United States Securities and Exchange Commission


Washington, D.C. 20549


_________________________________________________




FORM 20-F




 ̈
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934





OR




x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 - For the fiscal year ended April 30, 2011




OR




 ̈
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For the fiscal year ended:  N/A







OR




 ̈
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




Date of event requiring this shell company report: N/A




Commission File Number 0-24342





Reg Technologies Inc.


(Exact name of Registrant as specified in its charter)


(Translation of Registrant’s name into English)





British Columbia, Canada


(Jurisdiction of incorporation or organization)





240-11780 Hammersmith Way


Richmond, British
  Columbia V7A 5E9, Canada


(Address of
  principal executive offices)





John Robertson, President, jr@ihiway.com


240-11780 Hammersmith Way, Richmond, British Columbia V7A 5E9, Canada


Phone: 604-278-5996  Fax 604-278-3409


(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)








Securities registered or to be registered pursuant to Section 12(b) of the Act.  None





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


Common Stock, no par value


(Title of Class)




Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:




None




Indicate the number of outstanding shares of each of the issuer's class of capital or common stock as of the close of the period covered by the annual report.




Title of Each Class
Outstanding at April 30, 2011Common Shares, no par value
30,725,118





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









If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  ̈ Yes x No





Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No  ̈





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate 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  ̈ No





Indicate by check mark whether the registrant is a large accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.




Large accelerated filer  ̈
Accelerated file  ̈
Non-accelerated filer x





Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:




oU.S. GAAP
oInternational Financial Reporting Standards as issued by the International Accounting Standards Board
xOther





If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.


Item 17. x   Item 18.   ̈




If this is an annual report, indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act).         Yes ̈Nox




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TABLE OF CONTENTSPART IITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
6ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE
6ITEM 3.

KEY INFORMATION
6A.
SELECTED FINANCIAL DATA
6B.
CAPITALIZATION AND INDEBTEDNESS
7C.
REASON FOR THE OFFER AND USE OF PROCEEDS
7D.
RISK FACTORS
8ITEM 4.

INFORMATION ON THE COMPANY
12A.
HISTORY AND DEVELOPMENT OF THE COMPANY
12B.
BUSINESS OVERVIEW
15C.
ORGANIZATIONAL STRUCTURE
23D.
PROPERTY, PLANTS AND EQUIPMENT
23ITEM 4A.

UNRESOLVED STAFF COMMENTS
24ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS
25A.
OPERATING RESULTS
25B.
LIQUIDITY AND CAPITAL RESOURCES
26C.
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC
28D.
TREND INFORMATION
29E.
OFF-BALANCE SHEET ARRANGEMENTS
29F.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
29G.
SAFE HARBOR
29ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
30A.
DIRECTORS AND SENIOR MANAGEMENT
30B.
COMPENSATION
33C.
BOARD PRACTICES
36D.
EMPLOYEES
37E.
SHARE OWNERSHIP
37ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
37A.
MAJOR SHAREHOLDERS
37B.
RELATED PARTY TRANSACTIONS.
38C.
INTERESTS OF EXPERTS AND COUNSEL.
39ITEM 8.

FINANCIAL INFORMATION
39A.
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
39B.
SIGNIFICANT CHANGES
40ITEM 9.

THE OFFER AND LISTING
40ITEM 10.

ADDITIONAL INFORMATION
42A.
SHARE CAPITAL
42B.
MEMORANDUM AND ARTICLES OF ASSOCIATION
40C.
MATERIAL CONTRACTS
42D.
EXCHANGE CONTROLS
42E
TAXATION
43F.
DIVIDENDS AND PAYING AGENTS
44G.
STATEMENT BY EXPERTS
44H.
DOCUMENTS ON DISPLAY.
44I.
SUBSIDIARY INFORMATION
45ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
45ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
45
     - 3 -
  PART IIITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELIQUENCIES
45ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SCURITY HOLDERS AND USE OF PROCEEDS
45A.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
45B.
USE OF PROCEEDS.
45ITEM 15.

CONTROLS AND PROCEDURES
45ITEM 16.

[RESERVED]
47ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT
47ITEM 16B.

CODE OF ETHICS
48ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES
49ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
49ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
49ITEM 16F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
49ITEM 16G.

CORPORATE GOVERNANCE
49PART IIIITEM 17.

FINANCIAL STATEMENTS
50ITEM 18.

FINANCIAL STATEMENTS
50ITEM 19.

EXHIBITS
51
  - 52SIGNATURE PAGE
53




-
  4 -





BUSINESS OF REG TECHNOLOGIES INC.





Reg Technologies Inc. is 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. Since no marketable product has yet been developed, we have not received any revenues from operations.





Our ongoing operation is dependent upon cash flow from successful operations and equity financing. We have incurred a loss of $257,244 in the year ended April 30, 2011 (2010 - 454,902; 2009 - $456,090 (restated)). These consolidated financial statements do not include adjustments that would be necessary should it be determined that we may be unable to continue as a going concern.





FINANCIAL AND OTHER INFORMATION





In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (“CDN$” or “$”). The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (“US$”).





FOREIGN PRIVATE ISSUER STATUS





We are a Canadian corporation incorporated under the laws of the Province of British Columbia. Less than 50% of our common stock is held by United States citizens and residents; our business is administered principally outside the United States; and more than 50% of its assets are located outside the United States. As a result, we believe that we qualify as a "foreign private issuer" for continuing to report regarding the registration of the common stock using this Form 20-F annual report format.





FORWARD-LOOKING STATEMENTS





Certain statements in this document constitute “forward-looking statements”. Some, but not all, forward-looking statements can be identified by the use of words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend,” statements that an action or event “may,” “might,” “could,” “should,” or “will” be taken or occur, or other similar expressions. Although we have attempted to identify important factors that could cause actual results to differ materially from expected results, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: the risks associated with outstanding litigation, if any, risks associated with project development; the need for additional financing; operational risks; uncertainties and risks related to carrying on business in foreign countries; reliance on key personnel; the potential for conflicts of interest among certain officers, directors or promoters with certain other projects; the absence of dividends; currency fluctuations; competition; dilution; the volatility of our common share price and volume; and tax consequences to U.S. Shareholders. All forward-looking statements speak only as of the date on which they are made.We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our Annual Reports on Form 20-F and our Current Reports on Form 6-K.




-
  5 -





PART I




ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS




This Form 20-F is being filed as an annual report under theSecurities Exchange Act of 1934 (“Exchange Act”), and accordingly, the information called for in Item 1 is not required. Please see “Item 6 – Directors, Senior Management and Employees – Directors and Senior Management”.







ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE




This Form 20-F is being filed as an annual report under the Exchange Act, and accordingly, the information called for in Item 2 is not required.




ITEM 3.
KEY INFORMATION




A.
SELECTED FINANCIAL DATA




The summary consolidated financial information set forth below should be read in conjunction with, and is qualified in its entirety by reference to, our consolidated financial statements, as of and for the years ended April 30, 2011 and 2010, together with the notes thereto, which appear elsewhere in this annual report. The consolidated financial statements as of and for the year ended April 30, 2011 and April 30, 2010 have been audited by ACAL Group, Chartered Accountants.  The consolidated financial statements are prepared in accordance with Canadian GAAP. See Note 15 of the Notes to consolidated financial statements for reconciliation to U.S. GAAP.





The information in the following table is derived from our financial statements and is expressed in Canadian dollars. Since June 1, 1970, the Government of Canada has permitted a floating exchange rate to determine the value of the Canadian dollar as compared to the United States dollar. At April 30, 2011, US$1.00 was equal to approximately C$0.9486. The exchange rates for the past five fiscal years ended April 30, are presented below.





The following represents our selected financial data for each of the past five fiscal years, ending on April 30. The data presented is prepared in accordance with generally accepted accounting principles in Canada and reconciliation of the data to U.S. GAAP and expressed in Canadian dollars:





Fiscal Years Ended April 30





2011

2010

2009

2008

2007

(restated)CANADIAN GAAPNet Revenues
-

-

-

-

-Loss from continuing operations
(257,244)

(454,902)

(785,625)

(1,763,967)

(1,888,213)Net loss
(257,244)

(454,902)

(456,090)

(536,329)

(641,453)Income from discontinued operations
-

-

-

-

-Loss from continuing operations per share
(0.01)

(0.02)

(0.02)

(0.02)

(0.03)Current assets
1,058,759

625,976

567,868

141,097

412,145Total assets
1,293,881

629,322

574,765

151,296

424,876Working Capital
678,684

215,870

290,087

40,324

38,886Capital stock (excluding long term debt and redeemable preferred stock)
12,372,889

12,082,039

11,800,964

11,356,689

11,356,689Weighted average number of shares
29,000,177

26,123,280

24,849,721

23,849,000

23,831,000




-
  6 -
 U.S GAAP
2011

2010

2009

2008

2007

(restated)Net Loss
(420,798)

(615,973)

(627,795)

(918,703)

(959,567)Loss Per Share
(0.01)

(0.02)

(0.03)

(0.04)

(0.04)Retained Earnings (Deficit)
(23,392,759)

(22,971,961)

(22,355,988)

(21,728,193)

(20,809,490)Total Assets
1,293,881

629,322

574,765

151,296

424,876Long-Term Debt
-

-

-

-

-Capital Stock
12,372,889

12,082,039

11,800,964

11,356,689

11,356,689




Reference is made to "Item 4. Information on the Company" and "Item 5. Operating and Financial Review and Prospects” for a description of the initiation and progression of our activities since incorporation.





Currencies and Exchange Rates:





Unless otherwise indicated, all monetary references herein are denominated in Canadian Dollars. References to “$” or “Dollars” are to Canadian Dollars and references to “US$” or “U.S. Dollars” are to United States Dollars.





The following table sets forth, for the periods indicated, the exchange rates based on the noon buying rate with the Federal Reserve Bank of New York for cable transfers in Canadian dollars.  Such rates are the number of Canadian dollars per one (1) U.S. Dollar.





Year Ended April 302011

$
2010

$
2009

$
2008

$
2007

$Average for Period
1.0124
1.0721
1.1444
1.0226
1.1375





The high and low exchange rates for each month during the previous six months are as follows:





Month EndedSeptember
August
July
June
May
April2011

$
2011

$
2011

$
2011

$
2011

$
2011

$High for Period
1.0389
0.9909
0.9667
0.9859
0.9809
0.9689Low for Period
0.9751
0.9577
0.9448
0.9642
0.9489
0.9486





On October 14, 2011, the exchange rate in effect for Canadian dollars exchanged for United States dollars, expressed in terms of Canadian dollars, and based on the noon buying rates in New York City, for cable transfers in Canadian dollars, as certified for customs purposes by the Federal Reserve Bank of New York was $1.0148.




B.
CAPITALIZATION AND INDEBTEDNESS  This Form 20-F is being filed as an annual report under the Exchange Act, and accordingly, the information called for in this Item 3.B is not required.
  C.
REASON FOR THE OFFER AND USE OF PROCEEDS  This Form 20-F is being filed as an annual report under the Exchange Act, and accordingly, the information called for in Item 3.C is not required.   
 -
  7 -
  D.
RISK FACTORS




The occurrence of any of the following risks could hurt our business, financial condition or results of operations. In such case, the trading price of our shares could decline and you could lose all or part of your investment. 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 not now known to us or that we think are immaterial 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.




RISK FACTORS RELATED TO OUR BUSINESS AND OPERATIONS





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 $21,625,225 in accordance with Canadian 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.





Although we anticipate receiving future revenues fromthe 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.


-
  8 -


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 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.





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® 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 20-F 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.  
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  9 -





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.





Certain of our directors and officers are also directors and/or officers and/or shareholders of our potential competitors, giving rise to potential conflicts of interest.





Several of our directors and officers are also directors, officers or shareholders of other companies. In particular, Mr. Robertson, and Mr. Vandeberg are directors and/or officers of both REGI U.S., Inc. and IAS Energy, Inc., each a public company. Additionally, Mr. Robertson is a director and officer of Linux Gold Corp. and Teryl Resources Corp., each a public natural resource exploration company that shares office space and administrative staff with our company. Mr. Robertson is a director and officer of SMR Investments Ltd., which holds approximately 17% of our common shares. Some of our directors and officers are engaged and will continue to be engaged in the search for additional business opportunities on behalf of other corporations, and situations may arise where these directors and officers will be in direct competition with our company. Such associations may give rise to conflicts of interest from time to time.  Such a conflict poses the risk that we may enter into a transaction on terms which could place us in a worse position than if no conflict existed. Conflicts, if any, will be dealt with in accordance with the relevant provisions of the British Columbia Business Corporations Act. The Board has resolved that any transaction involving a related party to our company is required to be reviewed and approved by our Audit Committee. Our directors are required by law to act honestly and in good faith with a view to our best interests and to disclose any interest which they many have in any project or opportunity in respect of which we are proposing to enter into a transaction.





As a"foreign private issuer”, we are exempt from the Section 14 proxy rules and Section 16 of the Securities Act, which may result in shareholders having less complete and timely data.





The submission of proxy and annual meeting of shareholder information (prepared to Canadian standards) on Form 6-K may result in shareholders having less complete and timely data. The exemption from Section 16 rules regarding sales of common shares by insiders may result in shareholders having less data.





We are dependent 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.


-
  10 -


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.





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.





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.  
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  11 -


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.





UNCERTAINTIES AND RISKS RELATING TO COMMON SHARES





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





There is only a limited public market for our common shares on the OTC Bulletin Board (“OTCBB”) and the TSX Venture Exchange (“TSX.V”), 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 OTCBB and the TSX.V 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 OTCBB is less than $5.00.





Since our 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 OTCBB 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.


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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.





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.





ITEM 4.
INFORMATION ON THE COMPANY




A.
HISTORY AND DEVELOPMENT OF THE COMPANY




We were incorporated in British Columbia on October 6, 1982 as Reg Resources Corp. under a perpetual charter pursuant to the British Columbia Business Corporations Act. On February 23, 1993, we changed our name to Reg Technologies Inc. in order to better reflect our main area of business development. We did not consolidate our shares at the time our name was changed.





Our authorized capital consists of 65,000,000 shares consisting of 50,000,000 common shares without par value, 10,000,000 preferred shares with a par value of $1.00 per share and 5,000,000 Class "A" non-voting shares without par value. Of the 50,000,000 common shares without par value, 30,725,118 common shares were issued and outstanding as of April 30, 2011, and 32,768,418 are outstanding as at October 14, 2011. There are no Preferred or Class "A" shares currently outstanding. They are not subject to any future call or assessment and they all have equal voting rights. There are no special rights or restrictions of any nature attached to any of the shares and they all rank equally, as to all benefits that might accrue to the holder thereof.





Our head office is located at #240 -11780 Hammersmith Way, Richmond, B.C., V7A 5E9, Canada. Our telephone number is 604-278-5996 and our fax number is 604-278-3409.








We were initially involved in the mineral development and oil and gas business. The mineral development business produced no revenues from operations and the oil and gas business produced only limited revenues.





On May 23, 1986, we entered an agreement which was amended October 20, 1986 ("Initial Agreement") among ourselves, Rand Cam-Engine Corp. (a private company owned by James L. McCann, the inventor of the RadMax® Engine, and James L. McCann).  Under the Initial Agreement, we acquired a 40% interest in a company to be formed, by paying $50,000 and agreeing to expend $200,000 on research and development pertaining to the Rand Cam Engine, which utilizes a new type of design for a rotary internal combustion engine.





The new company was formed and incorporated in British Columbia in November 1989, as Rand Energy Group Inc. (“Rand Energy”), which would hold all the rights, agreements and patents to the RadMax® Engine. We acquired 1,200,000 of the issued and outstanding shares of Rand Energy Group Inc. while Rand Cam-Engine Corp. acquired 1,800,000 of the issued and outstanding shares.


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The Initial Agreement was superseded by an Energy Group Acquisition Agreement dated March 28, 1990 and a Share Purchase Agreement dated March 28, 1990, whereby James L. McCann and Rand Cam- Engine Corp. agreed to transfer all rights, title and interest in and to the RadMax® Engine to Rand Energy for 1,800,000 common shares of Rand Energy in consideration for certain covenants and warranties along with the $250,000 expended in accordance with the Initial Agreement. We were allotted 1,200,000 common shares of Rand Energy.





These agreements resulted in us owning 40% of the issued and outstanding shares of Rand Technologies Inc., with the balance of 60% being owned by Rand Cam-Engine Corp. Pursuant to an amalgamation agreement between the shareholders of Rand Technologies Inc. and Rand Energy, the two companies were amalgamated, effective July 31, 1993. The amalgamated company is called Rand Energy Group Inc. (“Rand Group”) and retains the same ownership structure.





Under an agreement dated April 27, 1993, between ourselves, Rand Group, Rand Cam-Engine Corp. and James L. McCann, Rand Cam-Engine Corporation agreed to sell to us 330,000 shares of Rand Group, representing a further 11% interest in Rand Group.  In consideration for a controlling interest in Rand Group, we agreed to pay Rand Cam-Engine Corporation $50,000 (paid), issue 600,000 shares (expired) of our common shares and grant a participating royalty to a maximum amount of $10,000,000, ("Participating Royalty"). The Participating Royalty is to be paid in minimum annual installments of $50,000 per year beginning on the date the first revenues are derived from the license or sale of the patented technology and after shares are issued per above. As part of the minimum payment, we are to pay 5% of all net profits from sales, licenses, royalties or income derived from the patented technology.





Pursuant to an agreement with Brian Cherry ("Cherry Agreement") dated July 30, 1992 , Rand Group was assigned all right, title and interest in the RadMax® Engine for all countries excluding the United States of America. Also under the Cherry Agreement, REGI U.S., Inc. was assigned from Brian Cherry all right, title and interest in and to the RadMax® Engine for the United States. Pursuant to a letter of understanding among our company, REGI U.S., Inc. and Rand Group (collectively called the “Grantors”) and West Virginia University Research Corporation (“WVURC”), the Grantors have agreed that WVURC shall own 5% of all patented technology and will receive 5% of all net profits from sales, licenses, royalties or income derived from the patented technology. A 1% net profit royalty will be payable to Brian Cherry on all U.S. based sales.





REGI U.S., INC.





REGI U.S., Inc. ("REGI") was, until April 30, 2008, controlled by Rand Group.REGI was formerly controlled our company by way of a voting trust arrangement, which was cancelled on April 30, 2008.




Our direct investment in REGI, together with its 51% ownership in Rand Group, gives us control over approximately 3,836,483 shares of REGI, with a carrying value of US$Nil as of April 30, 2011.  We can sell, through a registered broker, up to 287,000 shares of REGI U.S., Inc., being 1% of the issued shares, during any 90 day period.  During the year ended April 30, 2011, Rand Group sold 163,000 REGI share for US$57,050, and we sold 295,300 REGI shares for US$73,825.





