**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**


**FORM
      10K-SB**





[X]
      Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
      of
      1934 for the year ended April 30, 2007





[
      ]Transition report Pursuant to Section 13 or 15(d) of the Exchange
      Act





**Commission
      File Number:**  **333-116324**





**ROTOBLOCK
      CORPORATION**


(Name
      of
      Small Business Issuer In Its Charter)




**Nevada                                                                                
      20-08987999**


(State
      or
      other
      jurisdiction                                                 
(I.R.S. Employer


of
      incorporation or
      organization                                           
 Identification No.)





**300
      B Street, Santa Rosa,
      CA.                
95401**


(Address
      of principal executive offices)      (Zip
      Code)





**(707)
      578-5220**


(Issuer's
      Telephone Number)




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


Securities
      registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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 [ ]





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained herein, and no disclosure will be contained, to the
      best of registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB. [X]




We
      had no
      revenues for the fiscal year ended April 30, 2007.





Indicate
      whether by mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). YES______ NO___X____





As
      of
      April 30, 2007, there were 30,440,886 shares of the Registrant's $0.001 par
      value Common Stock ("Common Stock"), Registrant's only outstanding class of
      voting securities, outstanding. The aggregate market value of Common Stock
      held
      by non-affiliates of the Registrant (10,806,571 shares), computed by reference
      to the closing price on July 27, 2007 ($0.0261 per share), is **** $281,946.58.





Some
      exhibits required to be filed hereunder, are incorporated herein by reference
      to
      Issuer's original Form 10-SB Registration Statement, filed under CIK No.
      0001295923 on July 6, 2004, on the SEC website at www.sec.gov.





Transitional
      Small Business Disclosure Format: Yes No X





Large
      Accelerated Filer ____ Accelerated Filer ____ Non-Accelerated Filer
      ___X____


1




**Available
      Information**





Our
      Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current Reports
      on Form 8-K and all amendments to those reports that we file with the Securities
      and Exchange Commission, or SEC, are available at the SEC's public reference
      room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain
      information on the operation of the public reference room by calling the SEC
      at
      1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains
      reports, proxy and information statements and other information regarding
      issuers that file electronically with the SEC.











**TABLE
        OF CONTENTS**
 
 **Page****PART
                  I**ITEM
                  1.
              
              Business
              
              
              2ITEM
                  1A.
              
              Risk
                  Factors
              
              
              8ITEM
                  1B.
              
              Unresolved
                  Staff Comments
              
              
              12ITEM
                  2.
              
              Properties
              
              
              12ITEM
                  3.
              
              Legal
                  Proceedings
              
              
              12ITEM
                  4.
              
              Submission
                  of Matters to a Vote of Security Holders
              
              
              12**PART
                  II**ITEM
                  5.
              
              Market
                  for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
                  Purchases of Equity Securities
              
              
              12ITEM
                  6.
              
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              
              
              18ITEM
                  7.
              
              Financial
                  Statements
              
              
              18ITEM
                  8.
              
              Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure
              
              
              18ITEM
                  8A.
              
              Controls
                  and ProceduresITEM
                  8B.
              
              Other
                  Information
              
              
              19**PART
                  III**ITEM
                  9.
              
              Directors,
                  Executive Officers and Corporate Governance
              
              
              19ITEM
                  10.
              
              Executive
                  Compensation
              
              
              22ITEM
                  11.
              
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              
              
              24ITEM
                  12.
              
              Certain
                  Relationships and Related Transactions, and Director
                  Independence
              
              
              25ITEM
                  13.
              
              ExhibitsITEM
                  14.
              
              Principal
                  Accountant Fees and Services
              
              
              25Financial
                  Statements
              
              
              25


2


**PART
      I**


**Item
      1. Business**





***General*** ****





Rotoblock
      Corporation was incorporated in the State of Nevada on March 22, 2004. We were
      formed to engage in the development and licensing of an Oscillating Piston
      Engine (OPE) and are currently in the development stage. We have not yet
      generated any revenues since inception and have incurred net operating losses
      of
      $4,045,615, since inception. We do not own any real estate. Our auditors have
      raised substantial doubt about our ability to continue as a going concern.





We
      maintain our statutory registered agent's office in Carson City, Nevada and
      our
      business offices and testing laboratory in Santa Rosa, California.





***Acquisition
      of Patented Rights and Technology***





On
      March
      30, 2004, we acquired Rotoblock, Inc., a privately-held Canadian corporation
      (the Subsidiary), which holds an option entitling it to acquire all of the
      rights, title and interest in and to a patented technology and prototype engine
      in exchange for 15,000,000 shares of our restricted common stock, valued at
      $0.002 per share. The terms of the option are as follows:





For
      a
      consideration of US$100,000, plus interest at the rate of 24% per annum
      calculated from January 31, 2004 to the date of payment, paid on May 31, 2004,
      the inventor and an unrelated third party, Dr. Monti Farrell granted us, through
      our wholly-owned Subsidiary, Rotoblock, Inc., an option to acquire the patent
      rights to the engine technology. The option grants us the rights to further
      develop, market and sell the final engine product or to license the technology
      to third-party manufacturers. In addition, the option grants us the right and
      option to purchase the patents for US$1,000,000, if purchased by December 2,
      2005 (not paid), or for $1,500,000, if purchased within 36 months after payment
      of the initial deposit (June 2, 2007). On
      25
      October 2006, we negotiated an extension to exercise the Option by thirty seven
      months. Pursuant to the amended option agreement, we must pay a royalty of
      $50
      per engine on the sale of up to 10,000 oscillating piston engines (“OPE”), and a
      royalty of $2 per engine on the sale of up to 100,000 OPE.




Dr.
      Farrell passed away during the year ended April 30, 2005 and the option rights
      were assigned to his Estate.





We
      currently do not own the patents or rights underlying the patents, but rather,
      have been granted the use thereof and an option to purchase the rights within
      3
      years, which gives us ample time to further test and develop the technology
      and
      engine. Pursuant to the terms of the agreement, the option may also be assigned
      to a third party without consent of the Estate of the Optionor.





We
      acquired all of the issued and outstanding shares of Rotoblock Inc. by issuing
      15,000,000 shares of our common stock. Since the transaction resulted in the
      former shareholders of Rotoblock Inc. owning all of the issued shares of
      Rotoblock Corporation, the transaction has been treated for accounting purposes
      as an acquisition by Rotoblock Inc. of the net assets and liabilities of
      Rotoblock Corporation. Under this purchase method of accounting, the results
      of
      operations of Rotoblock Corporation are included in the consolidated financial
      statements.





Rotoblock
      Corporation had a net asset deficiency at the acquisition date, therefore,
      the
      15,000,000 common shares issued on acquisition were issued at a fair value
      of
      $Nil with the net asset deficiency of $138 charged to deficit. Rotoblock Inc.
      is
      deemed to be the purchaser for accounting purposes. Accordingly, its net assets
      are included in the consolidated balance sheet at their previously recorded
      amounts.





All
      of
      our operations relating to the development and marketing of the OPE technology
      are conducted by Rotoblock, Inc. (the Subsidiary). We are currently in the
      process of improving on the technology to make the engine more efficient,
      economical and environmentally friendly in an effort to make it attractive
      to


3


engine
      manufacturers to either acquire the technology or negotiate license agreements
      to use the technology. We have made several changes to the prototype engine.
      All
      parts except the crankshaft and engine block have been re-designed.





We
      are
      continuing our research, development and testing efforts until we are certain
      we
      have completed the best, most efficient model. This goal will be considered
      to
      be reached when the engine demonstrates a power to weight ratio of 2:1. We
      are
      hopeful this can be achieved within the 36 months granted in the option to
      use
      the technology underlying the patents.





**The
      Oscillating Piston Engine Technology (OPE)**





The
      OPE
      patented internal combustion engine is different than conventional reciprocating
      engine technology in that the current oscillating piston design incorporates
      four pairs of pistons. Each of these eight pistons is alternately attached,
      through two oppositely rotating adjacent discs, to two coaxial drive shafts
      extending from the center of one face of the cylinder block. Each piston is
      attached to a single disc such that four non-adjacent pistons are rigidly
      affixed to the upper disc and the remaining four to the lower. Each concentric
      shaft is attached, respectively, to the connecting discs. The discs, in turn,
      couple the motion of the oscillating pistons to a single crankshaft, via a
      dual
      scotch yoke mechanism. Each piston is a segmented toroidal section traveling
      within the closed toroidal chamber of the cylinder block.





The
      round
      cylinder block containing the pistons, connecting discs and coaxial output
      shafts is free to continuously rotate in a counter clockwise direction. It
      is
      caused to revolve ninety degrees for every complete revolution of the rotating
      crankshaft. This action is accomplished by a four-to-one ratio gear reduction
      mechanism which couples the two components together.





Rotation
      of the cylinder block causes a pair of intake and exhaust ports, as well as
      two
      diametrically positioned spark plugs, to regularly appear in the intervening
      spaces formed between the faces of the pistons as they oscillate backwards
      and
      forwards between the limits of allowed travel within the toroidal cylinder.
      When
      in operation, the diametrically opposed inlet ports in the cylinder block are
      supplied with a combustible fuel/air mixture through an attached intake
      manifold, such that the separating opposing piston pairs each draws in a fresh
      charge mixture as the rotating cylinder block passes through the first of four
      combustion cycles.





The
      second cycle begins as the same piston pairs reach their limits of travel,
      reverse direction and proceed to compress the charge mixture captured between
      their faces. Compression continues until the approaching piston faces reach
      their closest point at the end of their range of travel.





