales of engines or the licensing of our technology or pursuant to a joint venture, we have received minimal revenues in preparation for licensing or joint venture activities, and there are no assurances that significant revenues will be derived from this activity in the future. We have received no revenues from sales of any of the products under development. There can be no assurance as to when or if we will be able to develop significant sources of revenue or whether our operations will become profitable, even if we are able to commercialize any product. See "Operating and Financial Review and Prospects," and Notes to Financial Statements.

We have no assurance that we will be able to develop a commercially feasible product.

We have no assurance at this time that a commercially feasible design will ever be perfected, or if it is, that it will become profitable. Our profitability and survival will depend upon our ability to develop a technically and commercially feasible product which will be accepted by end users. The RadMax® Engine which we are developing must be technologically superior or at least equal to other engines that competitors offer and must have a competitive price/performance ratio to adequately penetrate its potential markets. If we are not able to achieve this condition or if we do not remain technologically competitive, we may be unprofitable and our investors could lose their entire investment. There can be no assurance that we or potential licensees will be able to achieve and maintain end user acceptance of our engine.

We will require additional financing and we may not be able to secure the financing necessary to continue our development and operations.

There is no assurance that we will be able to secure the financing necessary to continue our development and operations. Our expectations as to the amount of funds needed for development and the timing of the need for these funds is based on our current operating plan, which can change as a result of many factors, and we could require additional funding sooner than anticipated. Our cash needs may vary materially from those now planned because of results of development or changes in the focus and direction of our development program, competitive and technological advances, results of laboratory and field testing, requirements of regulatory agencies and other factors.

We have no credit facility or other committed sources of capital. To the extent capital resources are insufficient to meet future capital requirements, we will have to raise additional funds to continue our development and operations. There can be no assurance that such funds will be available on favorable terms, or at all. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities could result in dilution to our shareholders. If adequate funds are not available, we may be required to curtail operations significantly or to obtain funds on unattractive terms. Our inability to raise capital would have a material adverse effect on us.

We have a history of losses and expect to incur significant losses for the foreseeable future.

We expect to incur significant losses for the foreseeable future and cannot be certain when or if we will achieve profitability. Failure to become and remain profitable will adversely affect the value of our Common Shares and our ability to raise capital and continue operations.

 
15

 
We have a history of operating losses, and an accumulated deficit, as of April 30, 2011, of $10,782,477.  Our ability to generate revenues and profits is subject to the risks and uncertainties encountered by development stage companies.

Our future revenues and profitability are unpredictable. We currently have no signed contracts that will produce revenue and we do not have an estimate as to when we will be entering into such contracts.  Furthermore, we cannot provide assurance that management will be successful in negotiating such contracts.

We have no assurance that our products will receive market acceptance.

Our profitability and survival will depend upon our ability to develop a technically and commercially feasible product which will be accepted by end users. The RadMax® Engine which we are developing must be technologically superior or at least equal to other engines which our competitors offer and must have a competitive price/performance ratio to adequately penetrate our potential markets. A number of rotary engines have been designed over the past 80 years but only one, the Wankel, has been able to achieve mechanical practicality and any significant market acceptance. If we are not able to achieve this condition or if we do not remain technologically competitive, we may be unprofitable and our investors could lose their entire investment. There can be no assurance that we or our potential licensees will be able to achieve and maintain end user acceptance of our engine.

Our officers lack of experience to manufacture or market our products.

Assuming we are successful in developing the RadMax® Diesel Engine, we presently have no proven ability either to manufacture or market the engine. There is no assurance that we will be able to profitably manufacture and market engines.

Our auditors have indicated that our losses raise substantial doubt about our ability to continue a going concern.

The report of our independent auditors with respect to our financial statements included in this Form 10-K includes a "going concern" qualification, indicating that our losses and deficits in working capital and shareholders' equity raise substantial doubt about our ability to continue as a going concern. See " Operating and Financial Review and Prospects” and Notes to Financial Statements.

We are dependent upon certain members of our staff, the loss of which could adversely affect our business.

We are dependent on certain members of our management and engineering staff, the loss of services of one or more of whom could adversely affect our business.  The loss of any of these key individuals could hamper the successful development of the engine. Our present officers and directors have other full-time positions or part-time employment unrelated to our business. Some officers and directors will be available to participate in management decisions on a part-time or as-needed basis only. Our management may devote time to other companies or projects which may compete directly or indirectly with us. We do not have "key man" life insurance on such officers and currently have no plans to obtain such insurance. See "Management". Our success also depends on our ability to attract and retain additional skilled employees.

 
16

 
Certain of the Company’s directors and officers are also directors and/or officers and/or shareholders of potential competitors of the Company, giving rise to potential conflicts of interest.