At April 30, 2011, the market value of the REGI shares owned by us and Rand Group was US$609,780.





REGI was organized under the laws of the State of Oregon on July 27, 1992 as Sky Technologies, Inc. with its name changed on August 1, 1994. It has a total authorized capital of 100,000,000 common shares. As of April 30, 2011, a total of 28,749,824 shares of common stock of REGI were issued and outstanding, of which 633,483 are owned by Rand Group and 2,744,700 shares are owned by us.





Together with REGI, we are in the business of developing and commercially exploiting an improved axial vane type rotary engine known as the RadMax® Engine. The world-wide marketing and intellectual rights, other than the U.S., are held by Rand Group (our Canadian subsidiary 51% owned by us) which holds approximately a 2.8% interest in REGI.  REGI owns the U.S. marketing and intellectual rights. Rand Group and REGI have a project cost sharing agreement whereby these companies each fund 50% of the development of the Technology.   As at April 30, 2011, Rand Group owes us $1,985,603 (2010 - $1,940,555) which will be fully repaid prior to royalty obligations due, and prior to dividends being paid to the owners of Rand Group.





Our stock trades on the OTC BB under the symbol REGRF.OB and on the TSX.V as RRE.V.   
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B.
BUSINESS OVERVIEW




Nature of Our Operations





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. We hold the worldwide intellectual and marketing rights to the RadMax® Engine, exclusive of the United States, which are held by REGI.   REGI 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 we 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.





Products and Projects





The RadMaxTM Rotary Technology





The worldwide marketing and intellectual rights to the Technology, other than in the US, are held by us and REGI owns the US marketing and intellectual rights. We own 3,378,183shares of REGI, representing an 11.75% interest. We have a project cost sharing agreement with REGI, whereby we each fund 50% of the costs of developing the Technology.





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. The mechanism can be scaled to match virtually any size requirement.  
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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, 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.





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 RadMax® 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.





We have tested the RadMax® Engine technology for interested customers. To date, we have granted an option for a license for certain applications to a Fortune 1000 company, which has evaluated the RadMax® Engine design and assisted in the development and testing at no cost to us. On December 31, 2010, the option for the exclusive rights expired without being exercised and the non-exclusive rights for military and aerospace expire December 31, 2011.  Under the terms of a confidentiality agreement, we are prohibited from publishing the name of the partner or discussing the partner’s specific application.





RadMax® Engine





Based on a review of published industry literature by our thermodymanics engineer, Dr. Allen MacKnight, PhD., we believe that the RadMax® Engine could achieve improved fuel consumption when compared to gasoline and turbine engines. 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.





To bring the RadMax® 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.





We retained Belcan Engineering Services of Phoenix, AZ (“Belcan”) 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.


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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 abrication 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.







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® Engine demonstration prototype.  Commercial item procurement, parts fabrication and preparation for prototype testing are underway.







All major components (rotors, cams, stator and vanes) are each more than 75% complete, as evidenced by many photos accompanying several of our press releases.





As at the date of this report, the following components need to be completed in order to complete fabrication. Their respective progresses are as follows:


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Rotors: Remaining operations are final turns, drilling 72 oil galleries (requires development of a drilling fixture with 30 degree indexing and cradle for rotor), drilling 48 combustion chamber holes for oil cooling, wire EDM cut 24 vane slots into combustion chamber, cut 48 side seal slots, cut 4 radial seal slots, final machining of bore bearing locations, final machining of oil cooler locations, sinker EDM of side seal slots, phosphate coating, and a few other minor operations.


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End plates: Remaining operations are cutting air and water plenum holes, final mill and bore. Anodizing.


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Stator frame: Remaining operations are final mill and bore. Anodizing.


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Enclosure: Rolling the enclosures (vendor quote received). Work has not started.


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Vanes: Remaining operations are vendor plating with nickel and chrome, final polish.


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Cam: Remaining operations are final surface grind and polish, final mill and bore for other features, then nickel and chrome plating.


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Driveshaft: Work is complete.


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Oil coolers: Material has been received for 48 pieces. No machining work has been started.


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Bearings: Material has been received for 24 pieces. No machining work has been started.


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Connecting tubes: Have received 9 of 12 units from plating vendor. Three are outstanding. Once received, there is some minor additional work. Drilling holes in each end, final machining for axle mount, clean-up of welds, trimming length to specification. All these processes are on hold.


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Air and Water Flanges: These are inexpensive parts that replace expensive threading of end plates, reducing prototype cost approximately $3000 per end plate.
  All these processes are on hold.


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Gaskets for air and water flanges: These will be sent to local vendor who already produced and delivered other gaskets for us.


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Nameplates: Fabricating and plating the nameplates. Work has not started.


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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 Tech 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® Engine 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; and


·
The outside dimensions of the vane portion have been fabricated in a wire Electrical Discharge Machining (“EDM”) Process.





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.





During May 2011, we received our second fabrication progress report for the prototype RadMax® Engine whereby we estimated that approximately one-third of all fabrication work was complete. The fabrication progress in May was as follows:





·
The rotors have completed their first-pass rough turning process within .030-inch of final. As of this report, the following rotor fabrication operations have been completed: outer surface, neck, driveshaft slot, and combustion chamber.


·
The cams have completed their initial rough turning passes. The reason for the two pass turning process is because the metal “moves” (stretches or deforms) after the machining process. To maintain our high-tolerance requirements, the two-passes are required.


·
Fabrication of the 24 vane-actuator assemblies is complete. This includes completion of the vanes, connecting tubes, axles, wheels, wrist pins, and integration with commercial wheel bearings.


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During August 2011, we had successful transfer directly from 3D cad model to Computer Numerically Controlled (“CNC”) machine code for the prototype RadMax® Engine.





This was a significant event, as we proved our capability to go from 3D computer models of the cam surface to deriving the cutter path for the CNC milling center and fabricating the complex cam surface.





In prior technological stages, machine readable flat files comprised of many thousands of points with x, y, and z coordinates were required to be loaded into CNC machines with the process verified with human-entered corrections and multiple test pieces fabricated before a final prototype product was achieved.





This successful transfer applies directly to the RadMax® Engine cam and stator surfaces; both of which are implementations of complex transcendental formulas.





A detailed thermodynamic analysis of the patented RadMax® Engine was performed last year in conjunction with Belcan. As a result, the cam is fabricated from lightweight aircraft aluminum and weighs approximately 12 pounds. This is in sharp contrast to earlier implementations in steel that weighed more than 50 pounds each. This capability is one of the major contributing factors to RadMax® Engine weight reduction, which naturally leads to enhanced fuel economy in every application.







RadMax®Pump





We actively pursued the development of the RadMax® pump from early 2007 until March 2008. From September 2007 until March 2008, we 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.


RadMax®Compressor





We then focused our 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 our 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.





We 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 enter into 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.





We were 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. We are pleased to be able to support CGI’s commitment of reducing the effects of global warming by continuing to pursue commercializing the fuel efficient RadMaxTM Diesel Engine Technology.





The U.S. Patent and Trademark office has been in contact with REGI’s patent attorney to commence a review of 24 Claims in the new patent application for the RadMaxTMapplication. The new design claims are far moreadvanced than the existing Rand Cam technology patents, and once approved will give REGI an additional 20 years of patent technology protection.


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Description of the Markets in Which We Compete





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® 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® 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® 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.





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


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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 the testing of the RadMax® 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® 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.






Seasonality





We believe that there is no seasonality which affects our products.





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® 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® 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 Rand Cam 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.





Dependence on Certain Commercial Agreements





We do not have any material agreements upon which we are dependent.




Patents and Licenses





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 are held by Rand Energy.  
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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 worldwide patents cover Canada and several countries in Europe, namely, Germany, France, Great Britain, and Italy.





The U.S. Patent and Trademark office has been in contact with our patent attorney to commence a review of 24 Claims in the new patent application for the RadMaxTMapplication. The new design claims are far more advanced than the existing Rand Cam technology patents, and once approved will give us an additional 20 years of patent technology protection.





Royalty Payments





We are required to pay Rand Group semi-annually a royalty of 5% of any net profits to be derived by us from revenues received as a result of our license of the RadMax® Engine. We are required to pay Brian Cherry a royalty of 1% semi-annually on any net profits derived by us from revenue received as a result of our licensing the RadMax® Engine.





Other provisions of the April 1993 Agreement call for is (a) to pay to Rand Group 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 Group, REGI and WVURC, WVURC will receive 5% of all net profits from sales, licenses, royalties or income derived from the patented technology relating to the RadMax® Engine and the RC/DC Engine.





Material Effects of Government Regulation





Our engine products will be subject to various exhaust emissions standards depending upon the application and the country in which it is produced and/or sold. As each product becomes ready for sale, it will be necessary to have the engine certified according to the standards in effort at that time.  
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C.
ORGANIZATIONAL STRUCTURE




We own an 80% interest in Minewest Silver and Gold Inc., a private British Columbia company, and a 51% interest in Rand Energy Group Inc., which owns a 2.2% interest in REGI.  We also own a 9.55% interest in REGI.




D.
PROPERTY, PLANTS AND EQUIPMENT





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.  The monthly rent for our portion of this office space is $1,259. In addition, we lease a research and development facility in a commercial business park building also located in Richmond.  The lease is for a period of three years with an annual rent of $15,108 per annum.  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. There are no current plans to purchase or lease any properties in the near future.





Plan of Operations





The following contains forward-looking statements relating to revenues, expenditures and sufficiency of capital resources. Actual results may differ from those projected in the forward-looking statements for a number of reasons, including those described in this Form 20-F Annual Report.  We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information.





Source of Funds for Fiscal 2011/2012





Our primary source of funds since incorporation has been through the issuance of equity securities.





We have been successful in the past in acquiring capital through the issuance of common shares and through advances from related parties. Although we intend to continue utilizing these sources, there has been no assurance in the past that these sources and methods would continue to be available in the future.





The audited consolidated financial statements have been prepared assuming that we will continue as a going-concern.  As discussed in Note 1 to the audited consolidated financial statements, we have no revenues and limited capital, which together raise substantial doubt about our ability to continue as a going-concern. Management plans in regard to these matters are also described in Note 1. The audited consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.





In the event that no other sources of capital were available to us in the future, on a reasonable financial basis, we would face the same obstacles as many small, undercapitalized companies do, and, in the worst case, we could be forced to reorganize or liquidate, either of which consequence would likely have an adverse financial effect upon our shareholders.





Use of Funds for Fiscal 2011/2012





We anticipate that our cash requirements for the fiscal year ending April 30, 2012 will remain consistent with those for the fiscal year ended April 30, 2011.


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  23 -


Anticipated Changes to Facilities/Employees





We anticipate there will not be any changes to either facilities or employees in the near future.




ITEM 4A.
UNRESOLVED STAFF COMMENTS





This section is not applicable as we are not an accelerated filer or a large accelerated filer, as defined in Rule 12b-2 of the Exchange Act, or a well-known seasoned issuer as defined in Rule 405 of the Securities Act.




ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS





The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere herein. The consolidated financial statements have been prepared in accordance with Canadian GAAP. See Note 15 to the consolidated financial statements for reconciliation to U.S. GAAP.





Overview





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. We have undergone mounting losses to date totaling $21,625,225 and further losses are expected until we complete a licensing agreement with a manufacturer and reseller. We have working capital of $678,684. 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.







A.
OPERATING RESULTS




Results of Operations





Fiscal year ended April 30, 2011 compared to fiscal year ended April 30, 2010





For the year ended April 30, 2011, we had a net and comprehensive loss of $(257,244) or $(0.01) per share, as compared to a net and comprehensive loss of $(454,902) or $(0.02) per share for the year ended April 30, 2010.  The decrease in the net loss during fiscal 2011 is mainly due to a gain of $27,048 in foreign exchange, compared to a loss of $(81,608) in fiscal 2010, and decreased research and developments costs of $107,700, compared to $227,402 in fiscal 2010, which is offset by an increase in consulting fees of $32,209, compared to $16,542 in fiscal 2010 and stock based compensation of $89,776, compared to $1,348 in fiscal 2010.





Other significant changes from fiscal 2010 to fiscal 2011 are as follows:





·
In 2011 we had a convertible debenture of principal amount of $50,000. Interest expense of $10,894 was recorded on the loan during the period, while we did not have such debt or related interest expense in 2010;





·
We decreased shareholder communication expenses from $82,026 in 2010 to $41,106 in 2011 due to our continued utilization of efficient channels for shareholder communication during theweak world economy;


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  24 -


·
From 2010 to 2011 office expenses decreased from $33,719 to $27,286, professional fees decreased from $105,851 to $99,670, and travel and promotion decreased from $15,211 to 7,605, all due to our continuing effort to streamline our operations and share costs with our associated companies;





·
Transfer agent and filing fees decreased from $26,925 in 2011 to $15,101 in 2010 due to our lowered equity financing activities in 2011;





·
We had net mineral property maintenance costs of $7,254 in 2011 instead of costs of $8,060 in 2010 due to reimbursement by Teryl Resources Inc. for their portion of the property maintenance costs;





·
Wages and benefits increased slightly from $22,541 in 2010 to $26,750 in 2011 due to our severance pay while we streamline our office operations;





·
Management and director fees increased from $54,700 in 2010 to $61,200 in 2011 and consulting fees increased from $16,542 in 2010 to $32,209, as a result of services provided for our new subsidiary Minewest incorporated in 2011.





In 2010 we recognized a gain of $142,815 on private sale of our holdings of REGI shares when the shares were transferred to the purchasers; in 2011 we recognized the gain of $102,966. The difference is largely due to the fact that we sold fewer REGI shares in 2011 (485,300 shares) than in 2010 (621,725 shares).





We recorded a net gain of $126,404 in 2011 and $6,971 in 2010 on expiration and modification of warrants issued for purchase of our REGI shares, due to the fact that most of the warrants issued in 2010 expired in 2011.





Unrealized gain on our warrants for issued for our REGI shares were recorded at $62,916 in 2010 and $5,872 in 2011, largely because we had fewer such warrants outstanding at the end of 2011 than at theend of 2010.





Fiscal year ended April 30, 2010 compared to fiscal year ended April 30, 2009




For the year ended April 30, 2010, we had a net loss of $454,902 or $0.02 per share, as compared to a net loss of $456,090 or $0.02 per share for the year ended April 30, 2009.  This increase in net loss is mainly due to the increase of research and development fees from $185,955 to $227,402 and foreign exchange loss of $81,608 in 2010 versus foreign exchange gain of $59,268 in 2009 as a result of our advances to REGI denominated in US dollar which weakened against Canadian dollar over the year.  During 2010, we had income tax recovery on Rand’s REGI US shares sold in 2009, while in 2009 we had income tax expense related to the sales.





Mineral property maintenance costs remain at 2009’s $8,060. Director and management fees as reported in the financial statements increased by $4,650 from $50,050 in 2009 to $54,700, because fees of $2,000 for services provided in 2009 is paid and recorded in 2010, and there was no actual change in remuneration from 2009. Staff salaries and wages decreased slightly from $24,313 in 2009 to $22,541 in 2010.





All other expenses, including professional, shareholder communication, travel and promotion all decreased significantly from 2009 due to the reduced operations as a result of the world economy and Company’s continuing effort to streamline its operations.





During 2010 we had gain on sale of REGI US shares of $142,815 compared to $347,099 in 2009 because we sold fewer shares in 2010. In 2010 we had realized net gain of $6,971 on expiration and modification of warrants attached to the private sale of REGI US units in 2009; this gain was absent in 2009. In 2010 we had unrealized gain of $62,916 on warrants issued to private sale of REGI US units as a result of valuation calculations using the Black-Scholes model, compared to $14,815 in 2009.


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  25 -


Fiscal year ended April 30, 2009 compared to fiscal year ended April 30, 2008





For the year ended April 30, 2009, we realized a net loss of $456,090 or $0.02 per share, as compared to net loss of $536,329 or $0.02 per share for the year ended April 30, 2008.  This decrease in net loss is mainly due to the deconsolidation of a subsidiary on April 30, 2008 and the exchange fluctuations as a result of a fluctuating Canadian dollar.  The de-consolidated former subsidiary accounted for as an equity investment resulted in a non-controlling interest decrease from $761,463 to $nil in 2009 and the gain on issue by investee of its own shares decreased from $228,934 in 2008 to $nil in 2009.  The strengthening Canadian dollar resulted in a foreign exchange gain of $59,268 in 2009 versus an exchange loss of $27,313 in 2008.  In addition, net operating expenses decreased as a result of a concentrated attempt to decrease costs in response to the downturn in the investor market.  Stock-based compensation decreased by $156,323 to $90,736 in 2009 compared to $247,059 in 2008.  Wages and benefits decreased by $170,410 to $24,313 in 2009 compared to $194,723 in 2008.  Investors' relations decreased $159,398 to $22,285 in 2009 compared to $181,683 in 2008 due to reduced investor relations activity.  Travel and promotion decreased by $89,047 in 2009 to $29,616 compared to $118,663 in 2008 due to reduced travel and promotional activity.  Advertising and promotion decreased by $47,357 in 2009 to $100,159 compared to $147,516 in 2008 due to reduced promotional activity.  Professional fees decreased by $86,566 in 2009 to $145,407 compared to $231,973 in 2008 due to lower accounting and audit fees incurred. The decrease in net loss for the year ended April 30, 2009 was also offset by gains of $347,099 due to the sale of investee’s shares compared with gains of $261,351 in 2008.







B.
LIQUIDITY AND CAPITAL RESOURCES




Liquidity





Fiscal year ended April 30, 2011





As of April 30, 2011, we had a cash position of $88,684, compared to $364 as at the year ended April 30, 2010, representing a significant increase of $88,320. As at April 30, 2011, we had a working capital of $678,684, compared to a working capital of $219,216 as at April 30, 2010.





During the year ended April 30, 2011, we issued a convertible debenture for $50,000, which bears interest at 8% per annum, payable monthly, is unsecured and due on June 1, 2011. The unpaid amount of principal can be converted at any time at the holder’s option into common shares at a price of $0.20 per share. We had the option to repay the principal and accrued interest before the due date with 30 days advance notice. We repaid principal of $30,000 during February, 2011.





During the year ended April 30, 2011, we issued 1,894,333 common shares for gross proceeds of $272,187.





During the year ended April 30, 2011, we raised $289,200 from sale of our private placement subscriptions and those of our 80% owned subsidiary Minewest.