The
      third
      cycle starts with the appearance of the spark plugs in the intervening space
      between the moving pistons just at the point in the cycle when they make their
      closest approach to each other. At this juncture, timed firing of the spark
      plugs ignites the compressed charge mixture confined between the faces of each
      of the two piston pairs. The exploding fuel/air mixture is rapidly heated and
      expands, thereby forcing the opposing piston pair faces apart and, by so doing,
      produces the power cycle. The force applied to the separating pistons by the
      expanding gas is coupled, through the two connecting discs, to the scotch yokes,
      which, in turn cause the continuous rotation of the crankshaft and output
      shaft.











4





As
      the
      cylinder block continues to rotate, the fourth cycle begins. Next, exhaust
      ports
      appear between the piston pairs coincident with their change of direction at
      the
      end of the power stroke. The approaching piston faces now expel the burnt
      exhaust gases through the exhaust ports. This brings to a close the final cycle
      of the four cycle sequence.





The
      endless repetition of these four combustion cycles produces sixteen power
      strokes for each revolution of the cylinder block. Momentum stored in the
      inertial mass of the rotating cylinder block substitutes for the action of
      the
      flywheel found in conventional reciprocating engine designs.





***Simplicity
      of Design, Assembly and Repair***





The
      OPE
      engine is comprised of four major mechanical sub-assemblies. Each sub-assembly
      can be easily removed from the engine, allowing for rapid factory assembly
      and
      easy replacement or field servicing. We believe this feature should permit
      the
      engine to be totally field maintainable, to the degree that a major overhaul
      should be able to be completed by a qualified mechanic using only conventional
      hand tools in just a few hours. The simple design of the engine should also
      help
      reduce the costs of manufacturing because of the reduced parts count. In
      addition, the elimination of a valve train and liquid cooling system components
      in the oscillating piston engine design should lessen the engine's complexity,
      which could further reduce costs to achieve overall engine efficiency. We are
      currently still in the testing and development stages of the engine design
      and
      as a result, have not yet completed the final prototype for further
      testing.





Departure
      from conventional engine design, resulting in fewer moving parts, has allowed
      us
      to produce an engine with reduced frictional losses, which if proven in testing,
      could lead to increased reliability, improved performance and longer engine
      life. As is typical with mechanical systems, simplicity is the key to a
      successful design. In keeping with this philosophy, the OPE engine uses
      standardized components, common to the industry, wherever possible.





There
      is
      no certainty, however, that our research and development activities will result
      in a marketable engine that:





-
      can be
      assembled more quickly than a conventional engine;


-
      is
      easier to service in the field;


-
      is
      totally field maintainable; or


-
      will
      reduce the costs of manufacturing.





***Versatility
      of Use***





The
      OPE
      engine has been specifically designed to maximize versatility of use. The
      engine's extreme horsepower to weight ratio, when finally tested and proven,
      could lend itself useful to a wide variety of both industrial and consumer
      applications. The advantage of having high power-to-weight ratio and air-cooled
      design fits perfectly with the specialized requirements of many recreational
      vehicles and portable power tools. Here, engines in the range of several hundred
      to several thousand horsepower are employed to power electric generators, pumps
      and compressors, as well as a wide variety of other industrial and agricultural
      types of machinery. If we are successful in completing our proposed model and
      technology, it could be an ideal choice for applications such as
      these.





***Environmental
      Impact***





The
      OPE
      design is totally valve-less. As such, there are no moving intake or exhaust
      valves to limit combustion temperature, as with typical internal combustion
      engines. If we are successful in developing an operational engine on this basis,
      it would allow the engine to be operated with a leaner fuel/air mixture and
      a
      consequent higher combustion temperature. The result would be increased Carnot
      cycle efficiency


5


when
      used
      with gasoline or similar hydrocarbon fuels. Carnot cycle efficiency is the
      ratio
      of the output work to the input heat. Leaner mixture and higher combustion
      temperature promotes more complete oxidation of the burning fuel, which would
      reduce carbon monoxide emission, while increasing efficiency and reducing fuel
      consumption for a given equivalent power output. While there is no guarantee
      we
      will be successful in developing an operational engine on this basis, we will
      attempt to make the engine's environmental impact minimal.





***Research,
      Development and Testing Since Acquisition***





We
      have
      conducted a number of test runs with the engine and are continuing to improve
      upon the technology. The milestones we have set for ourselves have been reached
      and we are in the process of discussing potential joint ventures and/or
      co-development arrangements with qualified manufacturers. We are researching
      technologies that could be used in conjunction with the OPE, therefore enhancing
      the uses for this unique engine. The market has a need for technologically
      advanced and efficient propulsion systems, be they straight mechanical or hybrid
      in nature. One of the greatest challenges when incorporating hybrid technology
      into a vehicle is space limitation. Due to the projected high power-to-weight
      ratio of the OPE, at a given horsepower output OPE technology will result in
      a
      smaller, more compact engine, hence being ideally suited for such applications.
      We have also been contacted by manufacturers in the following areas who feel
      that the OPE exhibits attributes and characteristics that would benefit their
      product lines.





-
            High
                power marine outboard motors


-
            Auxiliary-power
                units for the trucking industry





***Patents
      and Trademarks***





On
      March
      30, 2004, we acquired Rotoblock, Inc., a privately-held Canadian corporation
      (the "Subsidiary"), which holds an option entitling it to acquire all of the
      rights, title and interest in and to the following patents:





**Name
                of Patent******
            **Patent
                #**
            **Issue
                Date**
            **Expiration
                Date**5,222,463
            29-Jun-93
            28-Jun-10***Oscillating
                Piston Engine*****-**This
                patent covers the basicOscillating
                Piston engine, all ofits
                parts and functionality.***Oscillating
                Piston Engine for******Driving
                a Ducted Fan -***
            5,303,546
            19-Apr-94
            18-Apr-11This
                patent covers theapplication
                of the OPE as ameans
                of driving a ducted fan(e.g.,
                aircraft, boat, hovercraft, etc.)***Oscillating
                Piston Engine for an******Electrical
                Charging System for******Electrically
                Powered Vehicles -***
            5,323,737
            28-Jun-94
            27-Jun-11This
                patent covers any applicationsfor
                an OPE powering an electriccharging
                system for an electricallypowered
                vehicle (e.g., a hybrid vehicle).***Oscillating
                Piston Engine for******Pumping
                System -***
            5,324,176
            28-Jun-94
            27-Jun-11This
                patent covers applications forthe
                OPE being used to powerpumping
                systems.***Oscillating
                Piston Engine******for
                Helicopters***
            5,467,744
            28-Nov-95
            20-Nov-12This
                patent coversapplications
                for the OPE asa
                power source to powerhelicopters.





Under
      the
      terms of the Option Agreement, exercised on May 31, 2004 with the payment of
      $100,000, plus accrued interest in the amount of $8,745, and $1,500,000 in
      cash
      by June 2, 2007, we were granted the rights to further develop, test,
      sub-license and market the engine, which we intend to do once we have a finished
      second-generation prototype. Pursuant to the terms of the Agreement, the rights
      will revert back to Dr. Farrell's Estate if they are not purchased outright
      within 36 months from the date of exercise of the option.





On
      25
      October 2006, we negotiated an extension to exercise the Option by thirty seven
      months. Pursuant to the amended option agreement, we must pay a royalty of
      $50
      per engine on the sale of up to 10,000 oscillating piston engines (“OPE”), and a
      royalty of $2 per engine on the sale of up to 100,000 OPE.





**Balance
                at 30 April 2007**
            
            **Balance
                at 30 April 2006****$**
            
            **$**Patent
                costs to date
            
            108,745
            
            108,745Accumulated
                depreciation
            
            -
            
            -108,745
            
            108,745





***Competition***





The
      industry in which we operate is intensely competitive with respect to new and
      evolving technologies on a continuous basis. In addition, there are many
      well-established competitors with substantially greater financial and other
      resources, including but not limited to established businesses with loyal
      customers. We will rely heavily on our new and developing engine technology
      to
      acquire a competitive edge. We have determined that some of our largest
      competitors will be Honda, Briggs & Stratton, Tecumseh, Kawasaki, Kohler and
      Stihl, the major producers of general purpose engines. Because of our
      intensive


6


battle
      for market share among these companies, we will also be contacting these
      manufacturers anticipating that they will want to include our OPE technology
      in
      their product lines. There are always new and emerging technologies in the
      industry in which we compete; however, we are unaware of any other new types
      of
      engines being developed with our OPE products and technology will compete at
      this time.





***Marketing
      of Technology and/or Rights***





Our
      marketing efforts will be focused on selling manufacturing licenses or rights
      to
      use the technology. Sale of the technology rights would be preferred, as the
      administration and enforcement of licensing agreements can be very complex
      and
      costly.





The
      combustion engines we see today have experienced years of relentless
      development. Manufacturers have aimed to make engines more efficient, more
      durable, and in some cases lighter. Also, recently, great efforts are being
      made
      in reducing environmentally damaging emissions .





We
      consider it important that a new engine concept be introduced in a low-key
      manner and in applications that are not mission-critical in order to build
      a
      reputation of reliability over time. We intend to pursue a marketing strategy
      that primarily targets manufacturers of general purpose engines and secondarily,
      manufacturers of engines used in recreational vehicles, such as outboard motors
      and other weight critical uses. A review of the general purpose engine market
      is
      presently underway. To date it has been determined that several large companies,
      such as Honda, Briggs & Stratton, Tecumseh, Kawasaki, Kohler and Stihl,
      dominate the industry. Initially, we intend to focus our marketing efforts
      on
      these 6 largest manufactures of general purpose engines. The manufacturers
      produce engines for a large variety of applications, including portable chain
      saws, weeding machines, portable turbo generators, portable crushers, portable
      arc welders and generators, snow blowers, lawn mowers and air and gas
      compressors, among others.





Because
      of the anticipated high power to weight ratio and the intensive battle for
      market share, we are hopeful that we will be successful in convincing one or
      more of these and other not so well known small engine manufacturers to include
      our OPE technology in their product offerings.