Our present officers and directors have other unrelated full-time positions or part-time employment.  Some officers and directors will be available to participate in management decisions on a part-time or as-needed basis only.  Our management may devote time to other companies or projects which may compete directly or indirectly with us. Major competitors for our officers and directors’ time are IAS Energy, Inc., Teryl Resources Corp., Linux Gold Corp. Reg Technologies Inc., Legend Oil and Gas Ltd., American Sierra Gold Corp. and ASAP Expo, Inc., all public companies listed on the OTC Bulletin Board. and/or the Toronto Venture Exchange.

Our business administrative office is also the head office of the other four public companies listed above.

Our present office is shared with IAS Energy, Inc., Teryl Resources Corp., Linux Gold Corp. and Reg Technologies Inc. Although the office space is suitable to our current operations and the space is not fully occupied, in the event of our expansion or expansion of any of these other companies, we may need to locate additional space which may cost us more.

We are dependant upon consultants and outside manufacturing facilities.

Since our present plans do not provide for a significant technical staff or the establishment of manufacturing facilities, we will be primarily dependent on others to perform these functions and to provide the requisite expertise and quality control. There is no assurance that such persons or institutions will be available when needed at affordable prices. It will likely cost more to have independent companies do research and manufacturing than for us to handle these resources.

Our business may suffer if we are unable to adequately protect our intellectual property.

Our business depends on the protection of our intellectual property and may suffer if we are unable to adequately protect our intellectual property. The success of our business depends on our ability to patent our engine. Currently, we have been granted several U.S. Patents. We cannot provide assurance that our patents will not be invalidated, circumvented or challenged, that the rights granted under the patents will give us competitive advantages or that our patent applications will be granted.

Our engines and planned applications may contain product errors which could adversely affect our operations.

Engines such as the ones proposed by us and our related planned applications may contain errors or defects, especially when first introduced, or when new versions are released. Our products may not be free from errors after commercial release has occurred. Any errors that are discovered after such commercial release could result in loss of revenue or delay in market acceptance, diversion of development resources, damage to our reputation, increased service and warranty costs and liability claims. Any defects in these products could adversely affect the operation of and market for our products, reduce revenue, increase costs and damage our reputation.

Our competition possesses greater technical resources and market recognition than us and there is no assurance that we will be able to compete effectively with these companies.

While not a highly competitive business in terms of numbers of competitors, the business of developing engines of a new design and attempting to either license or produce them is nonetheless difficult because most existing engine producers are large, well financed companies which are very concerned about maintaining their market position. These companies possess greater technical resources and market recognition than us, and have management, financial and other resources not yet available to us. Existing engines are likely to be perceived by many customers as superior or more reliable than any new product until it has been in the marketplace for a period of time. There is no assurance that we will be able to compete effectively with these companies.

 
17

 
Market prices for our products may decline in the future which would have a material adverse effect on our business, financial condition and results of operations.

We anticipate that market prices for our main products may decline in the future due to increased competition. We expect significant competition among local and international companies, including from new entrants, may continue to drive equipment prices lower. We also expect that there may be increases in promotional spending by companies in our industry which would also contribute to increasing movement of customers between competitors. Such increased competition and the resulting decline of market prices for our products would have a material adverse effect on our business, financial condition and results of operations.

New technology or refinement of existing technology could render our Rand Cam products less attractive or obsolete.

New technology or refinement of existing technology could render our Rand Cam products less attractive or obsolete. Our success depends in part upon its ability to anticipate changes in technology and industry standards and to successfully develop and introduce new and improved engines on a timely basis. There is no assurance that we will be able to do so. Accordingly, if we are unable to adapt to changing technologies and to adapt our product to evolving industry standards, our business will be adversely affected.
 
 
Product liability claims asserted against us in the future could hurt our business.

Product liability claims asserted against us in the future could hurt our business. If a customer suffers damage from our products, the customer could sue us on product liability or related grounds, claim damages for data loss or make other claims. We currently do not carry product liability insurance. While we have not been sued on product liability grounds to date, a successful product liability or related claim brought against us could harm our business.

Our success may be dependent on the timing of new product introductions and lack of market acceptance for our new products.

Our future success may be dependent on the success of our products and services. The success of our business depends on a variety of factors, including:

 
the quality and reliability of our products and services;
 
our ability to develop new products and services superior to that of our competitors;
 
our ability to establish licensing relationships and other strategic alliances;
 
our pricing policies and the pricing policies of our competitors;
 
our ability to introduce new products and services before our competitors;
 
our ability to successfully advertise our products and services; and
 
general economic trends.
 

 
 
18

 
We may be affected by other factors which may have an adverse effect on our business.

Our areas of business may be affected from time to time by such matters as changes in general economic conditions, changes in laws and regulations, taxes, tax laws, prices and costs, and other factors of a general nature which may have an adverse effect on our business.

There is only a limited public market for our common shares on the OTC Bulletin and those markets are extremely volatile.

There is only a limited public market for our common shares on the OTC Bulletin Board and there is a risk that a broader or more active public trading market for our common shares will never develop, or be sustained, or that current trading levels will not be sustained.