During the year ended April 30, 2011, we raised $76,466 from sale of our holdings of REGI shares and warrants for purchase of REGI shares from us.





We are owed $865,607 by REGI, includes REGI’s 50% share of recent project costs for the RadMax Engine pursuant to the project cost sharing agreement. REGI currently lacks the liquidity to fund its share of the costs.


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  26 -


Fiscal year ended April 30, 2010





During the year ended April 30, 2010, we financed our operations with $567,503 from the following activities:





·
Private placement for net proceeds of $375,786 after share issuance costs of $22,603;





·
$240,395 from investing activities through the sale of our investee’s shares and warrants in the open market and through private sales, which was reduced by $49,421 advanced to REGI, our equity accounted investee.





Our cash position decreased by $743 from $1,107 at April 30, 2009 to $364 at April 30, 2010.





As at April 30, 2010, we had working capital of $215,870 (2009 - $290,087) of which $585,859 is due from REGI (2009-$536,438).  This receivable relates mainly to project costs as REGI owns the U.S. marketing and intellectual rights and has a project cost sharing agreement, whereby it will fund 50% of the further development of RadMax® Engine and wewill fund 50%.  REGI had US$NIL cash and a US$1,587,723 working capital deficiency at April 30, 2010.





During the year ended April 30, 2010, we used cash in the amount of $567,503 on operating activities as compared to $658,830 for the same period last year resulting in a decrease of $91,327.  This is a result of our incurring less operating expenses during 2010 in comparison to 2009.





On January 26, 2010, we completed a private placement, whereby we issued 1,012,596 units at $0.15 per unit for proceeds of $151,889. Each private placement unit consisted of one common share and share purchase warrant. Each warrant entitles the holder to purchase one additional share of common stock at a price of $0.20 per share for one year.  Finders’ fees of $7,050 were paid in connection with the private placement.





On March 28, 2010, we completed a private placement, whereby we issued 1,643,333 units at $0.15 per unit for proceeds of $246,500. Each private placement unit consisted of one common share and share purchase warrant. Each warrant entitles the holder to purchase one additional share of common stock at a price of $0.20 per share for one year.  Finders’ fees of $12,068 were paid in connection with the private placement, which are included in share issuance costs.





Fiscal year ended April 30, 2009





During the year ended April 30, 2009, we financed our operations and received $659,679 by:





·
share subscriptions received in the amount of $611,815; and





·
$472,730 from investing activities through the sale of our investee’s shares and warrants in the open market offset by advances to the investee and other affiliates of $424,126.





Our cash position increased to $1,107 at April 30, 2009 as compared to $258 at April 30, 2008.  Fiscal
  Year Ended April 30, 2010





On November 9, 2009, Rand sold 238,000 units of REGI shares at US$0.25 per unit consisting one common share of REGI and one share purchase warrant entitling the holder to purchase one additional share of REGI at US$0.35 per share expiring November 9, 2010.  During March, 2010, 163,000 such warrants issued in March, 2009 were exercised at US$0.35 per share of REGI shares for total proceeds of $58,877.





On November 9, 2009, we sold 280,000 units of REGI US shares at $0.25 per unit consisting one common share of REGI and one share purchase warrant entitling the holder to purchase one additional share of REGI at $0.35 per share expiring November 9, 2010.




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  27 -





Capital Resources





We are still in the development stage of our business and expect to continue with research and development activities and mineral exploration activities for the near future. We do not expect to generate significant revenues in the near future and will have to continue to rely upon the sale of equity securities to raise capital or shareholder loans. Fluctuations in our share price may affect our ability to obtain future financing and the rate of dilution to existing shareholders.





We have no funding commitments or arrangements for additional financing at this time and there is no assurance that we will be able to obtain any additional financing on terms acceptable to us, if at all. Any additional funds raised will be used for general and administrative expenses, and to continue with our research and development activities. The quantity of funds to be raised and the terms of any equity financing that may be undertaken will be negotiated by management as opportunities to raise funds arise.





We estimate that we will require approximately $250,000 to fund our general and administrative expenses for the next twelve months. We will also require approximately $250,000 to fund our share of the costs for the RadMax® Engine, being the master design integrator, prototype fabrication and labour expense.  We do not currently have sufficient working capital to carry out our current operations.  In order to continue, we will need to raise funds by way of an equity financing.  The quantity of funds to be raised and the terms of any equity financing that may be undertaken will be negotiated by management as opportunities to raise funds arise.





Since our incorporation, we have financed our operations almost exclusively through the sale of our common shares to investors and by borrowing from related parties. We expect to finance operations through the sale of equity in the foreseeable future as we do not currently generate any revenues from business operations. There is no guarantee that we will be successful in arranging financing on acceptable terms. To a significant extent, our ability to raise capital is affected by trends and uncertainties beyond our control.  Our ability to attain our business objectives may be significantly impaired if the Technology cannot be commercialized.





Our objectives when managing capital are to safeguard our ability to continue as a going concern in order to pursue the development of the Technology and to maintain a flexible capital structure for our projects for the benefit of our stakeholders. As we are not earning any revenues from operations, our principal source of funds is from the issuance of common shares.





US GAAP Reconciliation





Our consolidated financial statements are prepared in accordance with Canadian GAAP.  There are differences between Canadian and U.S. GAAP and such differences are summarized in Note 15 to the audited consolidated financial statements included herein.




C.
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.





The basic research and development work on the RadMax® Engine is being coordinated and funded by our company and REGI 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 $107,700 in fiscal 2011 and $227,402 in fiscal 2010 on research and development.





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  28 -




D.
TREND INFORMATION  See “Item 4. - Information on the Company - Part B., Business Overview”
  E.
OFF-BALANCE SHEET ARRANGEMENTS  There are no known significant off-balance sheet arrangements other than those disclosed in this Form 20-F and in our audited consolidated financial statements for the year ended April 30, 2011.
  F.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS




The following table provides information as of the latest fiscal year end balance sheet date with respect to our known contractual obligations specified below.  We expect to fund these obligations from operating income and equity financing:




Contractual Obligations
Total
Less than 1 year
1-3 years
3-5 years
More than 5 yearsLong-term debt obligations
Nil
Nil
Nil
Nil
NilCapital (Finance) Lease obligations
Nil
Nil
Nil
Nil
NilOperating lease obligations
Nil
Nil
Nil
Nil
NilPurchase Obligations
Nil
Nil
Nil
Nil
NilOther Long-term liabilities reflected on the balance sheet under Canadian GAAP
Nil
Nil
Nil
Nil
NilTotal
Nil
Nil
Nil
Nil
Nil




G.
SAFE HARBOR




All statements, other than statements of historical facts, included in this annual report that address activities, events or developments which we expect or anticipate will or may occur in the future are forward-looking statements. The words "believe", "intend", "expect", "anticipate", "project", "estimate", "predict" and similar expressions are also intended to identify forward-looking statements.





Our estimated or anticipated future results or other non-historical facts are forward-looking and reflect our current perspective of existing trends and information. The statements involve risks and uncertainties that cannot be predicted or quantified, and consequently actual results may differ materially from those expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: the risks associated with outstanding litigation, if any, risks associated with project development; the need for additional financing; operational risks associated with developing and testing an engine; reliance on key personnel; the potential for conflicts of interest among certain officers, directors or promoters with certain other projects; the absence of dividends; currency fluctuations; competition; dilution; the volatility of our common share price and volume; and tax consequences to U.S. Shareholders, and other risks and uncertainties detailed in this report and from time to time in our other SEC filings.





Consequently, all of the forward-looking statements made in this annual report are qualified by these cautionary statements. We cannot assure you that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected effect on us or our business or operations.





Forward-looking statements are subject to a variety of risks and uncertainties in addition to the risks referred to in “Risk Factors” under Item 3.D above.


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ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES  A.
DIRECTORS AND SENIOR MANAGEMENT





As of April 30, 2011, our Board of Directors consisted of four directors, two of whom are independent (or “outside”) non-executive directors. The following table provides certain information about the members of our Board of Directors as of April 30, 2011.





Name

Position with Registrant

Office Held SinceJohn G. Robertson

President, Secretary and Director

1982James Vandeberg *

Chief Financial Officer and Director

2004Susanne Robertson *

Director

1984Robert Grisar *

Director

2008




* Indicates member of the Audit Committee.





The present and principal occupations of our directors and executive officers during the last five years are set forth below:





John G. Robertson, Richmond, B.C.  Since October 1982, Mr. Robertson has been President and a director of our company. He is also the Chairman of the Board, founder and a director of Linux Gold Corp. since its inception.  Mr. Robertson has been the Chairman, President and Chief Executive Officer of REGI, an Oregon corporation traded on the OTCBB, since July 1992, a U.S. public company engaged in the development of a rotary engine/compressor. Mr. Robertson is President and Chief Executive Officer and a director of IAS Energy, Inc. since its formation in December 1994, a U.S. public company which trades on the PinkSheets. Mr. Robertson is also the President and founder of Teryl Resources Corp., a British Columbia company trading on the TSX.V and the OTCBB involved in mineral exploration. Since May 1977, Mr. Robertson has been President and a member of the Board of Directors of SMR Investments Ltd., a private British Columbia corporation engaged in management of public companies. Mr. Robertson is also the President and Director of JGR Petroleum, Inc a private company. Mr. Robertson is a citizen and resident of Canada.





Susanne M. Robertson, Richmond, B.C.  Mrs. Robertson has been a director of our company since 1984 and is also the spouse of John Robertson, our President. She has been active in the management of our company since incorporation.  She is also a director of Linux Gold Corp. and Teryl Resources Corp., and is the principal shareholder of SMR Investments Ltd.  Mrs. Robertson is a citizen and resident of Canada.




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James L. Vandeberg, Sammamish, WA  Mr. Vandeberg has been a director of our company and our Chief Financial Officer since March 2004. Mr. Vandeberg is an attorney in Seattle, Washington. Mr. Vandeberg's practice focuses on the corporate finance area, with an emphasis on securities and acquisitions. Mr. Vandeberg was previously general counsel and secretary of two NYSE companies. He has also been a director of IAS Energy, Inc. since November 1998. He is also a director of REGI.  Mr. Vandeberg is also a director of ASAP Expo Inc. since 2005. He is President and a director of SIN Holdings Inc, an OTCBB company in the oil and gas industry since May, 2010.  He is a member and former director of the American Society of Corporate Secretaries.  He became a member of the Washington Bar Association in 1969 and of the California Bar Association in 1973. Mr. Vandeberg graduated cum laude from the University of Washington with a Bachelor of Arts degree in accounting in 1966, and from New York University School of Law in 1969, where he was a Root-Tilden Scholar.





Robert Grisar, Kirtland, OH  Mr. Grisar was appointed a director of our company in September, 2008. Mr. Grisar has more than 30 years of progressive engineering experience designing and implementing electronic and mechanical systems for the US Department of Defense and related agencies. Mr. Grisar was responsible for the Astrospace design, fabrication, test, and implementation of the thermal protection system for Space Shuttle solid rocket boosters. Most recently, Mr. Grisar directed MILPARTS (Military Parts Reinvention Network), which continues to reinvent, produce, and deliver military system repair and spare parts for legacy defense systems.





The directors have served in their respective capacities since their election and/or appointment and will serve until the next annual meeting of shareholders or until a successor is duly elected, unless the office is vacated in accordance with our Articles.





The Board of Directors appoints senior management who serves at the discretion of the Board of Directors.





Cease Trade Orders





On September 4, 2009, the British Columbia Securities Commission (“BCSC”) issued a cease trade order against us for failure to file our annual audited financial statements and related Management’s Discussion & Analysis (“MD&A”).  We filed the required documents on SEDAR on September 11, 2009, to comply with the requirements to rectify the continuous disclosure deficiencies and the cease trade order was revoked by the BCSC on September 15, 2009.





On September 4, 2009, the BCSC issued a cease trade order against IAS Energy, Inc. (“IAS”), a company with related directors and officers, for failure to file its annual audited financial statements and related MD&A. The cease trade order was revoked on September 16, 2009 following filing of its annual financial statements and related MD&A. On October 2, 2009, a cease trade order was issued by the BCSC against IAS for failure to file its interim unaudited financial statements for the three months ended July 31, 2009.  The cease trade order was revoked on November 30, 2009 following filing of its annual financial statements and related MD&A.  On January 1, 2010, a cease trade order was issued by the BCSC against IAS for failure to file its interim unaudited financial statements for the six months ended October 31, 2009.  The cease trade order was revoked on January 18, 2010 following filing of its interim financial statements and related MD&A.  On September 7, 2010, the BCSC issued a cease trade order against IAS for failure to file its annual audited financial statements and related MD&A. The cease trade order was revoked on October 8, 2010 following filing of its annual financial statements and related MD&A.





On September 9, 2008, the BCSC issued a cease trade order against us for failure to file our annual audited financial statements and related MD&A.  We filed the required documents on SEDAR on September 22, 2008, to comply with the requirements to rectify the continuous disclosure deficiencies and the cease trade order was revoked by the BCSC on September 24, 2008.




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On December 3, 2007, the BCSC issued a cease trade order against Linux Gold Corp. (“Linux”), a company with related directors and officers, for failure to file a technical report and non-compliant disclosure. The BCSC staff found that the technical report filed on SEDAR on February 22, 2006 was not prepared by a qualified person. The BCSC also found that Linux’s disclosure in the offering memorandum dated April 5, 2007 did not disclose repayment of debt to related parties. Linux filed the required documents on SEDAR to comply with the requirements to rectify the continuous disclosure deficiencies and the cease trade order was revoked by the BCSC on February 8, 2008.





Other than the cease trade orders issued against our company, IAS and Linux, to our knowledge, no proposed director is, or has, within the 10 years before the date of this Information Circular, been a director or executive office of any company that, while that person was acting in that capacity:





(a)
was the subject of a cease trade order or similar order or an order that denied relevant company access to any exemptions under securities legislation, for a period of more than 30 consecutive days; or





(b)
was subject to an event that resulted, after the director or executive officer ceased to be a director or executive officers, in the company being the subject of a cease trade or similar order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days; or





(c)
within a year of that person ceasing to act in that capacity, became bankrupt, make a proposal under any legislation relating to bankruptcy or insolvency, or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.





Penalties or Sanctions





No director or officer of our company is or has, within the past ten years:





(a)
been subject to any penalties or sanctions imposed by a court relating to Canadian securities legislation or Canadian securities regulatory authority or has entered into a settlement agreement with a Canadian securities regulatory authority, or





(b)
been subject to any other penalties or sanctions imposed by a court or regulatory body that would be likely to be considered important to a reasonable investor making an investment decision.





Individual Bankruptcies





No director or officer of our company is or has, within the preceding 10 years, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or been subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that individual.





There is a family relationship between two of our directors. John Robertson and Susanne Robertson are spouses.  Please refer to Item 7.B. – Related Party Transactions.





There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management.





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B.
COMPENSATION




During the financial year ended April 30, 2010, we had two Named Executive Officer (“NEO”) being John Robertson, Chief Executive Officer (“CEO”) and President and James Vandeberg, Chief Financial Officer.





“Named Executive Officer” or “NEO” means: (a) each CEO, (b) each CFO, (c) each of the three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than $150,000; and (d) each individual who would be a NEO under (c) above but for the fact that the individual was neither an executive officer of a company, nor acting in a similar capacity, at the end of that financial year.




Compensation Objectives and Principles





The primary goal of our executive compensation program is to attract and retain the key executives necessary for our long term success, to encourage executives to further our development and our operations, and to motivate top quality and experienced executives.  The key elements of our executive compensation program are: (i) base salary; (ii) potential annual incentive award; and (iii) incentive stock options.  Our directors are of the view that all elements of the total program should be considered, rather than any single element.





Compensation Discussion and Analysis





Our executive officers make recommendations to the Board regarding compensation policies and the compensation of senior officers.  We do not have a Compensation Committee. The compensation of the senior executives comprises two components; namely, a base salary or consulting fees and the grant of stock options pursuant to our stock option plan.  . These forms of compensation are chosen to attract, retain and motivate the performance of selected directors, officers, employees or consultants of high caliber and potential. Each senior executive is employed for his or her skills to perform specific tasks and the base salary and number of options is fixed accordingly.





Senior executives generally enter into an employment agreement, with standard clauses covering salaries and termination and change of control provisions. The highlights of the employment agreements for the NEOs are outlined below under the section entitled “Management Contracts” and Narrative Discussionunder the Summary Compensation Table.





Option-based Awards





The grant of option-based awards to the senior executives is determined by the recommendation of executive officers to the Board pursuant to the terms of our stock option plan. Previous grants of option-based awards are taken into account when considering new grants. The options are always granted at market price.





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  33 -


Benefits and Perquisites





Our NEOs do not receive any benefits or perquisites other than as disclosed herein.





Summary Compensation Table





The following table provides a summary of the compensation earned by, paid to, or accrued and payable to, each NEO during the fiscal years ended April, 2010, 2009 and 2008.  Amounts reported in the table below are in Canadian dollars, the currency that we use in our financial statements.





Non-equity incentiveplan compensation($)Name and

Principal

Position
Year

Ended

April 30
Salary

($)
Share-

based

Awards

($)
Option-Based

Awards

($) (6)
Annual

incentive

plans

($)
Long-term

incentive

plans

($)
Pension

value

($)
All other

Compen -

sation

($)(5)
Total

compensation

($)John G.
2010
Nil
Nil
Nil
Nil
Nil
Nil
32,000l
38,000Robertson,
2009
Nil
Nil
31,240(3)
Nil
Nil
Nil
30,000
61,240CEO (1)(2)(3)
2008
Nil
Nil
Nil
Nil
Nil
Nil
30,688
30,688James
2010
Nil
Nil
Nil
Nil
Nil
Nil
Nil
NilVandeberg,
2009
Nil
Nil
15,620
Nil
Nil
Nil
Nil
15,620CFO (4)
2008
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil




(1)
Mr. Robertson is also a director and receives annual compensation of $6,000 in that capacity.


(2)
Mr. Robertson is a director of SMR Investments Ltd., which received or is to receive $2,500 per month for management services. See “Management Contracts”.


(3)
Mr. Robertson’s option-based awards granted during 2009 consisted of 100,000 stock options expiring on August 1 2013, at an exercise price of CDN$0.40 and fair value of CDN$0.3124 per share.


(4)
Mr. Vandeberg is also a director but does not receive any compensation in that capacity. Mr. Vandeberg’s option-based awards granted during 2009 consisted of 50,000 stock options expiring on August 1, 2013, at an exercise price of CDN$0.40 and fair value ofCDN$0.3124 per share.