Articles
      in appropriate trade journals, prominent newspapers and direct marketing
      campaigns will be used to promote the OPE technology. We will also send out
      special invitations, solicit inquiries and encourage visits our laboratory
      and
      testing facilities for the purpose of demonstrating the engine and its
      technology to potential customers to demonstrate the engine and its unique
      technology, educate the potential buyer/licensee and establish essential
      relationships.





We
      intend
      to expand our marketing efforts to the marine outboard motor industry, as well
      as other small engine applications used in the recreational and other markets,
      such as snowmobiles, small water craft such as Seadoos and all-terrain vehicles.
      We are confident that a high power to weight ratio engine, similar to our
      proposed product design will fit into a large area of applications.





With
      the
      successful test run of the OPE, we have conclusively proven the viability of
      the
      engine concept. Current events and the needs of international markets to
      capitalize on technological advances in propulsion technology immediately have
      necessitated an expansion of our mission. Global supply issues of conventional
      fuels and rapid advances of software and electric control, measurement and
      communication techniques have changed the competitive environment. Thus, we
      are
      concentrating on licensing the OPE technology to all available markets.
      Concurrently we are inviting new technologies that may be used in conjunction
      with the OPE in order to be able to eventually offer complete propulsion and/or
      power generating systems to the market.





7


***Joint
      Venture Agreements***





On
      27
      January 2006, we entered into a letter of intent with Apollo Energy Systems,
      Inc. for the purpose of developing hybrid electric car technology. All
      administrative and legal costs would be shared, and an operational cost sharing
      pan will be based on partner contribution. No significant activities occurred
      in
      the joint venture during the period ended 30 April 2007.





On
      18
      July 2006, we entered into an Engine Development and License Agreement (the
      “License Agreement”) with an unrelated party, Obvio ! Automotoveiculos S.A.
      (“Obvio !”), located in Brazil. Pursuant to the terms of the License Agreement
      the parties have agreed to enter into a non-exclusive joint venture to develop
      a
      third generation OPE suitable for hybrid applications. Under the terms of the
      License Agreement, we will grant Obvio ! with a license for OPE technology
      in
      consideration of $5,000,000, which will be payable in increments of $500 for
      each engine installed or sold. Upon receipt of $5,000,000 from Obvio !, the
      Company will receive royalties of $100 per vehicle sold that incorporates OPE
      technology. According to the terms of the License Agreement we have committed
      to:





i)
            keep
                the OPE patents in good standing and ensure that maintenance fees
                are paid
                in a timely manner; and





ii)
            exercise
                the Option for all patents on or before 31 May 2007 or negotiate
                an
                extension.





No
      significant activities occurred in the joint venture during the period ended
      April 30, 2007.





On
      28
      August 2006, we entered into a letter of intent with Autocraft Industries,
      Inc.
      for the purpose of developing energy efficient propulsion systems for on and
      off
      road vehicles. No significant activities occurred in the joint venture during
      the period ended April 30, 2007.





***Government
      and Industry Regulation***





Since
      it
      our intention to develop the engine to a point where the technology can be
      sublicensed to a third party manufacturer for production, we don't anticipate
      being subject to any government or industry regulations in our testing and
      development processes. We have not yet been required to obtain any licenses
      and/or permits and are not aware of any health or environmental rules and/or
      regulations that apply to our development activities. However, new laws, rules
      and/or regulations may be implemented in the future that we are currently
      unaware of and we may be required to comply with such laws, rules and/or
      regulations. Difficulties in obtaining or failure to obtain required licenses
      and approvals could result in delays in the development of our final prototypes
      in each phase.





***Employees
      and Employment Agreements***





At
      present, we have 3 full time employees, which include all of our officers and
      directors, who work on a full time or as-needed basis. We presently do not
      have
      pension, health, annuity, insurance, profit sharing or similar benefit plans;
      however, we may adopt such plans in the future. There are presently no personal
      benefits available to any officers, directors or key employees. However, the
      Company has issued stock and share purchase warrants to directors and officers
      for their services. Please refer to the tables in Item 10 of this
      report **.**





***Item
      1A. Risk Factors***




Our
      securities are highly speculative and involve a high degree of risk, including
      among other items the risk factors described below. You should carefully
      consider the following risk factors and other information in this 10-KSB before
      deciding to invest in us.




8


*RISKS
      RELATED TO OUR BUSINESS:*




***Due
      to Our History of Operating Losses, We are Uncertain That We Will Be Able to
      Maintain Sufficient Cash to Accomplish Our Business
      Objectives***




The
      consolidated financial statements included herein have been prepared assuming
      that we will continue as a going concern. During the fiscal years ended April
      30, 2007 and 2006, we suffered net losses of $863,582 and $2,767,259,
      respectively. At April 30, 2007 and 2006, our stockholders' equity was $205,266
      and $338,077, respectively. There is no assurance that we can successfully
      complete our prototype OPE engine or that we will ever generate revenues.




See
      "Plan
      of Operation" for a description of management's plans in regard to this issue.
      The consolidated financial statements do not include any adjustments relating
      to
      the recoverability and classification of assets or the amounts and
      classification of liabilities that might be necessary should we be unsuccessful
      in implementing these plans.





***We
      do not have any additional source of funding for our business plans and may
      be
      unable to find any such funding if and when needed.***





We
      currently have only $1,482 in cash in the bank and no other source of capital
      has been identified or sought. We are currently seeking alternative sources
      of
      funding, including bank loans, exercise of outstanding warrants, additional
      sales of our equity securities and/or a joint venture partner. If we do find
      an
      alternative source of capital, the terms and conditions of acquiring this
      capital may result in dilution and the resultant lessening of value of the
      shares of common stock of our stockholders.





If
      we are
      not successful in raising sufficient capital through this offering, we will
      be
      faced with several options:





1.
      abandon our business plans, cease operations and go out of
      business;


2.
      continue to seek alternative and acceptable sources of capital;


3.
      bring
      in additional capital that may result in a change of control; or


4.
      identify a joint venture candidate with financing sources.





In
      the
      event of any of the above circumstances you could lose a substantial part or
      all
      of any investment you make in our Company. Our failure to raise sufficient
      capital or find additional funding could have a material adverse effect on
      our
      business, financial condition and operating results, including a possible total
      loss of any investment you may make.





***The
      small engine industry is highly competitive and our technology may not be well
      received or successful.***





The
      small
      engine industry is highly competitive with respect to technology, performance,
      quality and availability of service/parts. There are numerous well-established
      competitors, including national, regional and local small engine manufacturers
      and distributors who have substantially greater financial, marketing, personnel
      and other resources than our company. There can be no assurance that we will
      be
      able to respond to various competitive factors affecting our industry and
      technology. The need for small engine equipment is also generally affected
      by
      changes in consumer preferences, national, regional and local economic and
      environmental regulations and demographic trends. Prior to our acquisition
      of
      the engine and technology, it experienced a critical mechanical failure and
      was
      disassembled to investigate the cause of the problem. Failure analyses showed
      metal fatigue to be the cause of the critical component having failed. It was
      subsequently determined that choice of materials specified in the original
      design was ultimately the cause of the failure. A replacement component was
      re-specified and fabricated from a more suitable material. There can be no
      assurance that we will be able to successfully develop our proposed technology
      sufficient to create our planned model or, that if developed, it will suitably
      pass future testing


9


and
      not
      fail again. If we are unable to successfully compete in the development and
      marketing of our finished product, we may be unable to generate any revenues
      and
      you could suffer a total loss of any investment you make in our securities.





***We
      may be unable to protect the proprietary rights to the technologies, patents
      and
      intellectual property, which may hamper our ability to license and/or sell
      the
      manufacturing rights to the technology, thereby impacting our ability to earn
      revenues and become profitable.***





Our
      success and ability to compete will depend in part on the protection of the
      patents to the technology. We rely on patent and copyright laws to protect
      the
      intellectual property that was developed and have an option to acquire several
      patents on the technology. However, such laws may provide insufficient
      protection. Moreover, other companies may develop products that are similar
      or
      superior to our prototype engine, or may copy or otherwise obtain and use
      proprietary information we develop or use without our authorization. If a third
      party were to violate one or more of the patents or the new technology we
      develop, we may not have the resources to bring suit or protect the intellectual
      property underlying the patents. In the event of such a violation or if a third
      party appropriated any of our unpatented technology, such party may develop
      and
      market technology and/or products which we intend to develop and/or market.
      We
      would lose any revenues, which we would otherwise have received from the sale
      or
      licensing of that technology or those products. This could prevent our ever
      making a profit on any licensing and/or sale of any technology or products
      we
      develop.





We
      do not
      currently own the intellectual property underlying the engine's technology,
      but
      rather, have an option to us the technology for and additional 37 months, at
      which time we will have to purchase it outright for $1,500,000. Our business
      plans are to develop the technology and build a prototype engine that can be
      sublicensed to third party manufacturers for amounts sufficient to generate
      the
      funds to purchase the patent rights subject of the option agreement; however,
      if
      we are unable to do so prior to the expiration date of the option, we would
      need
      to raise additional capital through loans or equity sales, or rely on receipt
      of
      the cash we would receive from exercise of the warrants sold in this offering
      to
      exercise the option. We cannot guarantee that we will ever develop a successful
      prototype or that, if successfully developed, we will be able to sublicense
      the
      rights to any manufacturer for production and sale. As a result, we may never
      have the funds to purchase the patents, which would result in a total failure
      of
      our business and a complete loss of any investment you make in our securities.