The market price for our common shares on the OTC Bulletin Board has been and we anticipate will continue to be extremely volatile and subject to significant price and volume fluctuations in response to a variety of external and internal factors. This is especially true with respect to emerging companies such as ours. Examples of external factors, which can generally be described as factors that are unrelated to the operating performance or financial condition of any particular company, include changes in interest rates and worldwide economic and market conditions, as well as changes in industry conditions, such as regulatory and environment rules, and announcements of technology innovations or new products by other companies. Examples of internal factors, which can generally be described as factors that are directly related to our consolidated financial condition or results of operations, would include release of reports by securities analysts and announcements we may make from time-to-time relative to our operating performance, advances in technology or other business developments.

Because we have a limited operating history and no profits to date, the market price for the common shares is more volatile than that of a seasoned issuer. Changes in the market price of the common shares, for example, may have no connection with our operating results or prospects. No predictions or projections can be made as to what the prevailing market price for the common shares will be at any time, or as to what effect, if any, that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price.

You will be subject to the penny stock rules to the extent our stock price on the OTC Bulletin Board is less than $5.00.

Since the common shares are not listed on a national stock exchange or quoted on the NASDAQ Market within the United States, trading in the common shares on the OTC Electronic Bulletin Board is subject, to the extent the market price for the common shares is less than $5.00 per share, to a number of regulations known as the "penny stock rules". The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC, to provide the customer with additional information including current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. To the extent these requirements may be applicable they will reduce the level of trading activity in the secondary market for the common shares and may severely and adversely affect the ability of broker-dealers to sell the common shares.




 
19

 
You should not expect to receive dividends.

We intend to retain any future earnings to finance our business and operations and any future growth. Therefore, we do not anticipate paying any cash dividends in the foreseeable future.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We own no properties.  We currently utilize office space in a commercial business park building located in Richmond, British Columbia, Canada, a suburb of Vancouver, shared by several companies related by common officers and directors.  We do not pay rent for this office space.  The present facilities are believed to be adequate for meeting our needs for the immediate future.  However we expect that we will likely acquire separate space when the level of business activity requires us to do so.  We do not anticipate that we will have any difficulty in obtaining such additional space at favorable rates.  In addition, we have access to a facility for research and development leased by Reg Tech.  This facility is also in Richmond, British Columbia, Canada.

There are no current plans to purchase or lease any properties in the near future.

ITEM 3.   LEGAL PROCEEDINGS

We are not a party to any legal proceedings or litigation, nor are we aware that any litigation is presently being threatened or contemplated against us or any officer, director or affiliate.

ITEM 4.   (Removed and Reserved)

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

There is a limited public market for our common stock which currently trades on the OTC Bulletin Board under the symbol "RGUS.OB" where it has been traded since September 21, 1994. The common stock has traded between $0.035 and $6.75 per share since that date.

There is also a limited public market for our common stock which began trading on May 1, 2006, on the Frankfurt Stock Exchange under the symbol (RGJ). International Security Identification Number (ISIN/CUSIP) number is US7589431045.

The following table sets forth the high and low bid prices for our common stock as reported on the Bulletin Board for the quarters presented. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not reflect actual transactions.

 
20

 

 
High
$
Low
$
Quarter ended July 31, 2009
0.31
0.18
Quarter ended October 31, 2009
0.30
0.18
Quarter ended January 31, 2010
0.28
0.18
Quarter ended April 30, 2010
     0.58
     0.12
Quarter ended July 31, 2010
0.38
0.16
Quarter ended October 31, 2010
0.30
0.18
Quarter ended January 31, 2011
0.27
0.15
Quarter ended April 30, 2011
0.25
0.16

(Information provided by The Over The Counter Bulletin Board.  The quotations reflect inter-dealer prices, without retail mark-up, markdown, or commission and may not represent actual transactions.)

The following table shows the high and low bid prices of our stock traded on the OTC Bulletin Board during the most recent six months, for each month as follows:


 
High
$
Low
$
February 2011
0.25
0.17
March 2011
0.25
0.17
April 2011
0.25
0.16
May 2011
0.23
0.04
June 2011
0.24
0.13
July 2011
0.23
0.01
 
_________

 * All prices are in U.S. dollars.

(Information provided by the Over the Counter Bulletin Board.  The quotations reflect inter-dealer prices, without retail mark-up, markdown, or commission and may not represent actual transactions.)

Holders

As of August 15, 2011, there were 28,758,824 shares of common stock outstanding, held by 267 shareholders of record.
 
Transfer Agent
 
Our transfer agent is Nevada Agency and Transfer Company, 50 West Liberty Street, Suite 880 Reno, Nevada 89501; Phone: 775-322-0626; Fax: 775-322-5623.
 
Dividends

To date we have not paid any dividends on our common stock and do not expect to declare or pay any dividends on our common stock in the foreseeable future. Payment of any dividends will be dependent upon future earnings, if any, our financial condition, and other factors as deemed relevant by our Board of Directors.