(5)
The valuation of the fair value of the options at the time of the grant is based on the Black Scholes model and includes the following assumptions; weighted average risk free rate, weighted average expected life, expected volatility and dividend yield.





Employment Contracts and Termination of Employment





There are no employment agreements or other compensating plans or arrangements with regard to any of the NEOs which provide for specific compensation in the event of resignation, retirement, other termination of employment or from a change of control of our company or from a change in an NEO’s responsibilities following a change in control.





Pursuant to a management agreement dated May 1, 1996, we engaged SMR Investments Ltd. (“SMR”) to provide services to us. SMR is a private company controlled by Susanne Robertson, a director and the spouse of our President. Our President is also a director and officer of SMR.  SMR provides management services for a monthly fee of $2,500. These services consist of general management services. The agreement may be terminated by the mutual consent of the parties. During the years ended April 30, 2010 and 2009, we paid or accrued to SMR the sum of $32,000 and $30,000 respectively.





During the year ended April 30, 2010, $Nil (2009 - $5,431) in professional fees were incurred with a law firm of which Mr. Vandeberg, an NEO, officer and director, is a partner.





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  34 -


Incentive Plan Awards





Outstanding Option-Based Awards and Share-Based Awards





The following table sets out all stock option-based awards granted to the NEOs and outstanding at the end of the most recently completed financial year ended April 30, 2010.





Option-based Awards
Stock-based AwardsName
Number of

securities

underlying

unexercised

options

(#)
Option

exercise

price

($)
Option expiration

date
Value of

unexercised in

-the-money

options

($)
Number of

shares or units

of shares that

have not vested

(#)
Market or payout

value of share-

based awards that

have not vested

($)John Robertson
750,000

100,000
0.30

0.40
October 20, 2010

August 1, 2013
Nil

Nil
187,000

25,000
Nil

NilJames Vandeberg
50,000
0.40
August 1, 2013
Nil
12,500
Nil





(1)      The closing price of our shares on the TSX Venture Exchange (“TSX.V”) on June 30, 2011 was $0.15.





Incentive Plan Awards – value vested or earned during the year





Name
Option-Based Awards – Value

Vested During the Year

($)
Share-Based Awards – Value

Vested During the Year

($)
Non-Equity Incentive Plan

Compensation – Value Earned

During the Year

($)John Robertson
Nil
Nil
NilJames Vandeberg
Nil
Nil
Nil





Pension Plan Benefits and Deferred Compensation Plans





We do not offer any pension plan benefits or deferred compensation plans for our NEOs or employees.





Termination of Employment or Change of Control





We have no plans or arrangements with respect to remuneration received or that may be received by the NEOs during our most recently completed financial year or current financial year in view of compensating such officers in the event of termination of employment (as a result of resignation, retirement, change of control, etc.) or a change in responsibilities following a change of control.





Director Compensation





For our most recently completed fiscal year ended April 30, 2010:





(a)
no compensation of any kind was accrued, owing or paid to any of our directors for acting in their capacity as such, except for John Robertson, who receives annual compensation of $6,000;





(b)
no arrangements of any kind existed with respect to the payment of compensation of any kind to any of our directors for acting in their capacity as such;





(c)
excluding our NEOs, no compensation of any kind was accrued, owing or paid to any of the directors for services rendered to us as consultants or experts, except for research and developments costs of $Nil (2009 - $38,465) that were paid to a company of which Mr. Robert Grisar is a director and officer; and





(d)
excluding our NEOs, no arrangements of any kind existed with respect to the payment of compensation of any kind to any of our directors for services rendered, or proposed to be rendered, to us as consultants or experts.





-
  35 -





Outstanding Share-Based Awards and Option-Based Awards





The following table sets out all stock option-based awards granted to the directors that were outstanding at the end of the most recently completed financial year ended April 30, 2010.





Option-based Awards
Stock-based AwardsName
Number of

securities

underlying

unexercised

options

(#)
Option

exercise

price

($)
Option

expiration date
Value of

unexercised in-

the-money

options

($)
Number of shares or

units of shares that

have not vested

(#)
Market or payout value

of share-based awards

that have not vested

($)Susanne Robertson
250,000
0.21
April 22, 2014
Nil
62,500
NilJennifer Lorette
50,000

75,000
0.40

0.21
August 1, 2013

April 22, 2014
Nil

Nil
12,500

18,750
Nil

NilRobert Grisar
Nil
Nil
Nil
Nil
Nil
Nil


(1)       The closing price of our common shares on the TSX.V on April 30, 2010 was $0.185





Incentive Plan Awards – Value Vested or Earned During the Year





The following table sets out the value vested or earned by our non-executive directors during the financial year ended April 30, 2010.





Name

(a)
Option-Based Awards – Value

Vested During the Year

($)

(b)
Share-Based Awards – Value

Vested During the Year

($)

(c)
Non-Equity Incentive Plan

Compensation – Value Earned

During the Year

($)

(d)Susanne Robertson
Nil
Nil
NilJennifer Lorette
Nil
Nil
NilRobert Grisar
Nil
Nil
Nil





Indebtedness of Directors and Officers





None of our directors and senior officers, proposed nominees for election or associates of such persons is or has been indebted to us or our subsidiaries, other than routine indebtedness, at any time since the beginning of our the last completed financial year.




C.
BOARD PRACTICES





Under section 224 of the Business Corporations Act,S.B.C. 2002, c. 57, the directors of a company must, at their first meeting on or after each annual reference date, elect an audit committee, to hold office until the next annual reference date. The audit committee must be composed of at least three directors, and a majority of the members of the committee must not be officers or employees of the company or of an affiliate of the company. The members must elect a chair from among their number and determine their own procedures.  The auditor of a company must be given reasonable notice of, and has the right to appear before and to be heard at each meeting of the company’s audit committee and must appear before the audit committee when request to do so by the committee and after being given reasonable notice to do so. Our Board of Directors established an Audit Committee, which members consist of James Vandeberg, Susanne Robertson and Robert Grisar.





The directors are elected by the shareholders to hold office for a term of one year or until re-elected at the next annual general meeting.




-
  36 -





Audit Committee





As of the date of this annual report, the members of our Audit Committee are James Vandeberg, Susanne Robertson and Robert Grisar.  Mrs. Robertson and Mr. Grisar are independent directors who are not officers or employees of our company or our affiliates.  Mr. Vandeberg is our Chief Financial Officer.





The Audit Committee must review our annual financial statements before they are approved by our Board of Directors.  Our Board of Directors must review, and if considered appropriate, approve our annual financial statements before presentation to our shareholders.




D.
EMPLOYEES  As of April 30, 2011, we did not have any employees. Our legal, accounting, marketing and administrative functions are, and have been during the last three fiscal years, contracted out to consultants who work closely with our management.
 We have no employees; as such, no directors of officers belong to any labor unions.  We have not been subject to any strikes or other labor disturbances that have interfered with our operations.
  E.
SHARE OWNERSHIP




The following table sets forth the ownership of our common shares by our directors and officers as at October 24, 2011:





Shareholder

Number of shares issued and outstanding

Percentage ownership (1)John G. Robertson (2)

4,157,183

12.49%Susanne Robertson (3)

5,317,628

16.00%James Vandeberg

37,500

--Robert Grisar

Nil

Nil




(1)
As at October 24, 2011 there were 32,985,840issued and outstanding common shares. For detailed information about the stock options held, if any, please see “Statement of Executive Compensation” above.


(2)
Includes 1,553,769 common shares held directly by Mr. Robertson. 1,118,530 shares are registered in the name of and beneficially owned by Access Information Services, Inc., a Washington corporation which is owned and controlled by the Robertson Family Trust, the beneficiary of which is Kelly Robertson, daughter of John G. Robertson.  Mr. Robertson is one of three trustees of the Robertson Family Trust, which acts by the majority vote of the three trustees. Mr. Robertson disclaims beneficial ownership of the shares owned or controlled by the Robertson Family Trust.  This amount also includes 506,200 common shares registered in the name of Rainbow Networks Inc., a British Columbia company controlled by Mr. Robertson, who is sole director, president and secretary. Mr. Robertson disclaims beneficial ownership of the shares owned or controlled by Rainbow Networks.   This amount also includes 1, 392,905 shares held by JGR Petroleum Inc., a corporation controlled by the Robertson Family Trust.   It also includes 100,000 stock options and 100,000 warrants registered in the name of JGR Petroleum Inc. and 100,000 warrants registered in the name of Rainbow Networks Ltd.


(3)
Includes 639,975 held directly by Mrs. Robertson.  SMR Investments Ltd., a company wholly-owned by Susanne Robertson, is the beneficial owner of 4,427,753 common shares. This amount also includes 250,000 stock options.




ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  A.
MAJOR SHAREHOLDERS.





To the best of our knowledge, we are not indirectly owned or controlled by any other corporation, foreign government or by any other natural or legal person, except as set out below.





-
  37 -





At October 24, 2011, we are aware of two shareholders who own 5% or greater of our voting shares.





Name of Shareholder
Number of Common Shares
Percentage of Outstanding Common Shares (1)Susanne Robertson (1)
4,157,183
12.49%John Robertson (2)
5,317,628
16.00%




(1)
As at October 24, 2011 there were 32,985,840issued and outstanding common shares. For detailed information about the stock options held, if any, please see “Statement of Executive Compensation” above.


(2)
Includes 639,975 held directly by Mrs. Robertson.  SMR Investments Ltd., a company wholly-owned by Susanne Robertson, is the beneficial owner of 4,427,753 common shares. This amount also includes 250,000 stock options.


(3)
Includes 1,553,769 common shares held directly by Mr. Robertson. 1,118,530 shares are registered in the name of and beneficially owned by Access Information Services, Inc., a Washington corporation which is owned and controlled by the Robertson Family Trust, the beneficiary of which is Kelly Robertson, daughter of John G. Robertson.  Mr. Robertson is one of three trustees of the Robertson Family Trust, which acts by the majority vote of the three trustees. Mr. Robertson disclaims beneficial ownership of the shares owned or controlled by the Robertson Family Trust.  This amount also includes 506,200 common shares registered in the name of Rainbow Networks Inc., a British Columbia company controlled by Mr. Robertson, who is sole director, president and secretary. Mr. Robertson disclaims beneficial ownership of the shares owned or controlled by Rainbow Networks.   This amount also includes 1, 392,905 shares held by JGR Petroleum Inc., a corporation controlled by the Robertson Family Trust.   It also includes 100,000 stock options and 100,000 warrants registered in the name of JGR Petroleum Inc. and 100,000 warrants registered in the name of Rainbow Networks Ltd.





Over the past three years, there has not been a significant change in the percentage ownership held by any major shareholder.





Canadian Share Ownership.





As of October 24, 2011, our shareholders list showed32,985,840common shares outstanding with 513 registered shareholders.  The direct and indirect holding by depository institutions and other financial institutions is estimated as 435 holders of record resident in Canada, holding an aggregate of 21,236,224 common shares; and 440 holders of record resident in the United States, holding an aggregate of 4,151,390 common shares.





Control of the Company





We are a publicly owned Canadian corporation, with shareholders in Canada, the United States and other foreign jurisdictions. We are not controlled by any foreign government or other person.





We do not know of any arrangements which could result in a change in control of our company.




B.
RELATED PARTY TRANSACTIONS.





During the years ended April 30, 2011 and 2010, we entered into the following transactions with and had the following balances owed by or to related parties:




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  38 -





·
At April 30, 2011, we are owed an aggregate of $8,490 (2010 - $28,455) by related parties and owed an aggregate of $218,878 (2010 - $146,741) to related parties. The amounts owed are unsecured, non-interest bearing and due on demand. These parties are companies that our President controls or significantly influences.





·
During the year ended April 30, 2011, rent of $15,680 (2010 - $10,181) incurred with a company that our President controls.





·
During the year ended April 30, 2011, management fees of $30,000 (2010 - $32,500) were incurred to a company of which our President is a director.





·
During the year ended April 30, 2011, research and development costs of $75,000 (2010 - $63,300) were paid to a company controlled by Mr. Robert Grisar, a director of our company.





·
During the year ended April 30, 2011, management and directors’ fees of $31,200 (2010 - $22,200) were paid to officers, directors and companies controlled by officers and directors for services rendered.





These transactions are in the normal course of operations and are measured at the exchange amount of consideration established and agreed to by all the related parties.  Amounts due from and to related parties are unsecured, non-interest bearing and due on demand





During the fiscal year ended April 30, 2011 there was no material direct or indirect interest by our directors and officers, any shareholder who beneficially owns more than 10% of our common shares, or any known associate or affiliate of these persons in any transactions or proposed transaction which has or would materially affect  us.


At no time during the fiscal year ended April 30, 2011 has any director, senior officer, proposed nominee for election, nor any associate of such persons been indebted to us or our subsidiaries, other than routine indebtedness. Refer to Note 8 of the financial statements for the years ended April 30, 2011 and 2010.




C.
INTERESTS OF EXPERTS AND COUNSEL  Not applicable.
  ITEM 8.
FINANCIAL INFORMATION  A.
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION




Financial Statements





Description
PageConsolidated Financial Statements for the years ended

April 30, 2011, 2010 and 2009
F-1 -  F-28




-
  39 -





Legal Proceedings





We are not a party to any material legal proceedings.





Dividend Distribution Policy





We have not paid any cash dividends to date and we do not intend to pay cash dividends in the foreseeable future.




B.
SIGNIFICANT CHANGES  None.
  ITEM 9.
THE OFFER AND LISTING




Not applicable, except for Item 9.A.4 and Item 9.C.





Our shares currently trade on the TSX.V under the trading symbol RRE.V.  In addition, we also trade on the OTCBB under the symbol REGRF.OB.  The ranges of the low and high sales prices for our shares traded on the TSX.v and OTCBB for the periods indicated are as follows:





TSX.V
OTC BB (1)High
Low
High
LowCDN $
CDN $
US $
US $Quarter Ended


High-Bid*
Low-Bid*2011July 31, 2010
0.185
0.13
0.18
0.12October 31, 2010
0.19
0.125
0.19
0.11January 31, 2011
0.19
0.11
0.19
0.11April 30, 2011
0.185
0.14
0.20
0.14





TSX.V
OTC BB (1)High
Low
High
LowCDN $
CDN $
US $
US $Quarter Ended


High-Bid*
Low-Bid*2010July 31, 2009
0.27
0.18
0.27
0.12October 31, 2009
0.30
0.17
0.24
0.15January 31, 2010
0.21
0.15
0.20
0.14April 30, 2010
0.26
0.13
0.25
0.132009July 31, 2008
0.57
0.39
0.57
0.36October 31, 2008
0.47
0.14
0.38
0.12January 31, 2009
0.32
0.09
0.25
0.09April 30, 2009
0.35
0.18
0.28
0.13




(1)
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 closing prices of our stock traded on the TSX.V and the OTCBB during the most recent six months, for each month as follows:




-
  40 -




TSX.V
OTC BB (1)High
Low
High
LowCDN $
CDN $
US $
US $High-Bid*
Low-Bid*Month (2011)September
0.175
0.12
0.18
0.12August
0.19
0.15
0.19
0.14July
0.175
0.145
0.20
0.15June
0.185
0.14
0.20
0.15May
0.19
0.155
0.21
0.15April
0.185
0.16
0.20
0.16




(1)
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.)





As a foreign private issuer, our officers, directors and ten percent beneficial owners we will not be subject to the reporting obligations of the proxy rules of the Section 14 of the Exchange Act or the insider short-swing profit rules of Section 16 of the Exchange Act.




Common Share Description








Our authorized capital consists of 65,000,000 shares consisting of 50,000,000 common shares without par value, 10,000,000 preferred shares with a par value of $1.00 per share and 5,000,000 Class "A" non-voting shares without par value.  Of the 50,000,000 common shares without par value, 30,725,118 shares were issued and outstanding as of April 30, 2011 and 28,587,278 are outstanding as at August 24, 2010. There are no Preferred or Class "A" Shares currently outstanding. All the Issuer's outstanding shares are Common Shares. They are not subject to any future call or assessment and they all have equal voting rights. There are no special rights or restrictions of any nature attached to any of the shares and they all rank equally, as to all benefits that might accrue to the holder thereof.





Holders of common shares are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders. Holders of common shares are entitled to receive such dividends as may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available therefore.





Upon our liquidation, dissolution or winding up, holders of common shares are entitled to receive pro rata our assets, if any, remaining after payments of all debts and liabilities.





No shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds.





Provisions as to the modification, amendment or variation of such shareholder rights or provisions are contained in the Business Corporations Act (British Columbia). Unless the Act or our Articles otherwise provide, any action to be taken by a resolution of the shareholders may be taken by an ordinary resolution, being approved by a vote of a majority of the votes cast in respect of the matter at the shareholders’ meeting.





There are no restrictions on the repurchase or redemption of our common shares while there is any arrearage in the payment of dividends or sinking fund installments.





-
  41 -




ITEM 10.
ADDITIONAL INFORMATION  A.
SHARE CAPITAL  Not applicable.
  B.
MEMORANDUM AND ARTICLES OF ASSOCIATION





Our Memorandum and Articles are incorporated by reference to the information in our registration statement on Form 20-F filed with the Securities and Exchange Commission, in Washington, D.C. on June 15, 1994, to which our Articles of Incorporation and Memorandum were filed as exhibits.





We were originally incorporated on October 6, 1982 as Reg Resources Corp. under a perpetual charter pursuant to the British Columbia Business Corporations Act (formerly the Company Act) by registration of our Memorandum and Articles. On February 23, 1993 we changed our name to Reg Technologies Inc. in order to better reflect our main area of business development. We did not consolidate our shares at the time our name was changed.




C.
MATERIAL CONTRACTS  During the past two years ended April 30, 2011 and April 30, 2010, we were not subject to or entered into any material contracts.
  D.
EXCHANGE CONTROLS





There are no governmental laws, decrees or regulations in Canada relating to restrictions on the export of capital affecting the remittance of interest, dividends or other payments to nonresident holders of the Registrant's shares. Any such remittances, however, are subject to withholding tax.  See Item 7, "Taxation".





There are no limitations under the laws of Canada, the Province of British Columbia or in the charter or any other constituent documents of our company on the right of foreigners to hold or vote our shares. However, under the provisions of the Investment Canada Act, when control of a Canadian business is acquired by a non- Canadian, the transaction may be reviewable in certain circumstances by Investment Canada, an agency of the federal government of Canada. Reviewable transactions are those in which a non-Canadian acquires the assets of a Canadian business or the voting shares of a Canadian corporation the value of which assets or shares exceeds $5 million (Canadian). Also, certain transactions are specifically exempted from review.