Policing
      unauthorized use of the patents, proprietary and other intellectual property
      rights could entail significant expense and could be difficult or impossible.
      In
      addition, third parties may bring claims of copyright or trademark infringement
      against us or claim that certain of our processes or features violate a patent,
      that we have misappropriated their technology or formats or otherwise infringed
      upon their proprietary rights. Any claims of infringement, with or without
      merit, could be time consuming to defend, result in costly litigation, divert
      management attention and/or require us to enter into costly royalty and/or
      licensing arrangements to prevent further infringement on the technology we
      develop or use, any of which could increase our operating expenses and thus
      prevent us from becoming profitable.





Our
      competitive position also depends upon unpatented trade secrets. Trade secrets
      are difficult to protect. Our competitors may independently develop proprietary
      information and techniques that are substantially equivalent to the technology
      we use, or otherwise gain access to trade secrets we develop surrounding the
      engine development, such as through unauthorized or inadvertent disclosure
      of
      our trade secrets. If this occurs, our competitors may use our processes or
      techniques to develop competing products and bring them to market ahead of
      us.
      This could prevent us from becoming profitable. As a result of any of the
      aforementioned circumstances, you could suffer a total loss of any investment
      you make in our securities.





***We
      may not be able to successfully develop a marketable
      product.***





Since
      we
      are in the early stages of our engine development process, we cannot guarantee
      that we will be able to successfully complete an engine that meets the
      specifications we have set forth and are attempting


10


to
      develop. Our final product may not function as we believe it will; its projected
      potential applications may be limited; and it may never be a viable product.
      If
      we are unable to successfully develop the engine technology as planned and
      it is
      not functional or commercially attractive to third parties, we may never be
      able
      to license the technology or sell the rights to manufacture our products. In
      such event, we would be able to generate any revenues and any investment you
      made in our securities would be a total loss.





***The
      loss of our current management would make it very difficult for us to continue
      our proposed business plans.***




Investors
      must rely upon the ability, expertise, judgment, discretion, integrity and
      good
      faith of our management and directors. Our success is highly dependent on our
      current management, key personnel and key consultants. The unexpected loss
      or
      departure of any of these parties could be detrimental to our future success.
      We
      do not maintain key man insurance on our management.




*RISKS
      RELATING TO OUR COMMON STOCK:*





***We
      have numerous outstanding Warrants which may adversely affect the price of
      our
      common stock.***




We
      have
      reserved 11,962,160 shares of our Common Stock for issuance upon exercise of
      outstanding warrants at prices between $0.15 and $0.50 per share.  Any sale
      into the public market of our Common Stock purchased privately at prices below
      the current market price could be expected to have a depressive effect on the
      market price of our Common Stock. See "Market for the Registrant's Common Stock
      and Related Stockholder Matters - Market Information."




***Future
      sales of our common stock may cause our stock price to
      decline.***




Our
      stock
      price may decline by future sales of our shares or the perception that such
      sales may occur. If we issue additional shares of Common Stock in private
      financings under an exemption from the registration laws, then those shares
      will
      constitute "restricted shares" as defined in Rule 144 under the Securities
      Act
      of 1933 (the "Act"). The restricted shares may only be sold if they are
      registered under the Act, or sold under Rule 144, or another exemption from
      registration under the Act.




Some
      of
      our outstanding restricted shares of Common Stock are either eligible for sale
      pursuant to Rule 144 or have been registered under the Act for resale by the
      holders. We are unable to estimate the amount, timing, or nature of future
      sales
      of outstanding Common Stock. Sales of substantial amounts of our Common Stock
      in
      the public market may cause the stock's market price to decline. See "Market
      for
      the Registrant's Common Stock and Related Stockholder Matters - Market
      Information."




***We
      do not expect to pay dividends.***




We
      have
      not paid dividends since inception on our Common Stock, and we do not
      contemplate paying dividends in the foreseeable future on our Common Stock
      in
      order to use all of our earnings, if any, to finance expansion of our business
      plans.




***Lack
      of trading market may make it difficult to sell our common
      stock.***




The
      only
      trading in our Common Stock is conducted on the Over-the Counter ("OTC")
      Bulletin Board. As a result, an investor may find it more difficult to dispose
      of, or to obtain accurate quotations as to the market value of, the Common
      Stock. In addition, our Common Stock is defined as a "penny stock" by rules
      adopted by the U.S. Securities and Exchange Commission. In such event, brokers
      and dealers effecting transactions in the Common Stock with or for the account
      of a customer must obtain the written consent of a customer prior to purchasing
      the Common Stock, must obtain certain information from the customer and must
      provide certain disclosures to such customer. These requirements may have the
      effect


11


of
      reducing the level of trading in the secondary market, if any, of the Common
      Stock and reducing the liquidity of the Common Stock.





***Our
      stock price can be extremely volatile.***




Our
      Common Stock is traded on the OTC Bulletin Board. As a result, an investor
      may
      find it more difficult to dispose of, or to obtain accurate quotations as to
      the
      market value of, the Common Stock. There can be no assurance that an active
      public market will continue for the Common Stock, or that the market price
      for
      the Common Stock will not decline below its current price. Such price may be
      influenced by many factors, including, but not limited to, investor perception
      of us and our industry and general economic and market conditions. The trading
      price of the Common Stock could be subject to wide fluctuations in response
      to
      announcements of our business developments or those of our competitors,
      quarterly variations in operating results, and other events or factors. In
      addition, stock markets have experienced extreme price volatility in recent
      years. This volatility has had a substantial effect on the market prices of
      companies, at times for reasons unrelated to their operating performance. Such
      broad market fluctuations may adversely affect the price of our Common
      Stock.




**Item 1B.
      Unresolved Staff Comments**





None.





**Item
      2. Properties**





We
      do not
      currently own any property. We currently are using office space located at
      300 B
      Street in Santa Rosa, California. The space consists of approximately 1,000sq
      ft. We currently have a lease agreement with Schellinger Brothers, an unrelated
      third party, for corporate office space. The lease term is renewable annually.
      We believe that this arrangement is suitable given the nature of our current
      operations, and also believe that we will not need to lease additional space
      for
      at least the next 12 months.





**Item
      3. Legal Proceedings**





We
      are
      not a party to any pending legal proceeding.





**Item
      4. Submission of Matters to a Vote of Security Holders**





None.





**PART
      II**





**Item
      5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities.**





***Market
      Information***




The
      Issuer's Common Stock is traded on the NASD OTC Bulletin Board under the symbol
      ROTB. The following table sets forth the high and low closing prices of the
      Common Stock during the periods indicated (since a public trading market
      commenced) as reported by Nasdaq. The quotations below reflect inter-dealer
      prices, without retail mark-up, mark-down or commission and may not represent
      actual transactions.




Fiscal
      QuarterHigh
      Closing PriceLow
      Closing Price **Fiscal
      Year End**


4 th Quarter
          (2/1/07 -
          4/30/07) $0.10 $0.03 30-Apr-07
          *
 3 rd Quarter
          (11/1/06-
          1/31/07) $0.18 $0.12
 2 nd Quarter
          (8/1/06 -
          10/31/06) $0.10 $0.20
 1 st Quarter
          (5/1/06 -
          7/31/06) $0.28 $0.125
  4 th Quarter
        (2/1/06 -
        4/30/06) $0.44 $0.21 30-Apr-06
        *
 3 rd Quarter
        (11/1/05-
        1/31/06) $0.46 $0.12
 2 nd Quarter
        (8/1/05 -
        10/31/05) $0.49 $0.19
 1 st Quarter
        (5/1/05 -
        7/31/05) $2.10 $0.36


The
      closing price of the Common Stock as reported by the OTCBB on July 21, 2006,
      was
      $0.0261 per share.




***Holders***




As
      of
      July 21, 2007, there were 115 holders of Common Stock, who collectively held
      30,440,886 issued and outstanding shares of Common Stock.




***Dividends***




We
      did
      not declare or pay cash or other dividends on its Common Stock during the last
      two calendar years. We currently have no plans to pay any dividends, although
      we
      may do so if our financial position changes.




***Equity
      Compensation Plans***




We
      have
      not adopted any equity compensation plans; however, during the year ended April
      30, 2007, we issued a total of 2,500,000 incentive share purchase warrants
      with
      an exercise price of $0.15 per share to our directors, officers, consultants
      and
      employees. The warrants are intended to provide incentives to officers,
      employees, consultants and advisers (including members of the Board of
      Directors), who contribute to the success of the Company by offering them the
      opportunity to acquire an ownership interest in it. The Board of Directors
      believes that this also will help to align the interests of our management
      and
      employees with the interests of our stockholders.




The
      number of shares reserved for issuance of Common Stock underlying the warrants
      is the maximum aggregate amount, assuming exercise of all warrants, which were
      registered by the filing of a Form S-8


12


registration
      statement with the SEC; a complete copy of the S-8 can be found on the SEC
      website at www.sec.gov under
      our SEC File Number 333-116324 .





In
      the
      event a change, such as a stock split, is made in our capitalization which
      results in an exchange or other adjustment of each share of Common Stock for
      or
      into a greater or lesser number of shares, appropriate adjustments will be
      made
      to outstanding, unexercised warrants and in the exercise price and in the number
      of shares subject to each outstanding warrant. The Committee also may make
      provisions for adjusting the number of bonuses or underlying outstanding
      warrants in the event we effect one or more reorganizations, recapitalizations,
      rights offerings, or other increases or reductions of shares of our outstanding
      Common Stock.





***Share
      Purchase Warrants***





During
      the year ended April 30, 2007, we extended the expiration date on a total of
      3,500,000 outstanding warrants to August 2009.