 
21

 
Securities authorized for issuance under equity compensation plans.

The Company is authorized to issue up to 100,000,000 shares of common stock, without par value. As of August 15, 2011, there were 28,758,824 shares of common stock issued and outstanding. Each share of Common Stock is entitled to one vote on all matters submitted for shareholder approval.
 

Recent Sales of Unregistered Securities

The following is a summary of all transactions within the past three years involving our sales of our securities that were not registered under the Securities Act.  Shares issued for cash consideration paid to us are valued at the purchase price per share; all other shares are valued as stated.  All shares issued were issued as “restricted” shares of our common stock except as otherwise expressly stated.

During the year ended April 30, 2010, the Company issued 650,000 common shares of the Company to a private company for consulting work on market analysis and shareholder communication. The common shares were valued at $0.22 per share for a total value of $143,000 based on the fair market value of the shares on the date of the issuance. The issuance of these securities was exempt from registration under The foregoing issuance of common stock was exempt from registration under the Securities Act, pursuant to Rule 701 thereof on the basis that the transactions were pursuant to a contract relating to compensation as provided under Rule 701.

ITEM 6.  SELECTED FINANCIAL DATA.

Not applicable.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview
 
The following discussion should be read in conjunction with audited financial statements of the Company and unaudited consolidated financial statements of our company and the related notes that appear elsewhere in this annual report.
 
The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report, particularly in the section entitled “Risk Factors”.
 
The audited financial statements of the Company are stated in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles.

Plan of Operations

We are a development stage company engaged in the business of developing and commercially exploiting an improved axial vane type rotary engine known as the RadMax® Engine.

As a development stage company, we devote most of our activities to establishing our business. Planned principal activities have not yet produced significant revenues and we have a working capital deficit.  We have incurred net losses to date totaling $12,882,685 and further losses are expected until we complete a licensing agreement with a manufacturer and reseller.  At April 30, 2011, we had working capital deficiency of $1,564,026. Our only asset is cash of $435 as of April 30, 2011. These factors raise substantial doubt about our ability to continue as a going concern.  Our ability to emerge from the development stage with respect to our planned principal business activity is dependent upon our successful efforts to raise additional equity financing, receive funding from affiliates and controlling shareholders, and develop a market for our products.

 
22

 
Results of Operations

Results of operations for the year ended April 30, 2011 ("2011’) compared to the year ended April 30, 2010 ("2010")

There were no revenues from product licensing during 2011 and 2010.

Net loss decreased from $1,220,349 in 2010 to $239,183 in 2011. One contributing factor to the decrease in net loss was a gain on the fair value of derivative liabilities of 322,707 in 2011 versus a loss on change in fair value of the same derivative liabilities of $114,643 in 2010, both calculated using Black Scholes valuation model reflecting market conditions include stock trading price volatilities, risk free interests date, expected life of the instruments as well as expected dividends at the dates of the evaluation.

The Company incurred a loss from operation of $561,890 in 2011 compared to a loss from operations of $1,105,715 in 2010, a decrease in loss of $543,825.

Non-cash based general and administrative expenses including shares issued for consulting services valued at $46,800 in 2011, significantly decreased from $195,800 in 2010. Option based compensation decreased from $316,979 in 2010 to $66,080 in 2011, due to the fact that options granted in prior years largely vested before fiscal 2011 and during 2011, only 50,000 options were modified and no options were granted.

During 2011 we incurred loss on foreign exchange of $2,619, a decrease from $10,654 in 2010.

Changes in cash-based expenses from 2010 to 2011 are as follows:

 
Research and development expenses decreased from $190,810 in 2010 to $101,093 in 2011, due to the decrease in required hours by our engineers in 2011.
 
Professional fees including legal, accounting, audit and auditors’ review expenses decreased from $90,885 in 2010 to $58,179 in 2011 due to the Company’s continuing effort in streamlining the operations;
 
Wages and benefits and office administrative expenses of $71,222 in 2010 increased to $81,118 in 2011 largely due to the severance pay in 2011 to one of our former employees.
 
Shareholder communication and investor relations decreased from $68,731 in 2010 to $42,682 in 2011, and
 
travel expenses decreased from $20,040 in 2010 $6,715 in 2011 due to our continuing effort to use more cost efficient communication methods in 2011.

Our basic and diluted loss decreased from $0.04 per share in 2010 to $0.01 in 2011.
 
 
 
 
23

 
LIQUIDITY AND CAPITAL RESOURCES

During 2011, with the downturn in the financial market, we financed our operations mainly through net proceeds of $286,507 borrowed from related parties.