-
  42 -




E
TAXATION




Certain Canadian Federal Income Tax Consequences





The discussion under this heading summarizes the principal Canadian federal income tax consequences of acquiring, holding and disposing of shares of our common stock for a shareholder of ours who is not a resident of Canada but is a resident of the U.S. and who will acquire and hold our common shares as capital property for the purposes of the Income Tax Act(Canada) (the “Canadian Tax Act”). This summary does not apply to a shareholder who carries on business in Canada through a “permanent establishment” situated in Canada or performs independent personal services in Canada through a fixed base in Canada if the shareholder’s holding in Reg Technologies Inc. is effectively connected with such permanent establishment or fixed base. This summary is based on the provisions of the Canadian Tax Act and the regulations thereunder and on an understanding of the administrative practices of Canada Revenue Agency, and takes into account all specific proposals to amend the Canadian Tax Act or regulations made by the Minister of Finance of Canada as of the date hereof. It has been assumed that there will be no other relevant amendment of any governing law although no assurance can be given in this respect. This discussion is general only and is not, nor is it intended to provide a detailed analysis of the income tax implications of any particular shareholder’s interest. Investors are advised to obtain independent advice from a shareholder’s own Canadian and U.S. tax advisors with respect to income tax implications pertinent to their particular circumstances. The provisions of the Canadian Tax Act are subject to income tax treaties to which Canada is a party, including the Canada-United States Income Tax Convention(1980), as amended (the “Convention”).





Dividends on Common Shares and Other Income





Under the Canadian Tax Act, a non-resident of Canada is generally subject to Canadian withholding tax at the rate of 25 percent on dividends paid or deemed to have been paid to him or her by a corporation resident in Canada. We are responsible for withholding of tax at the source. The Convention limits the rate to 15 percent if the shareholder is a resident of the U.S. and the dividends are beneficially owned by and paid to such shareholder, and to 5 percent if the shareholder is also a corporation that beneficially owns at least 10 percent of the voting stock of the payor corporation.





The amount of a stock dividend (for tax purposes) would generally be equal to the amount by which the paid up or our stated capital had increased by reason of the payment of such dividend. We will furnish additional tax information to our shareholders in the event of such a dividend. Interest paid or deemed to be paid on our debt securities held by non-Canadian residents may also be subject to Canadian withholding tax, depending upon the terms and provisions of such securities and any applicable tax treaty.





The Convention generally exempts from Canadian income tax dividends paid to a religious, scientific, literary, educational or charitable organization or to an organization constituted and operated exclusively to administer a pension, retirement or employee benefit fund or plan, if the organization is a resident of the U.S. and is exempt from income tax under the laws of the U.S.





Dispositions of Common Shares





Under the Canadian Tax Act, a taxpayer’s capital gain or capital loss from a disposition of a share of our common stock is the amount, if any, by which his or her proceeds of disposition exceed (or are exceeded by, respectively) the aggregate of his or her adjusted cost base of the share and reasonable expenses of disposition. The capital gain or loss must be computed in Canadian currency using a weighted average adjusted cost base for identical properties. The capital gains net of losses included in income are as follows. For gains net of losses realized before February 28, 2000, as to 75%. For gains net of losses realized after February 27, 2000 and before October 18, 2000, as to 66 2/3%. For gains net of losses realized after October 17, 2000, as to 50%. There are special transitional rules to apply capital losses against capital gains that arose in different periods. The amount by which a shareholder’s capital loss exceeds the capital gain in a year may be deducted from a capital gain realized by the shareholder in the three previous years or any subsequent year, subject to certain restrictions in the case of a corporate shareholder.




-
  43 -




Under the Canadian Tax Act, a non-resident of Canada is subject to Canadian tax on taxable capital gains, and may deduct allowable capital losses, realized on a disposition of “taxable Canadian property.” Shares of our common stock will constitute taxable Canadian property of a shareholder at a particular time if the shareholder used the shares in carrying on business in Canada, or if at any time in the five years immediately preceding the disposition 25% or more of the issued shares of any class or series in our capital stock belonged to one or more persons in a group comprising the shareholder and persons with whom the shareholder and persons with whom the shareholder did not deal at arm’s length and in certain other circumstances.





The Convention relieves U.S. residents from liability for Canadian tax on capital gains derived on a disposition of shares unless:





(a)
the value of the shares is derived principally from “real property” in Canada, including the right to explore for or exploit natural resources and rights to amounts computed by reference to production;





(b)
the shareholder was resident in Canada for 120 months during any period of 20 consecutive years preceding, and at any time during the 10 years immediately preceding, the disposition and the shares were owned by him when he or she ceased to be resident in Canada; or





(c)
the shares formed part of the business property of a “permanent establishment” that the holder has or had in Canada within the 12 months preceding the disposition.




F.
DIVIDENDS AND PAYING AGENTS  Not applicable.
  G.
STATEMENT BY EXPERTS





Our financial statements included in this Annual Report for the year ended April 30, 2011 and April 30, 2010 were audited by ACAL Group, Chartered Accountants; as stated in their report appearing herein (which report expresses an unqualified opinion), and are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.




H.
DOCUMENTS ON DISPLAY




Material contracts and publicly available corporate records may be viewed at our head office located at Suite 240, 11780 Hammersmith Way, Richmond, British Columbia.





We filed a registration statement on Form 20-F filed the Securities and Exchange Commission in Washington, D.C. (Registration No. 000-30084) on June 15, 1994, which became effective August 15, 1994. The Registration Statement contains exhibits and schedules. Any statement in this annual report about any of our contracts or other documents is not necessarily complete.  If the contract or document is filed as an exhibit to the Registration Statement, the contract or document is deemed to modify the description contained in this annual report. You must review the exhibits themselves for a complete description of the contract or documents.





We file annual reports and furnish 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).  We also file information with the Canadian Securities Administrators via SEDAR (www.sedar.com).  Our website is www.regtech.com.




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  44 -




I.
SUBSIDIARY INFORMATION




We own an 80% interest in Minewest Silver and Gold Inc., a private British Columbia company, and a 51% interest in Rand Energy Group Inc., which owns a 2.2% interest in REGI.  We also own a 9.55% interest in REGI.




ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  We are a smaller reporting company as defined in Rule 405 of the Securities Act, and Rule 12b-2 of the Exchange Act and therefore need not provide the information requested by this item.
  ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES





Not applicable.





PART II




ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELIQUENCIES




None.





ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS




A.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS  None.
  B.
USE OF PROCEEDS





Not applicable




ITEM 15.
CONTROLS AND PROCEDURES




Disclosure Controls and Procedures





We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow for timely decisions regarding required disclosure. As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive and financial officers, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report.





Based on the foregoing, our principal executive and financial officers concluded that our disclosure controls and procedures are not effective to ensure the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed and reported properly within the time periods specified in the SEC’s rules and forms.




-
  45 -





Our management and board of directors strive to remedy the deficiencies by thoroughly reviewing the requirements for filings and the contents of the filings. In addition, we will consult accounting and legal experts on disclosure requirements, and engage them for extensive reviews prior to our filings with the SEC.





Management’s Report on Internal Control Over Financial Reporting





Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:





·
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;





·
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and





·
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.





Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.





Our management, including our principal executive officer and principal financial officer, has used the framework set forth in the report entitled Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission to conduct an evaluation of the effectiveness of our internal control over financial reporting. Based on its evaluation, our management concluded that our internal control over financial reporting was not effective because certain deficiencies involving internal controls constituted a material weakness. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.





We concluded that our internal control over financial reporting was not effective as at April 30, 2011 due to inadequate segregation of duties and ineffective risk assessment. Once we have adequate funding in place, we plan to commence a process to enhance and improve the design of our internal controls over financial reporting. We intend to remediate the material weakness identified above. To remediate such weakness, we plan to appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management, and adopt sufficient written policies and procedures for accounting and financial reporting. These remediation efforts are largely dependent upon securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected.





-
  46 -





Notwithstanding the foregoing, all internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





Attestation Report on Internal Control Over Financial Reporting





This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.





Changes in Internal Control Over Financial Reporting





During the fiscal year ended April 30, 2011, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.




ITEM 16.
[RESERVED]ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT





Committees of the Board and Financial Expert





Audit Committee





Our Board of Directors has only one committee, being the Audit Committee. Our Audit Committee assists the Board in fulfilling its responsibilities relating to our corporate accounting and reporting practices. The Audit Committee is responsible for ensuring that management has established appropriate processes for monitoring our systems and procedures for financial reporting and controls, reviewing all financial information in disclosure documents; monitoring the performance and fees and expenses of our external auditors and recommending external auditors for appointment by shareholders. The Audit Committee is also responsible for reviewing our annual financial statements prior to approval by the Board and release to the public.   Our audit committee is comprised of three directors of the Company - Susanne Robertson, James Vandeberg and Robert Grisar.





Mr. Vandeberg is not “independent” as he is an officer. Mrs. Robertson and Mr. Grisar are “independent” in that they are free from any interest and any business or other relationship which could or could reasonably be perceived to, materially interfere with their ability to act in our best interests, other than an interest or relationship arising from ownership of our shares. All of the audit committee members are “financially literate”.





Since the commencement of our most recently completed financial year, our Board of Directors has not failed to adopt a recommendation of the audit committee to nominate or compensate an external auditor.





The audit committee has adopted specific policies and procedures for the engagement of non-audit services. The engagement of non-audit services is considered by our audit committee, and where applicable the Board of Directors, on a case-by-case basis.




-
  47 -




Audit Committee Financial Expert





The Board of directors has determined that it does not have a member that qualifies as an “audit committee financial expert” as defined in Form 20-F of the U.S. Securities and Exchange Commission.





We have been unable to retain the services of a person who qualifies as an “audit committee financial expert”. Until we appoint such a person, we believe that the members of our Board of Directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.





Moreover, the audit committee is comprised of seasoned business professionals, whereby two members have many years of experience in the investment business and are board members of several corporations.





On this basis, we believe that the audit committee has adequate resources available to it when financial expertise and advice are necessary.




ITEM 16B.
CODE OF ETHICS





Code of Ethics





Our Board of Directors’ is committed to encouraging and promoting a culture of ethical business conduct and integrity throughout our company. In order to achieve this objective, efforts are made to the implementation, monitoring and enforcement of our Code of Ethics (“Code”). This is accomplished by: (a) taking prompt action against violations of the Code; ensuring employees and consultants are aware that they may discuss their concerns with their supervisor or directly to the Compliance Officer; the Compliance Officer reporting suspected fraud or securities law violations for review by the Audit Committee and reporting same to the Board of Directors. We distribute to each new director, officer, employee and consultant our Code.





No waivers of any provision of this Code of Ethics may be made except by the Board of Directors.  Any waiver or amendment shall be reported as required by law or regulation.  There have been no waivers of the Code since its implementation.





A copy of the Code is available from us on written request, and the text of the code of business conduct and ethics is attached as an exhibit hereto and posted on our website at www.regtech.com.





Assessments





The Board of Directors is ultimately responsible for our stewardship, which means that it oversees the day-to-day management delegated to the President and Chief Executive Officer and our other officers. The Board is charged with the responsibility of assessing the effectiveness of itself, its committee(s) and the contributions of individual directors.





The Nominating and Corporate Governance Committee Charter was constituted by the Board of Directors to assist the Board and its officers, employees, and consultants to fulfill fundamental issues including: (a) the regular assessment of our approach to corporate governance issues; (b) ensuring that such approach supports our effective functioning with a view to the best interests of our shareholders and effective communication between the Board of Directors and management; and (c) the process, structure and effective system of accountability by management to the board of directors and by the board to the shareholders, in accordance with applicable laws, regulations and industry standards for good governance practices.  A copy of the Nominating and Corporate Governance Committee Charter is available on our website at www.regtech.com.





Additionally, directors and officers are subject to the laws of the Province of British Columbia, Canada, whereby they are required to act honestly, in good faith and in our best interests.




-
  48 -




ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES





The following table discloses accounting fees and services of the Registrant:





Type of Services Rendered
2011

Fiscal Year

(CAD$)
2010

Fiscal Year

(CAD$)(a)
Audit Fees
18,000
22,000(b)
  Audit-Related
  Fees
0
0(c)
  Tax Fees
1,000
3,000(d)
  All Other Fees
0
0





Our Audit Committee pre-approved all non-audit services (audit-related services, tax services, and all other services) provided to usprior to the commencement of the services.





In the table above, and the disclosure below, “audit fees” are fees billed by our external auditor for services provided in auditing our annual financial statements for the subject year. “Audit-related fees” are fees not included in audit fees that are billed by the auditor for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. “Tax fees” are fees billed by the auditor for professional services rendered for tax compliance, tax advice and tax planning. “All other fees” are fees billed by the auditor for products and services not included in the foregoing categories.




ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES




No disclosure required.





ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS





No disclosure required.




ITEM 16F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT  Not applicable.
  ITEM 16G.
CORPORATE GOVERNANCE  Not applicable.
  -
  49 -





PART III




ITEM 17.
FINANCIAL STATEMENTS  We have elected to provide financial statements pursuant to Item 18.
  ITEM 18.
FINANCIAL STATEMENTS





PageAudited Financial Statements for the Years

Ended April 30, 2011, 2010 and 2009
F-1 – F-27





Our consolidated financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP).





The consolidated financial statements, together with the report of ACAL Group, Chartered Accountants, on the annual consolidated financial statements referred to below, are filed as part of this annual report, and are included immediately following this text and include:





Report of Registered Public Accounting Firm dated August 29, 2011 of ACAL Group, Chartered Accountants


Consolidated Balance Sheets as at April 30, 2011 and April 30, 2010


Consolidated Statements of Operations and Comprehensive Loss as at April 30, 2011, April 30, 2010 and April 30, 2009


Consolidated Statements of Cash Flows as at April 30, 2011, April 30, 2010 and April 30, 2009


Consolidated Statements of Stockholders’ Equity as at April 30, 2008 to April 30, 2011


Notes to the Consolidated Financial Statements as at April 30, 2011, April 30, 2010 and April 30, 2009




-
  50 -


Reg Technologies Inc.


(A Development Stage Company)





Consolidated Financial Statements


(Expressed in Canadian Dollars)


April 30, 2011





F-1










SUITE 18501066 WEST HASTINGS STREET
ACAL GROUPVANCOUVER, BC V6E 3X2
CHARTEREDACCOUNTANTSPCAOB & CPAB RegistrantT: 604.683.3850F: 604.688.8479





INDEPENDENT AUDITORS’ REPORT




To:
the Shareholders ofReg Technologies Inc.




We have audited the accompanying consolidated financial statements of Reg Technologies Inc. (“the Company”), which comprise the consolidated balance sheets as at April 30, 2011 and 2010, and the consolidated statements of loss, comprehensive loss and deficit and cash flows and shareholders’ equity for the years then ended, and a summary of significant accounting policies and other explanatory information.





Management’s Responsibility for the Financial Statements


Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.





Auditors’ Responsibility


Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.





An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation  of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.





We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.





Opinion


In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Reg Technologies Inc. as at April 30, 2011 and 2010, and the result of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.





Emphasis of Matter


Without qualifying our opinion, we draw attention to Note 1 in the consolidated financial statements which indicates that the Company incurred a net loss of $246,000 during the year ended April 30, 2011 and, as of that date, had an accumulated deficit of $21,625,225, since inception. These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.





Other Matter


The consolidated financial statements of the Company for the year ended April 30, 2009, were audited by another auditor who expressed an unmodified opinion on those statements on August 24, 2009.





“ACAL Group”


Chartered Accountants








Vancouver, British Columbia


August 29, 2011





F-2





COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA – U.S. REPORTING CONFLICT





In  the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by significant uncertainties and contingencies such as those referred to in note 1 to these consolidated financial statements.  Although we conducted our audit in accordance with both Canadian GAAS and the standards of the PCAOB, our report to the shareholders dated August 29, 2011 is expressed in accordance with Canadian reporting standards which do not require a reference to such matters when the uncertainties are adequately disclosed in the consolidated financial statements.





“ACAL Group”


Chartered Accountants





Vancouver, British Columbia


August 29, 2011




F-3
 [report001.jpg]  AUDITORS REPORT  To the Shareholders of Reg Technologies Inc.,  We have audited the consolidated statements of loss and comprehensive loss, cash flows and shareholders equity of Reg Technologies Inc. for the year ended April 30, 2009.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.  We conducted our audit in accordance with Canadian generally accepted auditing standards.  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  In our opinion, these consolidated financial statements present fairly, in all material respects, the results of the Companys operations and its cash flows for the year ended April 30, 2009 in accordance with Canadian generally accepted accounting principles.  DMCL  DALE MATHESON CARR-HILTON LABONTE LLP CHARTERED ACCOUNTANTS Vancouver, Canada August 24, 2009 Except for Note 15 which is as of November 13, 2009  Comments by Auditor for U.S. Readers on Canada-U.S. Reporting Difference  In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the companys ability to continue as a going concern, such as those described in Note 1 to the consolidated financial statements.  Our report to the shareholders dated August 24, 2009 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors report when these are adequately disclosed in the financial statements.  DMCL  DALE MATHESON CARR-HILTON LABONTE LLP CHARTERED ACCOUNTANTS Vancouver, Canada August 24, 2009 Except for Note 15 which is as of November 13, 2009      [report002.jpg]   
 F-4


Reg Technologies Inc.


(A Development Stage Company)


Consolidated Balance Sheets
 (Expressed in Canadian Dollars)


As at

30 April

2011

$


As at

30 April

2010

$

(Restated 2 (o))AssetsCurrentCash


88,684



364GST and interest receivable


14,926



9,882Prepaid expenses


81,052



1,416Due from related parties (Note 8)


8,490



28,455Advances to equity accounted investee (Note 6)


865,607



585,8591,058,759



625,976Equipment (Note 5)


2,169



3,346Mineral Property (Note 7)


232,953



-1,293,881



629,322LiabilitiesCurrentBank indebtedness


-



494Accounts payable and accrued liabilities


105,912



57,861Due to related parties (Note 8)


218,878



146,741Income taxes payable


-



10,317Share subscription payable (Note 10)


-



58,877Convertible debt (Note 11)


19,368



-Financial instrument liability (Note 10)


35,917



135,816380,075



410,106Shareholders’ equityShare Capital (Note 4)


12,372,889



12,082,039Subscription received (Note 4)


289,200



-Warrants (Note 4)


237,714



245,518Contributed Surplus


9,441,987



9,270,884Equity component of convertible debt (Note 11)


8,485



-Non-controlling interest


188,756



-Deficit


(21,625,225
)


(21,379,225
)913,806



219,2161,293,881



629,322





Nature and Continuance of Operations(Note 1)


Commitments(Note 9)


Subsequent events(Note 14)





On behalf of the Board:




“John Robertson”

Director

“James L. Vandeberg"

DirectorJohn Robertson



James L. Vandeberg




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




F-5




Reg Technologies Inc.