The
      following share purchase warrants were outstanding at 30 April
      2007:





**Exercise
                price**
            
            **Number**
              **of
                warrants**
            
            **Remaining**
              **contractual
                life (years)****$**Warrants
            
            0.50
            
            2,000,000
            
            2.29Warrants
            
            0.50
            
            1,125,000
            
            0.32Warrants
            
            0.50
            
            3,000,000
            
            2.32Warrants
            
            0.50
            
            250,000
            
            0.42Warrants
            
            0.50
            
            1,154
            
            0.59Warrants
            
            0.50
            
            125,000
            
            0.60Warrants
            
            0.50
            
            1,006
            
            0.65Warrants
            
            0.25
            
            2,960,000
            
            3.71Warrants
            
            0.15
            
            2,500,000
            
            4.6111,962,160





The
      following is a summary of warrant activities during the years ended 30 April
      2007 and 2006:





**Number
                of warrants**
            
            **Weighted
                average exercise price****$**Outstanding
                and exercisable at 1 May 2005
            
            5,000,000
            
            0.50Granted
            
            9,502,160
            
            0.50Exercised
            
            (40,000)
            
            0.25Expired
            
            -
            
            -Outstanding
                and exercisable at 30 April 2006
            
            14,462,160
            
            0.50Weighted
                average fair value of warrants granted during the year ended 30 April
                2006
            
            
            
            0.23


13





Outstanding
                and exercisable at 1 May 2006
            
            14,462,160
            
            0.45Granted
            
            2,500,000
            
            0.15Exercised
            
            -
            
            -Expired
            
            (5,000,000)
            
            0.50Outstanding
                and exercisable at 30 April 2007
            
            11,962,160
            
            0.45Weighted
                average fair value of warrants granted during the year ended 30 April
                2007
            
            
            
            0.09





The
      weighted average grant date fair value of warrants issued during the year ended
      30 April 2007, amounted to $0.09 per warrant (30 April 2006 - $0.23 per
      warrant). The fair value of each warrant granted was determined using the
      Black-Scholes option pricing model and the following weighted average
      assumptions:





**As
                at 30 April 2007**
            
            **As
                at 30 April 2006**Risk
                free interest rate
            
            
            
            4.04
                - 4.82 %
            
            4.04
                - 4.42%Expected
                life
            
            
            
            2.0
                - 5.0 years
            
            2.0
                - 5.0 yearsAnnualized
                volatility
            
            
            
            117
                - 141%
            
            134
                - 141%Expected
                dividends
            
            
            
            -
            
            -











***Recent
      Sales of Unregistered Securities***




Following
      are descriptions of all unregistered equity securities sold during the last
      fiscal year:





During
      the 2007 fiscal year, we completed a private placement of 114,286 restricted
      shares of common stock for $0.21 per share.


14





During
      the 2007 fiscal year, we issued a total of 4,127,392 shares for services valued
      at $945,942.  Details
      of the shares issued for services are as follows:





**Date
                Issued**
            
            **Number**
              **of
                shares**
            
            **Price**
            
            **Price**
              **per
                share**
            
            **Service****$**
            
            **$**24
                August 2005
            
            250,000
            
            95,000
            
            0.38
            
            Consulting*24
                August 2005
            
            25,000
            
            9,500
            
            0.38
            
            Computer
                and IT24
                August 2005
            
            50,000
            
            19,000
            
            0.38
            
            Public
                relations24
                August 2005
            
            25,000
            
            9,500
            
            0.38
            
            Investor
                relations24
                August 2005
            
            300,000
            
            114,000
            
            0.38
            
            Legal24
                August 2005
            
            250,000
            
            95,000
            
            0.38
            
            Consulting*24
                August 2005
            
            25,000
            
            9,500
            
            0.38
            
            Accounting28
                September 2005
            
            104,171
            
            29,168
            
            0.28
            
            Investor
                relations29
                September 2005
            
            100,000
            
            25,000
            
            0.25
            
            Consulting29
                September 2005
            
            150,000
            
            37,500
            
            0.25
            
            Consulting*27
                October 2005
            
            327,586
            
            95,000
            
            0.29
            
            Investor
                relations28
                October 2005
            
            99,360
            
            24,840
            
            0.25
            
            Rent1
                November 2005
            
            50,000
            
            14,000
            
            0.28
            
            Public
                relations1
                November 2005
            
            125,000
            
            35,000
            
            0.28
            
            Consulting2
                November 2005
            
            80,000
            
            23,200
            
            0.29
            
            Consulting14
                November 2005
            
            100,000
            
            50,000
            
            0.50
            
            Printing12
                January 2006
            
            250,000
            
            37,500
            
            0.15
            
            Consulting12
                January 2006
            
            16,667
            
            2,500
            
            0.15
            
            Legal25
                January 2006
            
            68,287
            
            21,169
            
            0.31
            
            Commission
                bonus7
                February 2006
            
            22,059
            
            7,500
            
            0.34
            
            Consulting28
                June 2006
            
            24,513
            
            4,658
            
            0.19
            
            Consulting29
                June 2006
            
            150,000
            
            28,500
            
            0.19
            
            Investor
                relations9
                August 2006
            
            33,333
            
            5,000
            
            0.15
            
            Legal3
                October 2006
            
            57,820
            
            5,782
            
            0.10
            
            Consulting19
                October 2006
            
            69,000
            
            6,210
            
            0.09
            
            Consulting10
                November 2006
            
            75,000
            
            7,500
            
            0.10
            
            Public
                relations29
                November 2006
            
            800,000
            
            96,000
            
            0.12
            
            Public
                relations22
                December 2006
            
            192,363
            
            15,389
            
            0.08
            
            Rent2
                January 2007
            
            135,850
            
            10,868
            
            0.08
            
            Consulting7
                February 2007
            
            93,750
            
            7,500
            
            0.08
            
            Public
                relations3
                April 2007
            
            77,633
            
            4,658
            
            0.06
            
            ConsultingTotal
            
            4,127,392
            
            945,942






*Common
      shares issued for services from related parties.








There
      were no stock options issued or outstanding at April 30, 2007.





15





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





THIS
      ANNUAL REPORT, INCLUDING THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS,
      AND
      OTHER REPORTS FILED BY THE REGISTRANT FROM TIME TO TIME WITH THE SECURITIES
      AND
      EXCHANGE COMMISSION (COLLECTIVELY THE "FILINGS") CONTAIN FORWARD-LOOKING
      STATEMENTS WHICH ARE INTENDED TO CONVEY OUR EXPECTATIONS OR PREDICTIONS
      REGARDING THE OCCURRENCE OF POSSIBLE FUTURE EVENTS OR THE EXISTENCE OF TRENDS
      AND FACTORS THAT MAY IMPACT OUR FUTURE PLANS AND OPERATING RESULTS. THESE
      FORWARD-LOOKING STATEMENTS ARE DERIVED, IN PART, FROM VARIOUS ASSUMPTIONS AND
      ANALYSES WE HAVE MADE IN THE CONTEXT OF OUR CURRENT BUSINESS PLAN AND NFORMATION
      CURRENTLY AVAILABLE TO US AND IN LIGHT OF OUR EXPERIENCE AND PERCEPTIONS OF
      HISTORICAL TRENDS, CURRENT CONDITIONS AND EXPECTED FUTURE DEVELOPMENTS AND
      OTHER
      FACTORS WE BELIEVE TO BE APPROPRIATE IN THE CIRCUMSTANCES. YOU CAN GENERALLY
      IDENTIFY FORWARD-LOOKING STATEMENTS THROUGH WORDS AND PHRASES SUCH AS "SEEK",
      "ANTICIPATE", "BELIEVE", "ESTIMATE", “EXPECT", "INTEND", "PLAN", "BUDGET",
      "PROJECT", "MAY BE", "MAY CONTINUE", "MAY LIKELY RESULT", AND SIMILAR
      EXPRESSIONS. WHEN READING ANY FORWARD-LOOKING STATEMENT YOU SHOULD REMAIN
      MINDFUL THAT ALL FORWARD-LOOKING STATEMENTS ARE INHERENTLY UNCERTAIN AS THEY
      ARE
      BASED ON CURRENT EXPECTATIONS AND ASSUMPTIONS CONCERNING FUTURE EVENTS OR FUTURE
      PERFORMANCE OF OUR COMPANY, AND ARE SUBJECT TO RISKS, UNCERTAINTIES, ASSUMPTIONS
      AND OTHER FACTORS RELATING TO OUR INDUSTRY AND RESULTS OF OPERATIONS, INCLUDING
      BUT NOT LIMITED TO THE FOLLOWING FACTORS:





o
      WHETHER
      THE ALTERNATIVE ENERGY FOR OUR PRODUCTS CONTINUES TO GROW AND, IF IT DOES,
      THE
      PACE AT WHICH IT MAY GROW;





o
      OUR
      ABILITY TO ATTRACT AND RETAIN THE PERSONNEL QUALIFIED TO IMPLEMENT OUR GROWTH
      STRATEGIES,





o
      OUR
      ABILITY TO OBTAIN APPROVAL FROM GOVERNMENT AUTHORITIES FOR OUR
      PRODUCTS;





o
      OUR
      ABILITY TO PROTECT THE PATENTS ON OUR PROPRIETARY TECHNOLOGY;





o
      OUR
      ABILITY TO FUND OUR SHORT-TERM AND LONG-TERM FINANCING NEEDS;





o
      OUR
      ABILITY TO COMPETE AGAINST LARGE COMPETITORS IN A RAPIDLY CHANGING


MARKET;





o
      CHANGES
      IN OUR BUSINESS PLAN AND CORPORATE STRATEGIES; AND





o
      OTHER
      RISKS AND UNCERTAINTIES DISCUSSED IN GREATER DETAIL IN VARIOUS SECTIONS OF
      THIS
      REPORT.





SHOULD
      ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE
      UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY
      FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR PLANNED.
      EACH
      FORWARD-LOOKING STATEMENT SHOULD BE READ IN CONTEXT WITH, AND WITH AN
      UNDERSTANDING OF, THE VARIOUS OTHER DISCLOSURES CONCERNING OUR COMPANY AND
      OUR
      BUSINESS MADE IN OUR FILINGS. YOU SHOULD NOT PLACE UNDUE RELIANCE ON ANY
      FORWARD-LOOKING STATEMENT AS A PREDICTION OF ACTUAL RESULTS OR DEVELOPMENTS.
      WE
      ARE NOT OBLIGATED TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENT CONTAINED
      IN
      THIS REPORT TO REFLECT NEW EVENTS OR CIRCUMSTANCES UNLESS AND TO THE EXTENT
      REQUIRED BY APPLICABLE LAW.