We received funding in 2011 from our affiliated companies (common officers and directors) and our 13.34% shareholder, Reg Tech and Rand Energy. The total amount owing to related parties is $1,306,300 representing 84% of our total liabilities as of April 30, 2011.  This funding was necessary with a downturn in the financial market to complete the RadMax engine and place the Company in a position to attain profit.  The balances owing to related parties are non-interest bearing, unsecured and repayable on demand.  Our affiliated companies have indicated that they will not be demanding repayment of these funds during the next fiscal year and will advance, or pay expenses on behalf of the Company if further funds are needed.

As of April 30, 2011, we had a working capital deficiency of $1,564,026.  We receive interim support from our affiliated companies and will raise additional funds from equity financing which was negotiated.  We also plan to raise funds through loans from Reg Tech and Rand Energy.  At April 30, 2011 Reg Tech owns 3,040,000 shares and Rand Energy owns 796,483 shares of REGI common stocks and plans to sell shares as needed to meet our ongoing funding requirements if traditional equity sources of financing prove to be insufficient.

The audited consolidated financial statements have been prepared assuming that the Company will continue as a going-concern.  As discussed in Note 2 to the consolidated financial statements, the Company has no revenues and limited capital, which together raise substantial doubt about its ability to continue as a going-concern. Management plans in regard to these matters are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We have been successful in the past in acquiring capital through the issuance of shares of our Common Stock, and through advances from related parties.

We anticipate that our cash requirements for the fiscal year ending April 30, 2011 will remain consistent with those for the fiscal year ended April 30, 2010. 

These research and development costs are identified as master design integrator, prototype fabrication, and labour expense, and are estimated to be at $315,000 over the next 6 months.

Off-Balance Sheet Arrangements
 
As of April 30, 2011, we had no off-balance sheet arrangements, including any outstanding derivative financial statements, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

Not applicable.


 
24

 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 
    Page    
Audited Financial Statements for the Years ended April 30, 2011 and 2010
F-1 – F-18

 
Our consolidated financial statements are stated in United States dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
 
The following consolidated financial statements are filed as part of this annual report:
 
 
-
Report of Independent Registered Public Accounting Firm dated August 15, 2011
 
-
Consolidated Balance Sheets as of April 30, 2011 and 2010
 
-
Consolidated Statements of Expenses for the year ended April 30, 2011 and 2010 and for July 27, 1992 (inception) to April 30, 2011 with July 27, 1992 (inception) to April 30, 2008 unaudited
 
-
Consolidated Statements of Cash Flows for the year ended April 30, 2011 and 2010 and for July 27, 1992 (inception) to April 30, 2011 with July 27, 1992 (inception) to April 30, 2008 unaudited
 
-
Consolidated Statements of Stockholders’ Equity (Deficit) from July 27, 1992 (inception) to April 30, 2011 with July 27, 1992 (inception) to April 30, 2008 unaudited
 
-
Notes to the Consolidated Financial Statements.






 
 
 
 
 
 
 
 

 
 
25

 


REGI U.S., Inc.
(A Development Stage Company)
Consolidated Financial Statements


Reports of Independent Registered Public Accounting Firms
F-2
   
Consolidated Balance Sheets
F-3
   
Consolidated Statements of Expenses
F-4
   
Consolidated Statements of Cash Flows
F-5
   
Consolidated Statements of Stockholders’ Equity (Deficit)
F-6
   
Notes to the Consolidated Financial Statements
F-9



 
 
 
 
 
 

 
 
F-1

 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
REGI U.S., Inc.
(A Development Stage Company)
Richmond, BC, Canada

We have audited the accompanying consolidated balance sheets of REGI U.S., Inc., (A Development Stage Company) as of April 30, 2011 and 2010 and the related consolidated statements of expenses, changes in stockholders’ equity (deficit) and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of April 30, 2011 and 2010 and the consolidated results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has negative working capital and suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas

August 15, 2011
 
 
 
 
 
 
 
F-2

 
REGI U.S., Inc.
(A Development Stage Company)
Consolidated Balance Sheets


   
April 30,
 
   
2011
   
2010
 
ASSETS
           
Current Assets:
           
  Cash and cash equivalents
  $ 435     $ 1,158  
  Due from related parties
    -       4,413  
  Prepaid expenses
    -       5,722  
                 
Total Assets
  $ 435     $ 11,293  
 
               
LIABILITIES AND STOCKHOLDERS’ DEFICIT
               
Current Liabilities:
               
  Bank indebtedness
  $ -     $ 4,736  
  Accounts payable and accrued liabilities
    185,746       179,365  
  Due to related parties
    1,306,300       1,019,793  
  Derivative liabilities
    72,415       395,122  
    Total Current Liabilities
    1,564,461       1,599,016  
                 
Stockholders’ Deficit:
               
  Common stock, 100,000,000 shares authorized, no par value,
               
    28,749,824 and 28,713,824 shares issued and outstanding,
               
    respectively
    9,218,451       8,955,571  
  Deficit accumulated during the development stage
    (10,782,477 )     (10,543,294 )
    Total Stockholders’ Deficit
    (1,564,026 )     (1,587,723 )
                 