(A Development Stage Company)


Consolidated Statements of Loss and Comprehensive Loss


(Expressed in Canadian Dollars)




For the year 
 ended April 30,

2011

$


For the year 
 ended April 30,

2010

$


For the year

ended April 30,

2009

$ExpensesAmortization


2,128



3,551



4,042Shareholder communication


41,106



82,026



140,157Consulting fees


32,209



16,542



28,094Foreign exchange loss (gain)


(27,048
)


81,608



(59,268
)Interest expense


10,894



-



-Management and directors’ fees (Note 8)


61,200



54,700



50,050Mineral property maintenance costs


(7,254
)


8,060



8,060Office expenses


27,286



33,719



55,950Professional fees (Note 8)


99,670



105,851



145,407Research and development


107,700



227,402



185,955Rent and utilities (Note 8)


15,680



10,182



39,972Stock-based compensation (Note 4)


89,776



1,348



90,736Transfer agent and filing fees


15,101



26,925



42,541Travel and promotion


7,605



15,211



29,616Wages and benefits


26,750



22,541



24,313Loss before other items and income taxes


(502,803
)


(689,666
)


(785,625
)Other income (expense)Gain on sale of investee’s shares (Note 6)


102,966



142,815



347,099Net gain on expiration and modification of financial instrument liability


126,404



6,971



-Interest income


-



-



-Unrealized gain (loss) on financial instrument liability


5,872



62,916



14,815Loss before income taxes


(267,561
)


(476,964
)


(423,711
)Income tax recovery (expense) – current (Note 12)


10,317



22,062



(32,379
)Net and comprehensive loss


(257,244
)


(454,902
)


(456,090
)Non-controlling interest


11,244



-



-Net and comprehensive loss after non-controlling interest


(246,000
)


(454,902
)


(456,090
)Loss per share – basic and diluted


(0.01
)


(0.02
)


(0.02
)Weighted average number of common shares outstanding – basic and diluted


29,000,177



26,123,280



24,849,721




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




F-6




Reg Technologies Inc.


(A Development Stage Company)


Consolidated Statements of Cash Flows


(Expressed in Canadian Dollars)




For the year

ended April 30

2011


For the year

ended April 30

2010


For the year

ended April 30

2009$



$



$Cash flows used in operating activitiesNet loss


(246,000
)


(454,902
)


(456,090
)Adjustments to reconcile loss to net cash used by operating activities:Amortization


2,128



3,551



4,042Gain on sale of investee’s shares


(102,966
)


(142,815
)


(347,099
)Imputed interest


7,853



-



-Non-controlling interest


(11,244
)


-



-Net gain on expiration and modification of financial instrument liability


(126,404
)


(6,971
)


-Stock-based compensation


89,776



1,348



90,736Unrealized (gain) loss on financial instrument liability


(5,872
)


(62,916
)


(14,815
)Changes in non-cash working capital items:Bank indebtedness


(494
)


494



-GST and interest receivable


(5,044
)


(872
)


(1,990
)Prepaid expenses


(79,636
)


360



3,240Due from related parties


19,965



(8,918
)


(3,046
)Accounts payable and accrued liabilities


48,051



(20,541
)


33,813Due to related parties


72,137



146,741



-Income taxes payable


(10,317
)


(22,062
)


32,379(348,067
)


(567,503
)


(658,830
)Cash flows provided by investing activities(Advances to) repayments from equity accounted investee


(279,748
)


(49,421
)


(424,126
)Proceeds on sale of investee’s shares and warrants


76,466



240,395



472,730Mineral property costs


(32,953
)


-



-Purchase of equipment


(951
)


-



(740
)(237,186
)


190,974



47,864Cash flows provided by financing activitiesProceeds on convertible debt


50,000



-



-Repayment on convertible debt


(30,000
)


-



-Proceeds from share subscriptions


289,200



-



-Proceeds from share issuances, net of issuance costs


364,373



375,786



611,815673,573



375,786



611,815Increase (decrease) in cash


88,320



(743
)


849Cash, beginning


364



1,107



258Cash, ending


88,684



364



1,107Supplemental DisclosuresInterest paid


-



-



-Income taxes paid


-



-



-








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




F-7




Reg Technologies Inc.


(A Development Stage Company)


Consolidated Statements of Shareholders’ Equity


(Expressed in Canadian Dollars)




Non-





TotalCommon


Common


Subscription


Contributed





Convertible


controlling





Shareholders’Shares


Shares


Received


Surplus


Warrants


Debt


Interest


Deficit


Equity#


$


$


$


$


$


$


$


$Balance – April 30, 2008 (restated 2 (o))


23,942,759



11,356,689



–



9,162,067



–



–



–



(20,468,233
)


50,523Shares issued for cash


1,771,168



444,275



–



–



167,540



–



–



–



611,815Stock-based compensation


–



–



–



90,736



–



–



–



–



90,736Net loss


–



–



–



–



–



–



–



(456,090
)


(456,090
)–



–Balance – April 30, 2009 (restated 2 (o))


25,713,927



11,800,964



–



9,252,803



167,540



–



–



(20,924,323
)


296,984Shares issued for cash


2,655,929



281,075



–



–



94,711



–



–



–



375,786Stock-based compensation


–



–



–



1,348



–



–



–



–



1,348Expiration of warrants


–



–



–



16,733



(16,733
)


–



–



–



–Net loss


–



–



–



–



–



–



–



(454,902
)


(454,902
)–



–Balance – April 30, 2010 (restated 2 (o))


28,369,856



12,082,039



–



9,270,884



245,518



–



–



(21,379,225
)


219,216Warrants exercise


460,929



108,610



–







(16,424
)


–



–



–



92,186Shares issued for cash


1,894,333



182,240



–







89,947



–



–



–



272,187Warrants expiration


–



–



–



150,807



(150,807
)


–



–



–



-Warrants extension


–



–



–







69,480



–



–



–



69,480Option vested


–



–



–



20,296



–



–



–



–



20,296Subscription received


–



–



289,200



–



–



–



–



–



289,200Equity component of convertible debt


–



–



–



–



–



8,485



–



–



8,485Non-controlling interest


–



–



–



–



–



–



200,000



–



200,000Net loss


–



–



–



–



–



–



(11,244
)


(246,000
)


(257,244
)Balance – April 30, 2011


30,725,118



12,372,889



289,200



9,441,987



237,714



8,485



188,756



(21,625,225
)


913,806




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





F-8




Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010




1.
Nature and Continuance of OperationsReg Technologies Inc. (“Reg Tech” or the “Company”) is a development stage company in the business of developing and commercially exploiting an improved axial vane type rotary engine known as the Rand CamTM/Direct Charge Engine and other RandCamTM / RadMax® applications, such as compressors and pumps (the “Technology”).  The worldwide marketing and intellectual rights, other than in the U.S., are held by the Company, which as at April 30, 2011 owns 3.38 million shares of REGI U.S, Inc. (“REGI”) (a U.S. public company) representing a 11.75% interest in REGI.  REGI owns the U.S, marketing and intellectual rights.  The Company and REGI have a project cost sharing agreement whereby these companies each fund 50% of the development of the Technology.



In a development stage company, management devotes most of its activities to establishing a new business.  Planned principal activities have not yet produced any revenues and the Company has incurred recurring operating losses as is normal in development stage companies.  The Company has accumulated losses of $21,625,225 since inception.  These factors raise substantial doubt about the Company’s ability to continue as a going-concern.  The ability of the Company to emerge from the development stage with respect to its planned principal business activity is dependent upon its successful efforts to raise additional equity financing, receive funding from affiliates and controlling shareholders, and develop a market for its products.



Management is aware that material uncertainties exist, related to current economic conditions, which could adversely affect the Company’s ability to continue to finance its activities. The Company receives interim support from affiliated companies and plans to raise additional capital through debt and/or equity financings.  There continues to be insufficient funds to provide adequate working capital to fund ongoing operations for the next twelve months.  The Company may also raise additional funds though the exercise of warrants and stock options.



There is no certainty that the Company’s efforts to raise additional capital will be successful. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in normal operations.




2.
Significant Accounting Policies
  a)
Basis of accounting and principles of consolidationThese consolidated financial statements are prepared using Canadian generally accepted accounting principles (“GAAP”) and are presented in Canadian dollars.



These financial statements include the accounts of the Company, its 80% owned subsidiary Minewest Silver and Gold Inc. (“Minewest”) and its 51% owned subsidiary, Rand Energy Group Inc. (“Rand”), which owns a 2.2% (2010 – 2.8%) interest in REGI. The Company also owns a 9.55% (2010 – 10.6%) interest in REGI. Prior to April 30, 2008, REGI was considered a controlled subsidiary for consolidation purposes by way of control through an annually renewable voting trusts agreement, with other affiliated companies. This trusts agreement gave the Company 50% control of the voting shares of REGI. The agreement could be cancelled by the President of the 51% owned subsidiary with seven days’ written notice to the affiliated companies. Effective April 30, 2008, the voting trusts agreement was cancelled (Note 6) and consequently the investment in REGI has been accounted for as an equity investment.



All inter-company accounts and transactions have been eliminated on consolidation.




F-9


Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010




2.
Significant Accounting Policies(Cont’d)  b)
InvestmentsInvestments in which the Company has the ability to exert significant influence but does not have control are accounted for using the equity method whereby the original cost of the investment is adjusted annually for the Company's share of earnings, losses and dividends during the current year. When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.




c)
Comparative numbers




The 2010 and 2009 comparative numbers have been reclassified, where applicable, in order to conform with the presentation used in the current year.




d)
Use of estimates




The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management estimates relate to the useful life and recoverability of long-lived assets, assumptions used in the determination of the fair value of stock-based compensation, assumptions used in determining the fair value of financial instruments and future income tax asset valuation allowances. Actual results could differ from those estimates. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities, and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations and future cash flows would be affected.




e)
Equipment




Equipment consists of office furniture and equipment, and computer hardware recorded at cost and amortized on a straight-line basis over a five-year and three-year period, respectively.




f)
Research and development costs




The Company carries on various research and development activities to develop its technology.  Research costs are expensed in the periods in which they are incurred.  Development costs that meet all of the criteria to be recognized as an intangible asset, including reasonable expectation regarding future benefits, are capitalized and are amortized over their expected useful lives.  To date the Company has not capitalized any development costs.




F-10




Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010




2.
Significant Accounting Policies(Cont’d)





g)
Mineral property interests




The Company initially records the acquisition of resource property interests, including option payments under purchase agreements at cost which does not necessarily reflect market or recoverable value.  Recoverable value is dependent upon the successful funding and development or sale of the mineral interests and is subject to measurement uncertainty.  Exploration and development expenditures are deferred and capitalized to a property until the project is put into commercial production, sold, abandoned, or when changes in events or circumstances indicate that the carrying value may be impaired. Where a resource property interest is abandoned, the accumulated acquisition and deferred costs relating to that property are written off to operations.




h)
Long-lived assets and impairment




The carrying values of long-lived assets with fixed or determinable lives are reviewed for impairment whenever events or changes in circumstances indicate recoverable values may be less than carrying amounts.  Recoverable value determinations are based on management’s estimates of undiscounted and discounted future net cash flows expected to be recovered from specific assets or groups of assets through use or future disposition.  Impairment charges are recorded in the period in which determination of impairment is made by management.



Assets with indefinite or indeterminable lives are not amortized and are reviewed for impairment on a reporting period basis using fair value determinations based on management’s estimate of recoverable value.




i)
Foreign currency translation




(i)
Translation of foreign currency transactions and balances:Monetary balance sheet items are translated at the rate prevailing at the balance sheet date. Revenues, expenses and non-monetary balance sheet items in foreign currencies are translated into Canadian dollar equivalents at the rate of exchange prevailing on the transaction dates. The resulting exchange gain or loss is included in operations.




(ii)
Translation of foreign subsidiary balances:Foreign currency transactions are translated using the current rate method. Assets and liabilities of non-integrated foreign subsidiaries are translated into Canadian dollar equivalents at the rates of exchange on the balance sheet date. The foreign subsidiary’s operating results are translated into Canadian dollar equivalents using the average exchange rate for the year. Any resulting translation gain or loss is deferred and included as a separate component of shareholders’ equity.




j)
Income taxes




The Company follows the asset and liability method of accounting for income taxes. Under this method of tax allocation, future income tax assets and liabilities are determined based on differences between the financial statement carrying values and their respective income tax basis (temporary differences). Future income tax assets and liabilities are measured using the tax rates expected to be in effect when temporary differences are likely to reverse. The effect on future income tax assets and liabilities of a change in tax rates is included in operations in the period in which the change is enacted or substantively enacted. The amount of future income tax assets recognized is limited to the amount of the benefit that is likely to be realized.




F-11




Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010
  2.
Significant Accounting Policies(Cont’d)


k)
Stock-based compensation




The Company has adopted the fair value method of accounting for all stock-based compensation. The fair value of stock options granted is determined using the Black-Scholes option pricing model.  Stock-based compensation is expensed over the period of vesting and initially credited to contributed surplus. Any consideration paid on the exercise of stock options is credited to share capital. When options are exercised, previously recorded compensation is transferred from contributed surplus to share capital to fully reflect the consideration for the shares issued.




l)
Loss per share




Basic loss per share is calculated using the weighted average number of common shares outstanding during the year. The Company uses the treasury stock method for calculating diluted loss per share. Under this method the dilutive effect on loss per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the period. Diluted loss per share is not presented where the effects of various conversions and exercise of options and warrants would be anti-dilutive. Shares held in escrow, other than where their release is subject to the passage of time, are not included in the calculation of the weighted average number of common shares outstanding.




m)
Financial instruments




The Company follows Canadian Institute of Chartered Accountants (“CICA”) Sections 3855, “Financial Instruments – Recognition and Measurement” and Section 3856, “Hedges”. Section 3855 prescribes when a financial instrument is to be recognized on the balance sheet and at what amount. Under Section 3855, financial instruments must be classified into one of five categories: held-for-trading, held-to-maturity, loans and receivables, available-for-sale financial assets, or other financial liabilities. All financial instruments, including derivatives, are measured at the balance sheet  date at fair value except for loans and receivables, held-to-maturity investments, and other financial liabilities which are measured at amortized cost.



The Company’s financial instruments consist of cash, interest receivable, due from (to) related parties, advances to equity accounted investee, accounts payable, shares subscription payable, convertible debt and a financial instrument liability.  The carrying values of these financial instruments approximate their fair value unless otherwise noted.



Cash is measured at face value, representing fair value, and classified as held-for-trading.  Interest receivable, due from related parties, and advances to equity accounted investee, which are measured at amortized cost, are designated as loans and receivables.  Accounts payable, due to related parties and shares subscription payable are measured at amortized cost and designated as other financial liabilities.  The financial instrument liability, which is measured at fair value, is classified as held-for-trading.



The Company does not use any hedging instruments.




n)
Comprehensive income (loss)




The Company follows the CICA Section 1530, “Comprehensive Income”. Section 1530 establishes standards for the reporting and presenting of comprehensive income (loss) which is defined as the change in equity from transactions and other events from non-owner sources. Other comprehensive income (loss) refers to items recognized in comprehensive income (loss) that are excluded from net income (loss).




F-12


Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010




2.
Significant Accounting Policies(Cont’d)





o)
Newly adopted standards for the years ended April 30, 2011 and 2010




On May 1, 2008, the Company adopted new CICA accounting standards related to accounting changes, capital disclosures, financial instruments – presentation and disclosure, going concern and credit risk.  These standards were adopted on a prospective basis and are primarily related to disclosures. There were no adjustments recorded to opening balance sheet items or deficit as a result of the adoption of these standards.



Accounting Changes – CICA Handbook Section 1506



This standard establishes criteria for changes in accounting policies, accounting treatment and disclosure regarding changes in accounting policies, estimates and corrections of errors. In particular, this section allows for voluntary changes in accounting policies only when they result in the financial statements providing reliable and more relevant information.  This section requires changes in accounting policies to be applied retrospectively unless doing so is impracticable.



Capital Disclosure – CICA Handbook Section 1535



This section specifies the disclosure of (i) an entity’s objectives, policies and processes for managing capital; (ii) quantitative data about what the entity regards as a capital; (iii) whether the entity has not complied with any capital requirements; and (iv) if it has not complied, the consequences of such noncompliance. The Company has included disclosures in Note 13 as recommended by this new section.



Financial Instruments – Disclosure (Section 3862) and Presentation (Section 3863)



These standards replaced CICA Handbook Section 3861, Financial Instruments – Disclosure and Presentation.  These standards increase the disclosures currently required, which enables users to evaluate the significance of financial instruments for an entity’s position and performance, including disclosures about fair value.  In addition, disclosure is required of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk, currency risk, interest rate risk and market risk.  The quantitative disclosures must provide information about the extent to which the entity is exposed to risk, based on information provided internally to the entity’s key management personnel.  This standard is effective for the Company for interim and annual periods relating to fiscal years beginning on or after May 1, 2008.



In June 2009, the CICA amended Section 3862, Financial Instruments – Disclosures that includes additional disclosure requirements about fair value measurements for financial instruments and liquidity risk disclosures. These amendments entail a three level hierarchy that takes into account the significance of the inputs used in making the fair value measurements. Additional disclosure has been included in the Company’s consolidated financial statements (See Note 3).



General Standards of Financial Statement Presentation – CICA Handbook Section 1400



In June 2007, the CICA modified Section 1400 “General Standards of Financial Statement Presentation” to require management assess the Company’s ability to continue as going concern over a period which is at least, but not limited to, twelve months from the balance sheet date. The Company has included disclosures in Note 1 as recommended by this new section.




F-13





Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010


2.
Significant Accounting Policies(Cont’d)





o)
Newly adopted standards for the years ended April 30, 2011 and 2010 (Cont’d)




Credit Risk and the Fair Value of Financial Assets and Financial Liabilities – EIC 173



In January 2009, the CICA approved EIC 173, Credit Risk and the Fair Value of Financial Assets and Liabilities. This guidance clarified that an entity’s own credit risk and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and financial liabilities including derivative instruments.