16





***Results
      of Operations***





For
      the
      year ended April 30, 2007, we incurred a net operating loss of $863,582, as
      compared to a net loss of $2,767,259 for the year ended April 30,
      2006.





We
      incurred total expenses of $878,582 for the year ended April 30, 2007, as
      compared to total expenses of $2,580,185 for the year ended April 30, 2006.
      The
      majority of the expense was $414,711, the estimated fair value of incentive
      share purchase warrants issued to directors, officers and employees during
      the
      period. A total of $114,935 in consulting fees was paid, none to related
      parties. A total of $45,358 was paid for investor relations during the period
      and $96,679 in public relations and preparation and dissemination of shareholder
      information. A total of $64,562 was paid in professional fees for the year
      ended
      April 30, 2007, which generally consisted of fees for legal, accounting and
      outside services paid in connection with the preparation and filing of our
      periodic reports. Research and development expense was $418 for the year ended
      April 30, 2007. A total of $100,000 was expensed as the fair market value of
      management fees for services contributed by our officers and directors during
      the year ended April 30, 2007. The balance of general and administrative
      expenses were attributed to miscellaneous office expenses, filing fees, rent,
      travel and entertainment and day-to-day operating expenses.





During
      the year ended April 30, 2007, we recovered $15,000 from a related company
      with
      two directors in common. This amount relates to the $177,204 previously written
      off during the year ended April 30, 2006 that we had deemed to be uncollectible.





***Liquidity
      and Capital Resources***





We
      currently have only $1,482 in cash on hand and are seeking sources of funding
      to
      continue our operations. It is expected we will continue to need further funding
      until we complete a final prototype to bring to market for sale or enter into
      an
      agreement with a joint venture partner to complete our plans. We are currently
      researching both options; however, no definitive agreements have yet been
      entered into. We currently plan to fund future operations by public offerings
      or
      private placement of equity and/or debt securities as we have done in the past.
      However, there can be no assurance that debt or equity financing will be
      available to us on acceptable terms to meet these requirements, as and when
      needed. Our auditors have expressed substantial
      doubt about our ability to continue as a going concern





As
      of the
      date of this annual report, we have not yet generated any revenues.





We
      do not
      intend to purchase any significant property or equipment, nor incur any
      significant changes in employees during the next 12 months.





Cash
      provided by financing activities for the year ended April 30, 2007 was $34,000,
      attributed to $24,000 in private sales of our common stock, $10,000 received
      from a promissory note payable.





There
      was
      no cash used in investing activities for the year ended April 30,
      2007.





Our
      net
      loss for the year ended April 30, 2007 was $863,582, as compared to a net loss
      of $2,767,259 for the year ended April 30, 2006.





Our
      auditors have expressed the opinion that in our current state, there is
      substantial doubt about our ability to continue as a going concern.





We
      anticipate no material commitments for capital expenditures in the near term.
      Management is not aware of any trend in its industry or capital resources,
      which
      may have an impact on its income, revenue or income from
      operations.


17





***Off-Balance
      Sheet Arrangements***





We
      have
      no off-balance sheet arrangements or contractual or commercial
      commitments.





**Item
      7. Financial Statements**





See
      our
      Financial Statements and Supplementary Data following the signature page of
      this
      Form 10-KSB.





**Item
      8. Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosures**





There
      have been no disagreements with our accountants on accounting or other financial
      disclosures since inception.





On
      November 9, 2006, our independent auditors, Staley, Okada & Partners,
      Chartered Accountants, informed us by letter that they had sold their business
      to PricewaterhouseCoopers LLP and were resigning as our independent auditors.





Since
      the
      appointment of Staley, Okada & Partners, Chartered Accountants on May 31,
      2005, and all subsequent interim periods through the date of their resignation
      on November 9, 2006, Staley, Okada & Partners, Chartered Accountants’
reports on our financial statements did not contain an adverse opinion or
      disclaimer of opinion, nor were they modified as to audit scope or accounting
      principles. The audit report for the fiscal years ended April 30, 2005 and
      2006
      were modified as to the uncertainty regarding our ability to continue as a
      going
      concern because of out status as a development stage company with limited
      operations. The audited financial statements for the fiscal years ended April
      30, 2006 and April 30, 2005 did not include any adjustments that might have
      resulted from the outcome of this uncertainty. From the date of the appointment
      on May 31, 2005 through the firm’s resignation, there were no disagreements with
      Staley, Okada & Partners, Chartered Accountants on any matter of accounting
      principles or practices, financial statement disclosure, or auditing scope
      or
      procedure which, if not resolved to Staley, Okada & Partners, Chartered
      Accountants' satisfaction, would have caused Staley, Okada & Partners,
      Chartered Accountants to make reference to the subject matter in connection
      with
      its reports and/or reviews of our consolidated financial statements during
      our
      most recent fiscal years, or any interim period.





On
      November 9, 2006, we engaged the services of James Stafford Chartered
      Accountants, with offices in Vancouver, B.C., Canada, a PCAOB registered firm,
      as our principal accountant to review, audit and certify our financial
      statements for the balance of the fiscal year ended April 30, 2007. The decision
      to appoint James Stafford Chartered Accountants as our principal accounting
      firm
      was unanimously approved by written consent of the Board of Directors of
      Registrant on November 9, 2006.





**Item
      8a. Controls and Procedures**





***Critical
      Accounting Policies***





The
      financial statements included herein have been prepared pursuant to the rules
      and regulations of the Securities and Exchange Commission. Management believes
      the disclosures made are adequate to make the information not misleading. The
      financial statements and accompanying notes are prepared in accordance with
      the
      United States generally accepted accounting principles. Preparing financial
      statements requires Management to make estimates and assumptions that affect
      the
      reported amounts of assets and liabilities and disclosure of contingent assets
      and liabilities at the date of the financial statements and the reported amounts
      of revenues and expenses during the reporting period. These estimates and
      assumptions are affected by Management's application of accounting policies.
      These important accounting policies include the successful efforts method of
      accounting for property and equipment, revenue recognition, accounting for
      income taxes and foreign currency translation.


18





Management
      maintains disclosure controls and procedures designed to ensure that we are
      able
      to timely collect the information we are required to disclose in our reports
      filed with the U.S. Securities and Exchange Commission.





As
      of the
      end of the period covered by this report, we performed an evaluation, under
      the
      supervision and with the participation of our Management, of the effectiveness
      of the design and operation of our disclosure controls and procedures pursuant
      to Exchange Act Rule 13a-14. Based upon the evaluation, our Principal Executive
      Officer and Principal Accounting Officer concluded that the current disclosure
      controls are effective in timely alerting us to any material information
      required to be included in our periodic SEC filings.





We
      also
      maintain a system of internal controls designed to provide reasonable assurance
      that (i) transactions are executed in accordance with Management's general
      and
      specific authorization; (ii) transactions are recorded as necessary to permit
      preparation of financial statements in conformity with the United States
      generally accepted accounting principles and to maintain accountability for
      assets; (ii) access to assets is permitted only in accordance with Management's
      general or specific authorization; and (iv) the recorded accountability for
      assets is compared with the existing assets at reasonable intervals and
      appropriate action is taken with respect to any differences. We believe that
      our
      internal controls are effective to provide reasonable assurance that our
      financial statements are fairly presented in conformity with generally accepted
      accounting principals. Since our most recent evaluation, there have been no
      changes in our internal controls or in other factors that could significantly
      affect our internal controls, nor were any corrective actions required with
      regard to significant deficiencies and material weaknesses.





However,
      our auditors did not test the effectiveness of nor relied on our internal
      controls for the fiscal year ended April 30, 2007.





**Item
      8B. Other Information**





None.


**PART
      III**




**Item
      9. Directors, Executive Officers, Promoters and Control Persons; Compliance
      with
      Section 16(a) of the Exchange Act**





***Management***





The
      following table sets forth the names, positions and ages of the executive
      officers and directors. Directors are elected at the annual meeting of
      stockholders and serve for one year or until their successors are elected and
      qualify. Officers are elected by the Board of Directors and their terms of
      office are, except to the extent governed by employment contract, at the
      discretion of the Board of Directors.