Total Liabilities and Stockholders’ Deficit
  $ 435     $ 11,293  
                 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
F-3

 
 
 
REGI U.S., Inc.
(A Development Stage Company)
Consolidated Statements of Expenses


               
July 27, 1992
 
   
Years Ended
   
(Inception)
 
   
April 30,
   
Through
 
   
2011
   
2010
   
April 30, 2011
 
               
(Unaudited)
 
Operating Expenses:
                 
  Amortization
  $ -     $ -     $ 130,533  
  General and administrative
    460,797       914,905       8,557,424  
  Impairment loss
    -       -       72,823  
  Gain on settlement of accounts payable
    -       -       (200,351 )
  Research and development
    101,093       190,810       4,530,329  
                         
Loss from operations
    (561,890 )     (1,105,715 )     (13,090,758 )
                         
Other loss
                       
Gain (loss) on change in fair value of derivative   liabilities
    322,707       (114,634 )     208,073  
                         
Net Loss
  $ (239,183 )   $ (1,220,349 )   $ (12,882,685 )
                         
Net loss per share – basic and diluted
  $ (0.01 )   $ (0.04 )        
                         
Weighted average shares outstanding – basic and diluted
    28,731,000       28,269,000          
                         
 
The accompanying notes are an integral part of these consolidated financial statements.
 

 
 
 
 
 
 
 
 
 

 
 
F-4

 
REGI U.S., Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows


               
July 27, 1992
 
   
Years Ended
   
(Inception)
 
   
April 30,
   
Through
 
   
2011
   
2010
   
April 30, 2011
 
               
(Unaudited)
 
                   
Cash flows from operating activities:
                 
  Net Loss
  $ (239,183 )   $ (1,220,349 )   $ (12,882,685 )
  Adjustments to reconcile loss to net cash
                       
    used by operating activities:
                       
    Amortization
    -       -       130,533  
    Donated services
    150,000       150,000       1,447,500  
    Impairment loss
    -       -       72,823  
    Shares issued for services
    46,800       195,800       393,800  
    Options issued for services
    66,080       316,979       1,440,294  
    Amortization of deferred compensation
    -       -       373,795  
    Gain on settlement of accounts payable
    -       -       (200,351 )
    Loss (gain) on change in fair value of derivative liability
    (322,707 )     114,634       (208,073 )
    Write-off of intellectual property
    -       -       578,509  
    Changes in operating assets and liabilities:
                       
      Accounts receivable
    -       -       (3,000 )
      Prepaid expenses
    5,722       (1,222 )     -  
      Accounts payable and accrued liabilities
    6,381       25,047       394,253  
Net cash used in operating activities
    (286,907 )     (419,111 )     (8,462,602 )
                         
Cash flows from investing activities:
                       
  Patent protection costs
    -       -       (38,197 )
  Advances to related parties
    -       -       (260,136 )
  Collection of advances to related parties
    4,413       255,723       260,136  
  Purchase of equipment
    -       -       (198,419 )
Net cash provided by (used in) investing activities
    4,413       255,723       (236,616 )
                         
Cash flows from financing activities
                       
  Advances from related parties
    286,507       156,599       1,617,547  
  Bank indebtedness
    (4,736 )     2,947       -  
  Proceeds from convertible debentures
    -       -       5,000  
  Proceeds from the exercise of options
    -       5,000       5,000  
  Proceeds from the sale of common stock
    -       -       7,072,106  
Net cash provided by financing activities
    281,771       164,546       8,699,653  
                         
Net increase (decrease) in cash and cash equivalents
    (723 )     1,158       435  
Cash and cash equivalents, beginning of period
    1,158       -       -  
Cash and cash equivalents, end of period
  $ 435     $ 1,158     $ 435  
                         
Supplemental Disclosures:
                       
  Interest paid
  $ -     $ -     $ -  
  Income tax paid
    -       -       -  
                         
Non-Cash Investing and Financing Activities:
                       
  Cumulative effect of change in accounting principal
  $ -     $ 280,488     $ 280,488  
  Warrants issued for equity line of credit
    -       -       1,561,406  
  Shares issued to settle debt
    -       -       496,000  
  Shares issued for convertible debenture
    -       -       5,000  
  Shares issued for intellectual property
    -       -       345,251  
  Affiliate’s shares issued for intellectual property
    -       -       200,000  
                         
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
F-5

 
REGI U.S., Inc.
(A Development Stage Company)
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the period from July 27, 1992 (Inception) through April 30, 2011 with the period from July 27, 1992 through April 30, 2008 Unaudited 



                           
Deficit
       
                           
Accumulated
   
Total
 
               
Common
         
During the
   
Stockholders’
 
   
Common Stock
   
Stock
   
Deferred
   
Development
   
Equity
 
   
Shares
   
Amount
   
Subscribed
   
Compensation
   
Stage
   
(Deficit)
 