Business combinations, consolidated financial statements and non-controlling interests



In January 2009, the CICA issued Handbook Sections 1582 – Business Combinations, 1601 – Consolidated Financial Statements and 1602 – Non-controlling Interests which replace CICA Handbook Sections 1581 – Business Combinations and 1600 – Consolidated Financial Statements. Section 1582 establishes standards for the accounting for business combinations that is equivalent to the business combination accounting standard under International Financial Reporting Standards (“IFRS”). Section 1582 is applicable for the Company’s business combinations with acquisition dates on or after January 1, 2011.  Early adoption of this Section is permitted. Section 1601 together with Section 1602 establishes standards for the preparation of consolidated financial statements.  Section 1601 is applicable for the Company’s interim and annual consolidated financial statements for its fiscal year beginning January 1, 2011. Early adoption of this Section is permitted. If the Company chooses to early adopt any one of these Sections, the other two sections must also be adopted at the same time. The Company has early adopted and applied retroactively these sections on May 1, 2010. As a result, the Company treated $7,137,235 in gain due to ownership of net assets resulting from subsidiary shares issued as equity transactions, which previously have been charged to the statements of loss during the prior years.




p)
Recent Accounting Pronouncements Not Yet Adopted




International Financial Reporting Standards



In 2006, the Canadian Accounting Standards Board (“AcSB”) published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies.  The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five year transitional period.  In February 2008 the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canadian GAAP.  This date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.  The Company’s transition date of May 1, 2010 will require the restatement for comparative purposes of amounts reported by the Company for the year ended April 30, 2011.  In July 2008 AcSB announced that early adoption will be allowed in 2009 subject to seeking exemptive relief.  The Company is currently in the process of executing an IFRS conversion plan.  This will be an ongoing process as the International Accounting Standards Board and the AcSB issue new standards and recommendations. The Company does anticipate a significant increase in disclosure resulting from the adoption of IFRS as well as certain presentation differences.




3.
Financial Instruments




Foreign exchange risk



The Company is primarily exposed to currency fluctuations relative to the Canadian dollar through expenditures that are denominated in US dollars.  Also, the Company is exposed to the impact of currency fluctuations on its monetary assets and liabilities.




F-14


Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010


3.
Financial Instruments (cont’d)




The operating results and the financial position of the Company are reported in Canadian dollars.  Fluctuations in exchange rates will, consequently, have an impact upon the reported operations of the Company and may affect the value of the Company’s assets and liabilities.



The Company currently does not enter into financial instruments to manage foreign exchange risk.



The Company is exposed to foreign currency risk through the following financial assets and liabilities that are denominated in United States dollars:




April
  30, 2011

Cash

Due to

Related Party

Advances to Equity Accounted Investee

Accounts Payable$
(1,023)
$
3,465
$
604,869
$
21,745


At April 30, 2011 with other variables unchanged, a +/-10% change in exchange rates would increase/decrease pre-tax loss by approximately +/- $63,110.



Interest rate and credit risk



The Company has minimal cash balances and no interest-bearing debt. The Company has no significant concentrations of credit risk arising from operations. The Company's current policy is to invest any significant excess cash in investment-grade short-term deposit certificates issued by reputable financial institutions with which it keeps its bank accounts and management believes the risk of loss to be remote. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.



Receivables consist of goods and services tax due from the Federal Government.  Management believes that the credit risk concentration with respect to receivables is remote.



Liquidity Risk



Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.The Company manages liquidity risk through the management of its capital structure and financial leverage as outlined in Note 13.



Fair Value Measurement



The Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3862 “Financial Instruments Disclosures” requires disclosure of a three-level hierarchy for fair value measurements based upon the significance of inputs used in making fair value measurements as follows:  -
Level 1 – quoted prices in active markets for identical assets or liabilities.-
Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e.: as prices) or indirectly (i.e.: derived from prices).-
Level 3 – inputs for the asset or liability that are not based on observable market data.  At April 30, 2011, all of the financial instruments measured at fair value are included in Level 1 except financial instrument liability and convertible debts, which are in Level 2.





F-15




Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010




4.
Common StockAuthorized50,000,000 Common shares without par value10,000,000 Preferred shares with a $1 par value, redeemable for common shares on the basis of 1 common share for 2 preferred
  share5,000,000 Class A non-voting shares without par value.  Special rights and restrictions apply.
  Treasury Shares



At April 30, 2011, Rand owns 217,422 (2010 – 217,422) shares of the Company valued at $43,485 that have been deducted from the total shares issued and outstanding.  The value of these shares has been deducted from share capital.



Private placements



On January 26, 2010, the Company completed a private placement, whereby it issued 1,012,596 units at $0.15 per unit for proceeds of $151,889. Each private placement unit consisted of one common share and share purchase warrant. Each warrant entitles the holder to purchase one additional share of common stock at a price of $0.20 per share for one year.  The fair value of the warrants included in the units was estimated to be $0.04 using the Black-Scholes option pricing model using the following assumptions:  risk free interest rate of 1.17%, expected volatility of 97%, an expected life of 1 year and no expected dividends.  Finders’ fees of $7,050 were paid in connection with the private placement, which are included in share issuance costs. 172,596 of the warrants were exercised during the year ended April 30, 2011 and the expiration date of the remaining 840,000 warrants was extended to July 26, 2011. The value of the extended warrants was estimated at $6,184 using the Black-Scholes option pricing model using the following assumptions:  risk free interest rate of 1.64%, expected volatility of 148.48%, an expected life of 0.5 year and no expected dividends.  The warrants expired on July 26, 2011.



On March 28, 2010, the Company completed a private placement, whereby it issued 1,643,333 units at $0.15 per unit for proceeds of $246,500. Each private placement unit consisted of one common share and share purchase warrant. Each warrant entitles the holder to purchase one additional share of common stock at a price of $0.20 per share for one year.  The fair value of the warrants included in the units was estimated to be $0.03 using the Black-Scholes option pricing model using the following assumptions:  risk free interest rate of 0.87%, expected volatility of 99%, an expected life of 1 year and no expected dividends.  Finders’ fees of $12,068 were paid in connection with the private placement, which are included in share issuance costs. 288,333 of the warrants were exercised during the year ended April 30, 2011 and the expiration date of the remaining 1,355,000 warrants was extended to September 24, 2011. The value of the extended warrants was estimated at $63,296 using the Black-Scholes option pricing model using the following assumptions:  risk free interest rate of 1.56%, expected volatility of 145%, an expected life of 0.5 year and no expected dividends.



On April 24, 2011, the Company completed a private placement, whereby it issued 1,894,333 units at $0.15 per unit for proceeds of $284,150. Each private placement unit consisted of one common share and share purchase warrant. Each warrant entitles the holder to purchase one additional share of common stock at a price of $0.20 per share for one year.  The fair value of the warrants included in the units was estimated to be $0.07 using the Black-Scholes option pricing model using the following assumptions:  risk free interest rate of 1.69%, expected volatility of 144%, an expected life of 1 year and no expected dividends.  Finders’ fees of $8,500 and other related costs of $3,463 were paid in connection with the private placement, which are included in share issuance costs.



As at April 30, 2011, the Company and Minewest received total subscriptions of $289,200. These shares were not issued as at April 30, 2011.




F-16




Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010


4.
Common Stock(cont’d)




Stock Options



The Company has implemented a stock option plan (the “Plan”) to be administered by the Board of Directors.  Pursuant to the Plan, the Board of Directors has discretion to grant options for up to a maximum of 10% of the issued and outstanding common shares of the Company at the date the options are granted.  The option price under each option shall be not less than the discounted market price on the grant date.  The expiry date of an option shall be set by the Board of Directors at the time the option is awarded, and shall not be more than five years after the grant date.



These options have the following vesting schedule:




i)
Up to 25% of the option may be exercised at any time during the term of the option; such initial exercise is referred to as the “First Exercise”.ii)
The second 25% of the option may be exercised at any time after 90 days from the date of First Exercise; such second exercise is referred to as the “Second Exercise”.iii)
The third 25% of the option may be exercised at any time after 90 days from the date of Second Exercise; such third exercise is referred to as the “Third Exercise”.iv)
The fourth and final 25% of the option may be exercised at any time after 90 days from the date of the Third Exercise.v)
The options expire 60 months from the date of grant.  Options granted to consultants engaged in investor relations activities will vest in stages over a minimum of 12 months with no more than 25% of the options vesting in any three-month period.



During the year ended April 30, 2011, the Company recorded stock-based compensation of $20,296 (2010 - $1,348) as a general and administrative expense.



On April 19, 2010, the Company granted 50,000 stock options from the Plan a consultant exercisable at $0.21 per share, up to April 19, 2015.  The fair value of options was estimated using the Black-Scholes option pricing model using the following weighted average assumptions: risk free interest rate of 2.74%, expected volatility of 102%, an expected option life of 5 years and no expected dividends.  The weighted average fair value of options granted was $0.11 per option. The Company recognized $1,348 as stock-based compensation in relation to this grant, with $4,044 to be recognized in future accounting periods as the options continue to vest.



On October 21, 2010, the Company granted 750,000 stock options from the Plan to a director of the Company exercisable at $0.14 per share, up to October 21, 2015.  The fair value of options was estimated using the Black-Scholes option pricing model using the following weighted average assumptions: risk free interest rate of 1.72%, expected volatility of 106%, an expected option life of 5 years and no expected dividends.  The weighted average fair value of options granted was $0.11 per option. During the year ended April 30, 2011 the Company recognized $20,296 as stock-based compensation in relation to this grant, with $60,888 to be recognized in future accounting periods as the options continue to vest.



As at April 30, 2011, as the Company believes that it is not probable that any options would vest except the first 25% of the options that vested immediately at a date of the First Exercise, the fair value of the first 25% of the options that vested were charged to the consolidated statements of loss and comprehensive loss.




F-17




Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010




4.
Common Stock(cont’d)




Stock Options (cont’d)



The following is a summary of options activities during the years ended April 30, 2011 and 2010:




Number of options


Weighted average exercise price$Outstanding at April 30, 2009


1,525,000



0.30Granted


50,000



0.21Outstanding at April 30, 2010


1,575,000



0.30Expired


(750,000
)


0.30Granted


750,000



0.14Outstanding at April 30, 2011


1,575,000



0.30Weighted average fair value of options granted during the year ended April 30, 2011






0.11  The following options were outstanding at April 30, 2011:




Expiry Date

Exercise 
 price


Number

of options


Remaining

contractual life

(years)$August 1, 2013


0.40



400,000



2.26April 22, 2014


0.21



375,000



2.98April 19, 2015


0.21



50,000



3.97October 21, 2015


0.14



750,000



4.48Options Outstanding






1,575,000Options Exercisable






393,570  Share Purchase Warrants



The following is a summary of warrant activities during the years ended April 30, 2011 and 2010:




Number of warrants


Weighted average exercise price$Outstanding at April 30, 2009


1,543,168



0.56Issued


2,655,929



0.20Expired


(228,000
)


0.35Outstanding at April 30, 2010


3,971,097



0.33Expired


(1,315,168
)


0.60Exercised


(460,929
)


0.20Issued


1,894,333



0.20Outstanding at April 30, 2011


4,089,333



0.20




F-18




Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010


4.
Common Stock(cont’d)




Share Purchase Warrants (cont’d)



The following warrants were outstanding at April 30, 2011:




Expiry Date

Exercise price


Number

of warrants$July 26, 2011


0.20



840,000September 24, 2011


0.20



1,355,000February 24, 2012


0.20



1,894,333Warrants Outstanding






4,089,333  5.
Equipment


Cost


Accumulated

Amortization


2011

NetComputer hardware

$
8,323


$
7,187


$
1,136Office furniture and equipment


8,849



7,816



1,033Total

$
17,172


$
15,003


$
2,169





Cost


Accumulated

Amortization


2010

NetComputer hardware

$
7,372


$
6,829


$
543Office furniture and equipment


8,849



6,046



2,803Total

$
16,221


$
12,875


$
3,346




6.
Equity Accounted InvesteeThe Company’s investment in REGI has been reduced to $nil as the Company’s share of past losses exceeded the carrying value of the investment in REGI.



At April 30, 2011, the Company is owed an aggregate of $865,607 (2010 - $585,859) by REGI. The amounts owed are unsecured, non-interest bearing and due on demand.



During the year ended April 30, 2011, the Company recognized a gain of $102,966 (2010 – $142,815) relating to the sale of 458,300 (2010 – 621,725) of shares of REGI by the Company and Rand.




7.
Mineral property, Minewest and Asset Transfer Agreement




On July 20, 2010 the Company signed an asset transfer agreement with its newly incorporated subsidiary, Minewest, a private company incorporated in British Columbia for the purpose of acquiring and exploring mineral properties. In accordance with the agreement the Company transfers its 100% ownership in its undivided 45% interest subject to a 5% net smelter return in 33 mining claims situated in the Tootsee River area in the Province of British Columbia for following consideration:




-
Cash payment of $25,000 on or before August 15, 2010 (paid);-
Issuance of 8,000,000 shares of Minewest voting common shares (issued).




F-19







Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010


7.
Mineral property, Minewest and Asset Transfer Agreement(cont’d)




Effective December 15, 2010 Minewest signed a purchase agreement with Rapitan Resources Inc. ("Rapitan"), wherein Minewest purchased 100% of Rapitan’s 25% interest in the Silverknife property for the following consideration:




-
Cash payment of $10,000 (paid);-
Issuance of 2,000,000 shares of common stocks of Minewest (issued).










As at April 30, 2011, Minewest has incurred acquisition costs of $210,000 and exploration expenditures of $22,953 consisting of geological consulting fees of $17,311 and mineral claim renewal of $5,642 on the Silverknife property.




8.
Related Party Transactions




At April 30, 2011, the Company is owed an aggregate of $8,490 (2010 - $28,455) by related parties and owed an aggregate of $218,878 (2010 - $146,741) to related parties.  The amounts owed are unsecured, non-interest bearing and due on demand.  These parties are companies that the President of the Company controls or significantly influences.



During the year ended April 30, 2011, rent of $15,680 (2010 - $10,181) incurred with a company having common officers and directors.



During the year ended April 30, 2011, management fees of $30,000 (2010 - $32,500) were incurred to a company having common officers and directors.



During the year ended April 30, 2011, research and development costs of $75,000 (2010 - $63,300) were paid to a company having common officers and directors.



During the year ended April 30, 2011, management and directors’ fees of $31,200 (2010 - $22,200) were paid to officers, directors and companies controlled by officers and directors for services rendered.



The above transactions were in the normal course of operations and are recorded at their exchange amounts.




9.
Commitments




a)
In connection with the acquisition of Rand, the Company has the following royalty obligations:




(i)
A participating royalty is to be paid based on 5% of all net profits from sales, licenses, royalties or income derived from the patented technology, to a maximum amount of $10,000,000.  The participating royalty is to be paid in minimum annual instalments of $50,000 per year beginning on the date the first revenues are derived from the license or sale of the patented technology.





(ii)
Pursuant to a letter of understanding dated December 13, 1993, between the Company and REGI (collectively called the grantors) and West Virginia University Research Corporation (“WVURC”), the grantors have agreed that WVURC shall own 5% of all patented technology and will receive 5% of all net profits from sales, licenses, royalties or income derived from the patented technology.





(iii)
A 1% net profit royalty will be payable to a director on all U.S. – based sales.




b)
The Company is committed to fund 50% of the further development of the Rand CamTM/Direct Charge Engine Technology.




F-20







Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010




9.
Commitments(cont’d)




c)
On November 1, 2010, the Company extended the office lease agreement for one additional year for a total of $13,185.




10.
Financial Instrument Liability




Rand’s private sales of REGI shares



On November 9, 2009, Rand sold 238,000 units at US$0.25 per unit consisting one common share of REGI and one share purchase warrant entitling the holder to purchase one additional share of REGI at US$0.35 per share expiring November 9, 2010.  The warrants expired on November 9, 2010.



During March, 2010, 163,000 warrants issued in March, 2009 were exercised at US$0.35 per share of REGI shares and the additional 163,000 shares of REGI were sold by Rand for total proceeds of $58,877(US$57,050). These shares were transferred by Rand to the purchasers on May 4, 2010.



On March 12, 2010, 1,101,933 warrants issued on March 12, 2009 expired, of which 894,333 warrants were extended for one year expiring March 12, 2011. The fair value of the extended warrants on March 12, 2010 was determined using the Black-Scholes option pricing model using the following weighted average assumptions: risk free interest rate of 0.15%, expected volatility of 117%, an expected option life of 1 year and no expected dividends. These warrants expired on March 12, 2011.



As at April 30, 2011 the details of the share purchase warrants are as follows:




Closing date of sale
# of warrants
Exercise price
Expiry dateMarch 27, 2008
80,000

US$  1.50

March 27, 2013May 6, 2008
40,000

US$  1.50

May 6, 2013October 5, 2010
295,300

US$  0.30

October 5, 2011





The fair value of the warrants as follows:





Expiry date

Fair value at

April 30, 2011

Fair value at

April 30, 2010March 27, 2013
$
9,874

$
6,292May 6, 2013

5,120


3,120October 5, 2011

20,923


-March 12, 2011

-


86,863November 9, 2010

-


39,541Total
$
35,917

$
135,816
  Black-Scholes Option-Pricing Model Assumptions



The fair value of each warrant issued was calculated using the Black-Scholes option-pricing model with the following assumptions:




30 April 2011
30 April 2010Expected dividend yield
0.00%
0.00%Expected stock price volatility
207.57%
98% - 115%Risk-free interest rate
1.67%
0.38% - 2.42%Expected life of warrants (years)
1.91 – 2.02
0.87 – 3.01




F-21




Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010


10.
Financial Instrument Liability(cont’d)




Reg Tech’s private sales of REGI shares



On November 9, 2009, Reg Tech sold 280,000 units (2009 – nil units) at $0.25 per unit consisting one common share of REGI and one share purchase warrant entitling the holder to purchase one additional share of REGI at $0.35 per share expiring November 9, 2010.  The warrants expired on November 9, 2010.



The warrants are a derivative, and the proceeds on the sale of the units were bifurcated between the fair value of the common shares and the share purchase warrants.  The proceeds allocated to the warrants were $21,304 (2009 - $nil) upon issuance.  The fair value of the warrants at the closing date was determined using the Black-Scholes option pricing model using the following weighted average assumptions: risk free interest rate of 0.31%, expected volatility of 121%, an expected option life of 1 year and no expected dividends. The fair value of the warrants at April 30, 2010 was determined at $21,373 using the Black-Scholes option pricing model using the following weighted average assumptions: risk free interest rate of 0.24%, expected volatility of 121%, an expected option life of 0.53 year and no expected dividends.



On October 6, 2010, Reg Tech sold 295,300 units $0.25 per unit consisting one common share of REGI and one share purchase warrant entitling the holder to purchase one additional share of REGI at $0.30 per share expiring October 5, 2011.