Name
                of Director or Officer and Position in the Company
            
            Officer
                or Director Since
            
            Age
            
            Office(s)
                Held and Other Business ExperienceMatthias
                Heinze, President, CEO and Director
            
            May,
                2006 to present
            
            52
            
            Mr.
                Heinze is the Director of Technology for TUV, a U.S.-German corporation
                specializing in independent testing and assessment services. He is
                also
                Chief Executive Officer of Scibase Intl., LLC, a technology development
                company. For the past twenty years, Mr. Heinze has worked in the
                Industrial Machinery and Pressure Equipment divisions at TUV. Mr.
                Heinze
                holds engineering degrees from FH Hamburg and FH Jena in
                Germany.Thomas
                M. Howard, Chief Financial Officer, Principal Accounting Officer
                and
                Director
            
            August
                11, 2005 to Present
            
            59
            
            For
                the past five years Mr. Howard has been owner and operator of Thomas
                M.
                Howard, CPA. His company specializes in small business consulting,
                income
                tax preparations, compilations, reviews, and audits financial
                statements.Mariya
                Petrovska, Secretary and Director
            
            April
                18, 2007 to Present
            
            24
            
            Ms.
                Petrovska was appointed as director and corporate secretary of the
                company
                in April 2007 when the former secretary and director, Renay Cude,
                resigned.Ching
                Chen Chan,
                Director
            
            September
                26, 2005 to Present
            
            
            
            Professor
                at the University of Hong Kong and one of China's foremost authorities
                on
                drive train design and engineering. He has been called the "Father
                of
                Asian Electric Vehicles" by Global View Magazine2003
                and has been actively involved in electric vehicle (EV) projects
                in China,
                India, Japan, United States and Europe. In 2001, Asiaweek selected
                Chan as
                "Asia's Best Technology Pioneer". He has authored and co-authored
                eight
                books and over 220 technical papers and holds eight patents. His
                2001 book
                "Modern Electric Vehicle Technology" is considered a comprehensive
                reference book on the subject. Professor Chan is a member of the
                National
                Committee of the Chinese People's Political Consultative Conference
                and
                Chief Panelist for the Ministry of Science and Technology. He is
                the
                Science & Technology advisor for Shandong Province, as well as Chief
                Advisor on EVs for the Mayor of Wuhan. He founded the International
                Research Centre for EVs at the University of Hong Kong, hosted the
                10th
                International EV Symposium in Hong Kong and co-founded the World
                EV
                Association. He has also served as the President of EV Association
                of Asia
                Pacific, President of the Hong Kong Institution of Engineers, and
                is now
                Vice President of the Hong Kong Academy of Engineering Sciences and
                President of the Asian EV Society. Professor Chan was born to a Chinese
                entrepreneurial family in Indonesia. He obtained his academic credentials
                from Tsinghua University and the University of Hong Kong and holds
                honorary degrees from universities in Russia, Ukraine and the United
                Kingdom. He worked for 11 years in the research and development of
                electric machines and power systems; and for 29 years in polytechnic
                and
                universities devoted to teaching and research in electrical engineering.
                He has also served as a guest lecturer in the U.S. at UC Berkeley,
                MIT and
                UC Davis.Steve
                Schneider, Director
            
            August
                11, 2005 to present
            
            45
            
            Mr.
                Schneider is a director and Chief Executive Officer of ZAP since
                October 26, 2002. ZAP is an advanced technology vehicle distributor.
                Under Mr. Schneider’s leadership, the company obtained over 2 billion
                dollars in purchase orders; over $400 million in revolving credit,
                successfully brought to market America’s highest fuel economy vehicle as
                well as bringing the first production Chinese and electric vehicle
                to the
                U.S. In 2001, Mr. Schneider founded Voltage Vehicles, an electric
                vehicle
                distribution company specializing in electric vehicles and
                full-performance alternative fuel vehicles such as automobiles,
                motorcycles, and bicycles.Tony
                R. Collins, Vice President of Corporate Development and
                Technology
            
            December
                1, 2006 to present
            
            35
            
            Prior
                to joining the Registrant, Mr. Collins most recently served as President
                of Merchant West Communications from 2004 to 2006. From 2001 to 2004,
                Mr.
                Collins was Corporation Communications Director for Skyline Marketing
                Group. From 1998 to 2001, Mr. Collins was in senior management positions
                with Indus Investment Group and Molson Indy Vancouver, respectively.
                Mr.
                Collins is a resident of Vancouver, British Columbia,
                Canada.





The
      persons named above are expected to hold said offices/positions until the next
      annual meeting of our stockholders. The officers and directors are our only
      officers, directors, promoters and control persons.





19


***Section
      16(a) Beneficial Ownership Reporting Compliance***





Section
      16(a) of the Securities Exchange Act of 1934 requires our directors and
      executive officers, and persons who own more than ten percent of our Common
      Stock, to file with the Securities and Exchange Commission initial reports
      of
      ownership and reports of changes of ownership of our Common Stock. Officers,
      directors and greater than ten percent stockholders are required by SEC
      regulation to furnish us with
      copies of all Section 16(a) forms they file. To the best of our knowledge,
      all
      Section 16(a) filing requirements applicable to our officers, directors and
      greater than ten percent beneficial owners were complied with. In making these
      disclosures, we have relied solely on a review of the copies of such reports
      furnished to us and written representations by our directors, executive officers
      and greater than ten percent stockholders.




***Code
      of Ethics***





At
      this
      time, we have not adopted a formal Code of Ethics that applies to the Chief
      Financial Officer. We have, however, followed an informal Code of Ethics
      requiring Board of Director approval of any material transaction involving
      our
      Chief Financial Officer. We believe this procedure reasonably deters material
      wrongdoing and promotes honest and ethical conduct from our executive
      officers.





**Item
      10. Executive Compensation**





Our
      officers and directors do not presently receive any cash or non-cash
      compensation for their services and there are currently no plans to implement
      any such compensation. They are, however, reimbursed for any out-of-pocket
      expenses incurred on our behalf and have received equity compensation.





The
      following table sets out the compensation received for the fiscal years ended
      April 30, 2007 and 2006 with respect to each of the individuals who were the
      Company's chief executive officerS at any time during the last fiscal year
      and
      the Company's most highly compensated executive officers whose total salary
      and
      bonus exceeded $100,000.





**SUMMARY
                COMPENSATION TABLE****FISCAL
                YEAR COMPENSATION**
            
            **LONG
                TERM COMPENSATION****-**
            
            
            **Awards**
            
            **Payouts****Name
                and**
              **Principal**
              **Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Other**
              **Annual**
              **Compensation****(4)**
            
            **Securities**
              **Underlying**
              **Option/**
              **SARs**
              **Granted**
            
            **Restricted
                Shares**
              **or
                Restricted Share**
              **Units**
            
            **LTIP
                Payouts**
              **($)**
            
            **All
                other**
              **Compensation**
              **($)
                = Share Purchase Warrants**
            *Matthias
                Heinze, President
            
            
            2007
              2006
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            500,000
              500,000Thomas
                M. Howard, Chief Financial Officer, Principal Accounting Officer,
                Director
            
            
            2007
              2006
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            500,000
              1,000,000Mariya
                Petrovska, Secretary and Director
            
            
            2007
            `
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            0Renay
                Cude, Former Secretary and Director
            
            
            2007
              2006
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            500,000
              23,250,000Steve
                Schneider, Director
            
            
            2007
              2006
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            500,000
              750,000Ching
                Chuen Chan, Director
            
            
            2007
              2006
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            250,000
              150,000Tony
                R. Collins, VP of Development
            
            
            2007
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            250,000





* During
      the years ended April 30, 2007 and 2006, officers and directors received share
      purchase warrants exercisable at per share prices between $0.15 - $0.50 per
      share, expiring between August 2007 - December 2011.





There
      are
      no employment agreements, other arrangements or understandings between any
      executive officer and any director or other person pursuant to which any person
      was selected as a director or an executive officer.





***Option/Stock
      Appreciation Rights ("SAR") Grants during the most recently completed Fiscal
      Year*** **.**




The
      following table sets out the stock options and stock warrants granted as
      bonuses, which were granted by the Company during the year ended April 30,
      2006
      to the Named Executive Officers.


20





**OPTION/SAR
      GRANTS IN PREVIOUS YEAR - 2006**


**INDIVIDUAL
      GRANTS**





**Name**
            **Number
                of**
            **%
                of Total**
            **Exercise
                or**
            **Expiration
                Date****Securities**
            **Options/SARs**
            **Base
                Price ($)****Underlying**
            **Granted
                to****Options/SARs**
            **Employees
                in****Granted
                (#)**
            **Fiscal
                Year**Matthias
                Heinze
            250,000
            100%
            $0.50
            8/23/2007Matthias
                Heinze
            250,000
            100%
            $0.25
            1/12/2011Thomas
                M. Howard
            250,000
            100%
            $0.50
            8/23/2007Thomas
                M. Howard
            750,000
            100%
            $0.25
            1/12/2011Renay
                Cude
            22,250,000
            100%
            $0.50
            8/11/2007Renay
                Cude
            250,000
            100%
            $0.50
            8/23/2007Renay
                Cude
            750,000
            100%
            $0.25
            1/12/2011Steve
                Schneider
            750,000
            100%
            $0.25
            1/12/2011Ching
                Chuen Chan
            150,000
            100%
            $0.50
            9/29/2007




The
      following table sets out all option/SARs and warrants granted as bonuses which
      were exercised by the Named Executive Officers during the most recently
      completed fiscal year and the values of options/SARs and warrants for such
      persons as of the end of the most recently completed fiscal year.





***Aggregated
      Option/SAR Exercised in Last Financial Year and Fiscal Year-End Option/SAR
      Values***





**Name**
            **Shares
                Acquired on**
            **Value
                Realized ($)**
            **Number
                of Securities Underlying Unexercised Options/SARs at FY-End
                (#)**
            **Value
                of****Exercise
                (#)**
            
            **Exercisable/**
            **Unexercised
                Options/SARs at****Unexercisable**
            **FY-End
                ($)****Exercisable/****Unexercisable**- -
            **Nil**
            **Nil**
            **Nil**
            **Nil**





We
      do not
      have any standard arrangements pursuant to which directors are compensated
      for
      services as directors.





The
      directors are not compensated with cash for their services but they may be
      compensated with stock purchase warrants. In addition, no pension or retirement
      benefit plan has been adopted and none is proposed at this time. There is no
      arrangement for compensation with respect to termination of the directors in
      the
      event of change of control of the Company.




ITEM
      11.
      Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters





The
      following table sets forth certain information regarding Common Stock
      beneficially owned on the date of this filing for (i) each shareholder known
      by
      us to be the beneficial owner of five (5%) percent or more of our issued and
      outstanding Common Stock, (ii) each executive officers and directors, and (iii)
      all executive officers and directors as a group. As of the date of the filing
      of
      this annual report, there were 28,617,338 shares of Common Stock issued and
      outstanding.