Balances – July 27, 1992 (Inception)
    -     $ -     $ -     $ -     $ -     $ -  
Stock issued for intellectual property
    5,700,000       57,000       -       -       -       57,000  
Stock issued for cash
    300,000       3,000       -       -       -       3,000  
Net loss
    -       -       -       -       (23,492 )     (23,492 )
Balances – April 30, 1993
    6,000,000       60,000       -       -       (23,492 )     36,508  
Stock issued for cash pursuant to a
                                               
  public offering
    500,000       500,000       -       -       -       500,000  
Net loss
    -       -       -       -       (394,263 )     (394,263 )
Balances – April 30, 1994
    6,500,000       560,000       -       -       (417,755 )     142,245  
Stock issued for cash pursuant to:
                                               
Options exercised
    10,000       1,000       -       -       -       1,000  
Private placement
    250,000       562,500       -       -       -       562,500  
Warrants exercised
    170,200       213,000       -       -       -       213,000  
Net loss
    -       -       -       -       (1,225,743 )     (1,225,743 )
Balances – April 30, 1995
    6,930,200       1,336,500       -       -       (1,643,498 )     (306,998 )
Stock issued for cash pursuant to:
                                               
Options exercised
    232,500       75,800       -       -       -       75,800  
Warrants exercised
    132,200       198,300       -       -       -       198,300  
A private offering
    341,000       682,000       -       -       -       682,000  
Net loss
    -       -       -       -       (796,905 )     (796,905 )
Balances – April 30, 1996
    7,635,900       2,292,600       -       -       (2,440,403 )     (147,803 )
Stock issued for cash pursuant to:
                                               
Options exercised
    137,000       13,700       -       -       -       13,700  
Warrants exercised
    185,400       278,100       -       -       -       278,100  
Private placements
    165,000       257,500       -       -       -       257,500  
Net loss
    -       -       -       -       (510,184 )     (510,184 )
Balances – April 30, 1997
    8,123,300       2,841,900       -       -       (2,950,587 )     (108,687 )
Stock issued for cash pursuant to:
                                               
Options exercised
    50,000       5,000       -       -       -       5,000  
A units offering
    500,000       500,000       -       -       -       500,000  
Stock issued for acquisition of
                                               
  AVFS rights
    400,000       288,251       -       -       -       288,251  
Stock issued for services
    125,000       170,250       -       -       -       170,250  
Stock issued to settle an accrued
                                               
  liability
    50,000       25,000       -       -       -       25,000  
Net loss
    -       -       -       -       (580,901 )     (580,901 )
Balances – April 30, 1998
    9,248,300       3,830,401       -       -       (3,531,488 )     298,913  
Stock issued for services
    100,000       71,046       -       -       -       71,046  
Net loss
    -       -       -       -       (397,924 )     (397,924 )
Balances – April 30, 1999
    9,348,300       3,901,447       -       -       (3,929,412 )     (27,965 )
Stock issued for cash pursuant to:
                                               
A private placement
    852,101       639,075       -       -       -       639,075  
Cash commission paid
    -       (47,607 )     -       -       -       (47,607 )
 
 
 
F-6

 
 
Warrants exercised
    17,334       17,334       -       -       -       17,334  
Stock-based compensation
    -       15,417       -       -       -       15,417  
Net loss
    -       -       -       -       (413,495 )     (413,495 )
Balances – April 30, 2000
    10,217,735       4,525,666       -       -       (4,342,907 )     182,759  
Stock issued for cash pursuant to
                                               
  warrants exercised
    4,000       2,000       -       -       -       2,000  
Stock-based compensation
    -       18,500       -       -       -       18,500  
Stock to be issued
    -       -       72,000       -       -       72,000  
Net loss
    -       -       -       -       (808,681 )     (808,681 )
Balances – April 30, 2001
    10,221,735       4,546,166       72,000       -       (5,151,588 )     (533,422 )
Stock issued for cash pursuant to a
                                               
  private placement
    1,066,200       266,550       (72,000 )     -       -       194,550  
Amount receivable
    -       (3,000 )     -       -       -       (3,000 )
Stock-based compensation
    -       3,083       -       -       -       3,083  
Net loss
    -       -       -       -       (156,090 )     (156,090 )
Balances – April 30, 2002
    11,287,935       4,812,799       -       -       (5,307,678 )     (494,879 )
Stock issued to settle debt
    6,100,000       305,000       -       -       -       305,000  
Stock issued for services
    250,000       16,500       -       -       -       16,500  
Stock issued for convertible
                                               
  debenture
    50,000       5,000       -       -       -       5,000  
Stock to be issued
    -       -       25,968       -       -       25,968  
Donated consulting services
    -       187,500       -       -       -       187,500  
Net loss
    -       -       -       -       (220,972 )     (220,972 )
Balances – April 30, 2003
    17,687,935       5,326,799       25,968       -       (5,528,650 )     (175,883 )
Donated consulting services
    -       210,000       -       -       -       210,000  
Stock issued for cash pursuant to a
                                               
  private placement
    173,120       25,968       (25,968 )     -       -       -  
Stock issued for cash pursuant to:
                                               