The warrants are a derivative, and the proceeds on the sale of the units were bifurcated between the fair value of the common shares and the share purchase warrants.  The proceeds allocated to the warrants were $32,377 upon issuance.  The fair value of the warrants at the closing date was determined using the Black-Scholes option pricing model using the following weighted average assumptions: risk free interest rate of 1.21%, expected volatility of 222.74%, an expected option life of 1 year and no expected dividends. The fair value of the warrants at April 30, 2011 was determined at $20,923 using the Black-Scholes option pricing model using the following weighted average assumptions: risk free interest rate of 1.10%, expected volatility of 193%, an expected option life of 0.44 year and no expected dividends.




11.
Convertible Debenture




On June 1, 2010, the Company issued a convertible debenture for total proceeds of $50,000 which bears interests at 8% per annum payable monthly, is unsecured and due one year from date of issuance. The unpaid amount of principal can be converted at any time at the holder’s option into shares of the Company’s common stock at a price of $0.20 per share. The Company has the option to repay principal and accrued interest before the due date with 30 days’ notice.



The fair value of the debt component of the convertible loan was estimated using discounted cash flow at 10% for equivalent debt without the conversion feature.  The fair value of equity component was estimated using Black-Scholes option pricing model with following assumptions:  risk-free interest rate of 1.11%, dividend of 0%, expected life of 1 year and expected volatility of 93%. The debt and equity components of the convertible loans were then measured using the proportional or relative fair value method and were initially recorded at $41,515 and $8,485 respectively.



On February 18, 2011 principal amount of $30,000 was repaid to the debt holder, with loss on early payment of $1,564 recorded as financing cost.



As at April 30, 2011, $6,289 interest has been amortized with its debt component carried at amortized cost of $19,368. As at April 30, 2011, interest of $3,062 has been paid to the lender.




F-22





Reg Technologies Inc.


(A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010
  12.
Income TaxesIncome tax expense differs from the amount that would result from applying the combined federal and provincial income tax rate to earnings before income taxes.  These differences result from the following items:


For the year ended April 30, 2011

$


For the year ended April 30, 2010

$Net loss before income taxes


(267,561
)


(476,964
)Combined federal and provincial income tax rate


27.80
%


29.50
%Expected income tax recovery


(74,383
)


(140,705
)Increase (decrease) due to:Non-deductible expenses


37,124



4,898Change in long-term Canadian tax rate and other


5,008



25,191Expiry of non-capital losses


-



27,354Change in valuation allowance


76,185



80,922Non-taxable portion of gain


(54,251
)


(19,722
)Income tax expense (recovery)


(10,317
)


(22,062
)  The components of future income tax assets are as follows:




2011

$



2010

$Non-capital losses


767,506



678,000Intangible assets and other


147,056



160,000Equipment


49,924



50,000964,486



888,000Valuation allowance


(964,486
)


(888,000
)Net future income tax asset assets


-



-  The Company has non-capital losses of approximately $3,070,026 that may be available to offset future income for income tax purposes.  These losses expire as follows:




$2014

145,1292015

211,9352026

402,2532027

316,6062028

571,4682029

711,9842030

352,7372031

357,9143,070,026
  A full valuation allowance has been recorded against the potential future income tax assets as their utilization is not considered more likely than not.




F-23




Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010


13.
Capital Management




The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the development of its technologies and to maintain a flexible capital structure for its projects for the benefit of its stakeholders. As the Company is in the development stage, its principal source of funds is from the issuance of common shares.



In the management of capital, the Company includes the share capital as well as cash, receivables, related party receivables and advances to equity accounted investee.



The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, acquire or dispose of assets or adjust the amount of cash and short-term investments.



The Company expects its capital resources, which include a share offering and the sale of investee shares and warrants, will be sufficient to carry its research and development plans and operations through its current operating period.



The Company is not subject to externally imposed capital requirements and there were no changes in its approach to capital management during the year ended April 30, 2011.




14.
Subsequent Events




Convertible Debenture



On June 1, 2011, the convertible debenture for total principal of $20,000 matured and renewed to June 1, 2012.  The debenture bears interests at 8% per annum payable monthly and is unsecured. The unpaid amount of principal can be converted at any time at the holder’s option into shares of the Company’s common stock at a price of $0.20 per share.



Warrants expired



On July 26, 2011, 840,000 warrants of the Company exercisable at $0.20 per share into the Company’s common stock have expired, unexercised.



Private placement



On June 9, 2011, the Company completed a private placement, whereby it issued 2,043,300 units at $0.15 per unit for proceeds of $306,450. Each private placement unit consisted of one common share and one half share purchase warrant. Two half warrants entitle the holder to purchase one additional share of common stock at a price of $0.20 per share for one year.



Minewest subscription received



During May, 2011 Minewest received total subscriptions of $20,000 for 100,000 common shares of   Minewest. The shares have not yet been issued.




F-24




Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010


15.
Reconciliation of United States and Canadian Generally Accepted Accounting Principles (“US GAAP and “Canadian GAAP”)




These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP).  A description of US GAAP and practices prescribed by the US Securities and Exchange Commission (collectively US GAAP) that result in material measurement differences from Canadian GAAP are as follows:




a)
Development Stage Company




Pursuant to US GAAP, the Company would be subject to the disclosure requirements applicable to a development stage enterprise as the Company is devoting its efforts to establishing commercially viable products. However, the identification of the Company as such for accounting purposes does not impact the measurement principles applied to these financial statements.







b)
Mineral Properties and Deferred Exploration Costs







Under Canadian GAAP, mineral property interests and deferred exploration costs, including acquisition and exploration costs, are carried at cost and written down if the properties are abandoned, sold or if management determines there to be an impairment in value. Under United States GAAP, mineral property interests are carried at cost and deferred exploration costs are expensed as incurred.




c)
Donated Capital




Under US GAAP, the Company recognizes the value of services provided by management at no charge to the Company as donated capital. Under Canadian GAAP, no amount is recognized.d)
Asset Retirement ObligationsUnder US GAAP, ASC 410, “Asset Retirement and Environmental  Obligations” requires companies to record the fair value of the liability for closure and removal costs associated with legal obligations upon the retirement or removal of any tangible long-lived assets effective June 1, 2003. Under this standard, the initial recognition of the liability is capitalized as part of the asset cost and amortized over its estimated useful life. For Canadian GAAP purposes, effective June 1, 2004, the Company adopted the provisions of CICA HB Section 3110, “Asset Retirement Obligations”, which are substantially similar to those of ASC 410. The Company has determined that there were no material differences in the measurement and presentation of asset retirement obligations between Canadian GAAP and US GAAP as at April 30, 2011 and 2010.e)
Recent Accounting PronouncementsIn June 2009, the FASB issued FASB ASC 105, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162”.  Under FASB ASC 105 the “FASB Accounting Standards Codification” (“Codification”) will become the source of authoritative US GAAP to be applied by nongovernmental entities.  Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification became effective for financial statements issued for interim and annual periods ending after September 15, 2009.  On the effective date, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. The Company changed the Company’s references to U.S. GAAP accounting standards but did not impact the Company’s results of operations, financial position or cash flows.





F-25





Reg Technologies Inc.


(A Development Stage Company)


Notes to Consolidated Financial Statements


(Expressed in Canadian Dollars)


For the years ended 30 April 2011 and 2010


15.
Reconciliation of United States and Canadian Generally Accepted Accounting Principles (“US GAAP and “Canadian GAAP”(cont’d)




e)
Recent Accounting Pronouncements (cont’d)In June 2009, the Securities and Exchange Commission’s Office of the Chief Accountant and Division of Corporation Finance announced the release of Staff Accounting Bulletin (SAB) No. 112. This staff accounting bulletin amends or rescinds portions of the interpretive guidance included in the Staff Accounting Bulletin Series in order to make the relevant interpretive guidance consistent with current authoritative accounting and auditing guidance and Securities and Exchange Commission rules and regulations. Specifically, the staff is updating the Series in order to bring existing guidance into conformity with recent pronouncements by the Financial Accounting Standards Board, namely, Statement of Financial Accounting Standards No. 141 (revised 2007) (ASC Topic 805), Business Combinations, and Statement of Financial Accounting Standards No. 160 (ASC Topic 810), Non-controlling Interests in Consolidated Financial Statements. The statements in staff accounting bulletins are not rules or interpretations of the Commission, nor are they published as bearing the Commission's official approval. They represent interpretations and practices followed by the Division of Corporation Finance and the Office of the Chief Accountant in administering the disclosure requirements of the Federal securities laws.



In April 2009, an update was made to the FASB ASC 820, “Fair Value Measurements and Disclosures”, that provides additional guidance for estimating fair value when the volume and level of activity for the assets or liability have significantly decreased.  This update is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009.  The adoption of this guidance did not impact the Company’s results of operations, financial position or cash flows.



In April 2009, an update was made to FASB ASC 825, “Financial Instruments”, which requires a publicly traded company to include disclosures about the fair value of its financial instruments whenever it issues summarized financial information for interim reporting periods.  This update is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009.  The adoption of this guidance did not impact the Company’s results of operations, financial position or cash flows.



In May 2009, the FASB announced the issuance of FASB ASC 855, “Subsequent Events”, formerly referenced as SFAS No. 165, Subsequent Events.  FASB ASC 855 should not result in significant changes in the subsequent events that an entity reports.  Rather, FASB ASC 855 introduces the concept of financial statements being available to be issued.  Financial statements are considered available to be issued when they complete in a form and format that complies with generally accepted accounting principles (GAAP) and all approvals necessary for issuance have been obtained.  The Company has already adopted this policy and its full disclosure is included in Note 14.



In April 2010, the FASB issued Accounting Standards Update 2010-13, “Compensation – Stock Compensation (ASC 718)”, which addresses the classification of an employee share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. The Update provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment award that contains a condition that is not a market, performance, or service condition is required to be classified as a liability. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The Company is currently evaluating the impact of this update on the financial statements.




F-26


Reg Technologies Inc.


(A Development Stage Company)


Notes to Consolidated Financial Statements


(Expressed in Canadian Dollars)


For the years ended 30 April 2011 and 2010




15.
Reconciliation of United States and Canadian Generally Accepted Accounting Principles (“US GAAP and “Canadian GAAP”(cont’d)





f)
The net loss for the years ended April 30, 2011, 2010 and 2009 and deficit accumulated during the development stage as determined under U.S. GAAP is as follows:





2011


2010


2009$



$



$Net income (loss), as determined under Canadian GAAP


(246,000
)


(454,902
)


(456,090
)Deferred exploration expenditures


(22,953
)


-



-Donated services


(151,845
)


(161,071
)


(171,705
)Net loss, as determined under U.S. GAAP


(420,798
)


(615,973
)


(627,795
)Loss per share, weighted average basis (excluding escrowed shares) under US GAAP


(0.01
)


(0.02
)


(0.03
)Deficit accumulated during the development stage, as determined under U.S. GAAPBeginning of year


(22,971,961
)


(22,355,988
)


(21,728,193
)Loss for the year


(420,798
)


(615,973
)


(627,795
)End of year


(23,392,759
)


(22,971,961
)


(22,355,988
)





g)
Material effects of the different generally accepted accounting principles on the Company’s balance sheet as at April 30, 2011 and 2010 are as follows:





2011


2010$



$Donated capital, under Canadian GAAP


-



-Donated services


1,744,581



1,592,736Donated capital, under U.S. GAAP


1,744,581



1,592,736Mineral property, under Canadian GAAP


232,953



-Deferred exploration expenditures


(22,953
)


-Mineral property, under U.S. GAAP


210,000



-Deficit, ending balance, under Canadian GAAP


21,625,225



21,379,225Deficit, under U.S. GAAP


23,392,759



22,971,961Net increase to deficit, under U.S. GAAP


1,767,534



1,592,376





F-27




Reg Technologies Inc.
 (A Development Stage Company)
 Notes to Consolidated Financial Statements
 (Expressed in Canadian Dollars)
 For the years ended 30 April 2011 and 2010


15.
Reconciliation of United States and Canadian Generally Accepted Accounting Principles (“US GAAP and “Canadian GAAP”(cont’d)





h)
The impact of the differences between Canadian GAAP and US GAAP on the consolidated statements of cash flows would be as follows:





2011

$



2010

$



2009

$Cash flows used in operating activities, Canadian GAAP


(348,067
)


(567,503
)


(658,830
)Adjustment:Exploration expenditures


(22,953
)


-



-Cash flows used in operating activities, US GAAP


(371,020
)


(567,503
)


(658,830
)Cash flows provided by financing activities, Canadian and US GAAP


673,573



375,786



611,815Cash flows used in investing activities, Canadian GAAP


(237,186
)


190,974



47,864Adjustment:Exploration expenditures


22,953



-



-Cash flows used in investing activities, US GAAP


(214,233
)


190,974



47,864(Decrease) increase in cash


88,320



(743
)


849Cash, beginning of year


364



1,107



258Cash, end of year


88,684



364



1,107




F-28




ITEM 19.
EXHIBITS





Documents filed as exhibits to this annual report:





Number

Description1.1

Articles of Incorporation with Bylaws dated October 6, 1982
(1)1.2

Certificate of Name Change and Special Resolution dated February 23, 1993
(1)1.3

Memorandum and articles of incorporation amended effective April 5, 2005
(9)2.1

Special rights and restrictions attaching to the Common Shares without par value and the Class A non-voting shares without par value. Special resolution dated November 25, 1985
(1)4. (a) 1

Contract among the Company, Rand Technologies Corp. and Rand Energy Group Inc. regarding formation of Rand Energy Group Inc. and arrangement of various inter- related matters, dated March 28, 1990
(1)4. (a) 2

Energy Group Acquisition Agreement among the Company, Rand Cam-Engine Corporation, James L. McCann and Rand Energy Group Inc. regarding acquisition of technology, and rights to the Rand Cam-Engine, dated March 28, 1990
(1)4. (a) 3

Contract among the Company, Rand Cam-Engine Corporation Rand Energy Group Inc. and James L. McCann regarding arrangement of various inter-related matters concerning issuance of shares, payments, royalties, etc., dated July 30, 1992
(1)4. (a) 4

Agreement with Center for Industrial Research Applications (CIRA) regarding Year 2: Engine Refinement and Testing on the Rand-Cam Engine
(1)4. (a) 5

Research & Development Agreement Between Members of the Consortium of Reg Technologies Inc., Rand Energy Group Inc., Hercules Incorporated and The West Virginia University Research Corporation, dated May 10, 1994
(1)4. (a) 6

Agreement dated October 31, 1995 between the Company and REGI U.S., Inc. regarding assignment of Machine Vision Technology agreement with Integral Vision Systems, Inc.
(2)4. (a) 7

Cooperative Agreement between the Company and Global Aircraft Corporation regarding NASA General Aviation Propulsion Program
(3)4. (a) 8

Agreement dated June 22, 1997 between John Weston and the Company regarding the acquisition of rights to Air/Vapour Flow Systems by the Company from Weston
(4)4. (a) 9

Agreement dated September 23, 1997 between the Company, REGI U.S., Inc. and SMR Investments Ltd. regarding the assignment of the above agreement by the Company to REGI and SMR pending regulatory approval of the original agreement
(4)4. (a) 10

Agreement dated December 31, 1997 between the Company REGI U.S., Inc. and SMR Investments Ltd. regarding the Canadian rights to the AVFS and repayment of advances to Weston by SMR
(4)4. (a) 11

Joint Venture Agreement dated July 28, 1998 between REGI U.S., Inc and Trans Air Manufacturing Corporation regarding development and manufacturing of a prototype Bus Compressor
(4)4. (a) 12

Agreement dated August 5, 1998 between the Company and T.W. Blasingame Company, Inc. (Blasingame) regarding the licensing of certain Rand Cam/Direct Charge Engine manufacturing rights to Blasingame and licensing of certain rights to the "Vane Restraint Mechanism" by Blasingame to the Company
(5)4. (a) 13

Cooperative and Licensing Agreement dated December 14, 1998 between the Company, REGI U.S., Inc. Rand Energy Group, Inc. USA and Global Aircraft Corporation regarding the NASA SBIR Phase I Contract for development of the Rand-Cam Diesel Aircraft Engine
(5)4. (a) 14

Agreement made as of October 27, 2000 with GHM Inc. regarding 50% interest in the rights to the hydrogen separator technology
(7)4. (a) 15

Agreement between Radian, Inc., Reg Technologies Inc., REGI U.S., Inc. and Rand Energy Group Inc. made as of April 24, 2002
(8)




51




Number

Description4. (a) 16

Agreement between REGI and Advanced Ceramics Research dated March 20, 2002
(8)4. (a) 17

Agreement between REGI U.S, Inc. and Reg Technologies Inc. and Anuvu Incorporation dated June 29, 2005
(9)4. (b) 1

Management Agreement between the Company and SMR Investments Ltd., dated April 2, 1993
(1)4. (b) 2

Agreement between Brian Cherry, Sky Technologies, Inc. and Rand Energy Group Inc., regarding U.S. rights to the Rand Cam/Direct Charge Engine dated August 20, 1993
(1)4. (b) 3

Employment Agreement between Sky Technologies, Inc. and Patrick Badgley dated February 9, 1994
(1)4. (b) 4

Management Agreement between Sky Technologies, Inc. and Access Information Services, Inc., dated April 1, 1994
(1)4. (b) 5

Agreement between the Company and Rand Energy Group Inc. granting the Company rights to negotiate and sell licenses and marketing rights for the Rand Cam Engine, dated February 27, 1992
(1)4. (b) 6

Management Agreement dated May 1, 1996 between the Company and SMR Investments Ltd.
(3)8.1

List of Parents and Subsidiaries of the Company
(10)11.1

Code of Ethics
(11)12.1

Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - CEO
(12)12.2

Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - CFO
(12)13.1

Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - CEO
(12)13.2

Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - CFO
(12)15.1

Consent of ACAL Group, Chartered Accountant
(12)15.2

Consent of
  Dale Matheson Carr-Hilton Labonte LLP
(12)





1)
Incorporated by reference to the Registrant’s Registration Statement on Form 20-F filed on June 15, 1994 with the US Securities and Exchange Commission


2)
Incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 1996


3)
Incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 1997


4)
Incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 1998


5)
Incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 1999


6)
Incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2000


7)
Incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2001


8)
Incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2002


9)
Incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2006


10)
Incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2009


11)
Incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2010 filed on December 1, 2010


12)
Exhibits filed herewith.


52





SIGNATURE PAGE




The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.




REG TECHNOLOGIES INC.Dated:
November 15, 2011

By:
/s/ John G. RobertsonJohn G. RobertsonPresident




53