Warrants exercised
    550,000       86,000       -       -       -       86,000  
Stock options exercised
    100,000       20,000       -       -       -       20,000  
Stock-based compensation
    -       78,184       -       (78,184 )     -       -  
Stock issued for services
    400,000       92,000       -       (92,000 )     -       -  
Stock issued to settle debt
    3,320,000       166,000       -       -       -       166,000  
Deferred compensation
    -       -       -       142,355       -       142,355  
Net loss
    -       -       -       -       (609,913 )     (609,913 )
Balances – April 30, 2004
    22,231,055       6,004,951       -       (27,829 )     (6,138,563 )     (161,441 )
Stock issued for services
    150,000       24,000       -       (24,000 )     -       -  
Stock issued for cash pursuant to:
                                               
Options exercised
    133,750       29,750       -       -       -       29,750  
Warrants exercised
    173,120       34,624       -       -       -       34,624  
Private placement
    1,032,800       258,200       -       -       -       258,200  
Stock-based compensation
    -       23,304       -       -       -       23,304  
Donated consulting services
    -       150,000       -       -       -       150,000  
Deferred compensation
    -       -       -       38,829       -       38,829  
Net loss
    -       -       -       -       (584,889 )     (584,889 )
Balances – April 30, 2005
    23,720,725       6,524,829       -       (13,000 )     (6,723,452 )     (211,623 )
Re-class deferred compensation to
                                               
  common stock
    -       (13,000 )     -       13,000       -       -  
Stock issued for cash pursuant to:
                                               
Options exercised
    212,000       53,313       -       -       -       53,313  
Warrants exercised
    406,400       142,240       -       -       -       142,240  
Private placement
    1,500,000       881,088       -       -       -       881,088  
Common stock subscribed
    -       -       3,750       -       -       3,750  
Stock-based compensation
    -       124,793       -       -       -       124,793  
 
 
 
F-7

 
 
 
Deferred compensation
    -       12,000       -       -       -       12,000  
Donated consulting services
    -       150,000       -       -       -       150,000  
Net loss
    -       -       -       -       (1,055,358 )     (1,055,358 )
Balances – April 30, 2006
    25,839,125       7,875,263       3,750       -       (7,778,810 )     100,203  
    Stock issued for cash pursuant to:
                                               
Options exercised
    662,250       143,938       (3,750 )     -       -       140,188  
Warrants exercised
    268,833       217,666       -       -       -       217,666  
Private placement
    120,000       120,000       -       -       -       120,000  
Private placement costs
    -       (3,504 )     (13,673 )     -       -       (17,177 )
Common stock subscribed
    -       -       272,700       -       -       272,700  
Stock issued for services
    29,000       60,000       -       -       -       60,000  
Stock-based compensation
    -       260,569       -       -       -       260,569  
Deferred compensation
    -       1,000       -       -       -       1,000  
Donated consulting services
    -       150,000       -       -       -       150,000  
Net loss
    -       -       -       -       (1,413,294 )     (1,413,294 )
Balances – April 30, 2007
    26,919,208       8,824,932       259,027       -       (9,192,104 )     (108,145 )
Stock issued for cash pursuant to:
                                               
Options exercised
    38,500       12,125       -       -       -       12,125  
Warrants exercised
    99,166       96,666       (10,000 )     -       -       86,666  
Private placement
    833,950       833,950       (262,700 )     -       -       571,250  
Private placement costs
    -       (47,170 )     13,673       -       -       (33,497 )
Options exercised for services
    36,000       46,800       -       -       -       46,800  
Stock-based compensation
    -       241,528       -       -       -       241,528  
Donated consulting services
    -       150,000       -       -       -       150,000  
Net loss
    -       -       -       -       (1,236,583 )     (1,236,583 )
Balances – April 30, 2008
    27,926,824       10,158,831       -       -       (10,428,687 )     (269,856 )
Options exercised for services
    71,000       67,800       -       -       -       67,800  
Stock-based compensation
    -       291,857       -       -       -       291,857  
Donated consulting services
    -       150,000       -       -       -       150,000  
Net loss
    -       -       -       -       (994,466 )     (994,466 )
Balances – April 30, 2009
    27,997,824       10,668,488       -       -       (11,423,153 )     (754,665 )
   Cumulative effect of change
    in accounting   principle – May 1,
    2009 reclassification of embedded
    feature of equity linked financial
    instruments to derivative liabilities
    -       (2,380,696 )     -       -       2,100,208       (280,488 )
   Cashless exercise of options
    46,000       52,800       -       -       -       52,800  
   Options exercised for cash
    20,000       5,000       -       -       -       5,000  
   Shares issued for services
    650,000       143,000       -       -       -       143,000  
   Options expense
    -       316,979       -       -       -       316,979  
   Donated consulting services