**Name
                and Address of Beneficial Owner**
            **Position(s)****Nature
                and Amount of Beneficial Ownership (1)**
            **Percent
                of Outstanding Common Stock**Matthias
                Heinze
            President
            250,000
            1%300
                B StreetSanta
                Rosa, CA. 95401Ching
                Chen Chan
            Director
            150,000
            1%300
                B StreetSanta
                Rosa, CA. 95401Marlin
                Financial
            None
            2,000,000
            7%300
                B StreetSanta
                Rosa, CA. 95401Autodistributors
            None
            3,390,568
            12%300
                B StreetSanta
                Rosa, CA. 95401


__________________________________________________


Officers
      and Directors as a
      Group  (2)                                                                                                                                     
400,000                                                                             2%





(1)
      In
      general, a person is considered a beneficial owner of a security if that person
      has or shares the power to vote or direct the voting of such security, or the
      power to dispose of such security. A person is also considered to be a
      beneficial owner of any securities of which the person has the right to acquire
      beneficial ownership within (60) days.





**Changes
      in Control**





There
      are
      no arrangements known to us, the operation of which may at a subsequent date
      result in a change of control of our company.




21


**Item
      12. Certain Relationships and Related Transactions**





At
      April
      30, 2007, a total of $598 was due and payable to a former director and
      stockholder of the Company. This balance is non-interest bearing, unsecured
      and
      has no fixed terms of repayment.





During
      the year ended April 30, 2007, we recovered $15,000 from a related company
      with
      two directors in common. This amount relates to the $177,204, previously written
      off during the year ended April 30, 2006, that management deemed to be
      uncollectible from related company.





During
      the year ended April 30, 2007, we issued 2,500,000 share purchase warrants
      to
      our officers and directors; each share purchase warrant entitles the holder
      to
      purchase an additional common share at a price of $0.15 until December
      2011.





During
      the year ended April 30, 2007, officers and directors made contributions to
      capital for management fees in the amount of $100,000. These amounts have been
      recorded as an increase in expenditures and an increase in additional paid-in
      capital.





During
      the year ended April 30, 2007, the Company recognized stock compensation expense
      of $78,061 on the amendment of the expiry date of 2,000,000 warrants issued
      on
      11 August 2005 to 11 August 2009.





During
      the year ended April 30, 2007, the Company recognized stock compensation expense
      of $116,825 on the amendment of the expiry date of 3,000,000 warrants issued
      on
      24 August 2005 to 24 August 2009.








**Item
      13. Exhibits**





The
      following exhibits, marked with an asterisk and required to be filed hereunder,
      are incorporated herein by reference and can be found in their entirety in
      our
      original Form 10-SB Registration Statement, filed under our SEC File Number
      333-116324, on the SEC website at www.sec.gov:





**Exhibit
      No.**   **Description**




*
      3(i) Articles
      of Incorporation


*
      3(ii) Bylaws


*
      23 Consent
      of Accountants


31.1 Sec.
      302
      Certification of President


31.2 Sec.
      302
      Certification of Principal Accounting Officer/CFO


32.1 Sec.
      906
      Certification of President


32.2 Sec.
      906
      Certification of Principal Accounting Officer/CFO






**Item
      14. Principal Accountant Fees and Services**





**Audit
      Fees**





The
      aggregate fees billed for professional services rendered by our principal
      accountant for the audit of our annual financial statements for the fiscal
      year
      ended April 30, 2007 were $8,716 and $12,500 for the fiscal year ended April
      30,
      2006. The reviews for the financial statements included in our quarterly reports
      on Form 10-QSB during the fiscal year ended April 30, 2007 were
      $5,738.





***Audit
      Related Fees***





We
      incurred no fees for the fiscal years ended April 30, 2007 and 2006 for
      assurance and related services by our principal accountant that were reasonably
      related to the performance of the audit or review of our financial statements,
      and not reported under Audit Fees above.


22





***Tax
      Fees***





The
      aggregate fees billed for professional services rendered by our principal
      accountant for tax compliance, tax advice, preparation and filing of tax returns
      and tax planning for the fiscal years ended April 30, 2007 and 2006 were nil.





***All
      Other Fees***





We
      incurred no other fees during the fiscal years ended April 30, 2007 and 2006
      for
      products and services rendered by our principal accountants.





***Audit
      Committee Requirements***




Section 10A(i) of
      the Exchange Act prohibits our auditors from performing audit services for
      us,
      as well as any services not considered to be "audit services", unless such
      services are pre-approved by the audit committee of the Board of Directors,
      or
      unless the services meet certain *de
      minimis* standards. Because we are still in the development stage and have not yet
      completed our business plans and/or generated any revenues, we have not yet
      appointed an audit committee. Our Board of Directors ensure that:




·
            All
                audit services that the auditor may provide to us or any subsidiary
                (including, without limitation, providing comfort letters in connection
                with securities underwritings or statutory audits) as required by
                §10A(i)(1)(A) of the Exchange Act (as amended by the Sarbanes-Oxley
                Act of
                2002) are preapproved by the Board.




·
            All
                non-audit services (other than certain*de
                minimis*services described in §10A(i)(1)(B) of the Exchange Act (as amended by the
                Sarbanes-Oxley Act of 2002)) that the auditors propose to provide
                to us or
                any of our subsidiaries are preapproved by the Board.




All
      audit
      fees were approved by the Board of Directors.





**SIGNATURES**




Pursuant
      to the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
      of
      1934, the Registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.





**ROTOBLOCK
      CORPORATION** ,
      Registrant




Dated: July 28, 2007   /s/
      Matthias Heinze


By:
      Matthias Heinze, President and Director





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of Registrant and in the
      capacities and on the dates indicated:





/s/
      Thomas M. Howard


By:
      Thomas M. Howard, Treasurer, CFO, Principal Accounting Officer and
      Director





/s/
      Mariya Petrovska


By:
      Mariya Petrovska, Secretary and Director





/s/
      Ching
      Chen Chan


By:
      Ching
      Chen Chan, Director


23


























**ROTOBLOCK
      CORPORATION**


**(A
      Development Stage Company)**








**CONSOLIDATED
      FINANCIAL STATEMENTS**








**APRIL
      30, 2007**





**(Stated
      in U.S. Dollars)**

















24

















**James
                  Stafford****James
                Stafford**











**Report
      of Independent Registered Public Accounting Firm**








**To
      the Board of Directors and Stockholders of**


**Rotoblock
      Corporation**


**(A
      Development Stage Company)**





We
      have
      audited the consolidated balance sheet of **Rotoblock
      Corporation** as
      at 30
      April 2007 and the related consolidated statements of operations, cash flows
      and
      changes in stockholders’ equity for the year then ended. We have also audited
      the statements of operations, cash flows and changes in stockholders’ equity for
      the period from the date of inception on 2 September 2003 through 30 April
      2007,
      except that we did not audit these financial statements for the period from
      the
      date of inception on 2 September 2003 through 30 April 2006; those statements
      were audited by other auditors whose report dated 7 July 2006 expressed an
      unqualified opinion on those statements. 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 the standards of the Public Company
      Accounting Oversight Board (United States of America). Those standards require
      that we plan and perform the audit to obtain reasonable assurance about 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. We believe that our
      audit provides a reasonable basis for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of the Company as of 30 April 2007
      and
      the results of its operations, its cash flows and its changes in stockholders’
equity for the year then ended and for the period from the date of inception
      on
      2 September 2003 to 30 April 2007 in conformity with accounting principles
      generally accepted in the United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 1 to the financial
      statements, conditions exist which raise substantial doubt about the Company’s
      ability to continue as a going concern unless it is able to generate sufficient
      cash flows to meet its obligations and sustain its operations. Management’s
      plans in regard to these matters are also described in Note 1. The financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.


/s/ *James
      Stafford*


Vancouver,
      Canada C **hartered
      Accountants**


23
      July
      2007





25


**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Consolidated
      Balance Sheets


(Expressed
      in U.S. Dollars)


**As
      at 30 April**





**2007**
            
            **2006****$**
            
            **$****Assets****Current**Cash
                and cash equivalents
            
            1,482
            
            1,884Accounts
                receivable
            
            199
            
            686Prepaid
                expenses (Notes 10 and 13)
            
            149,818
            
            266,546151,499
            
            269,116**Patents**(Note
                3)
            
            108,745
            
            108,745260,244
            
            377,861**Liabilities****Current**Accounts
                payable and accrued liabilities (Note 4)
            
            32,675
            
            27,482Convertible
                promissory note payable (Notes 6 and 12)
            
            10,000
            
            -Due
                to related party (Note 8)
            
            598
            
            597Interest
                payable (Note 5)
            
            11,705
            
            11,70554,978
            
            39,784**Stockholders’
                equity****Capital
                stock**(Note10)Authorized75,000,000
                common shares, par value $0.001Issued
                and outstanding30
                April 2007 - 30,440,886 common shares, par value $0.00130
                April 2006 - 28,617,338 common shares, par value $0.001
            
            30,440
            
            28,617**Additional
                paid-in capital**
            
            4,224,699
            
            3,495,746**Accumulated
                comprehensive loss**
            
            (4,258)
            
            (4,253)**Deficit,
                accumulated during the development stage**
            
            (4,045,615)
            
            (3,182,033)205,266
            
            338,077260,244
            
            377,861





**Nature
      and Continuance of Operations** (Note 1 )
      and **Commitments** (Note
      12)





**On
      behalf of the Board:**











“Matthias
      Heinze”   Director  “Thomas
      Howard”   Director


26





**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Consolidated
      Statements of Operations


(Expressed
      in U.S. Dollars)





**For
                the period from the date of inception on 2 September 2003 to 30 April
                2007**
            
            **For
                the year ended 30 April 2007**
            
            **For
                the year ended 30 April 2006****$**
            
            **$**
            
            **$****Expenses**General
                and administrative (Schedule 1)
            
            3,873,403
            
            878,582
            
            2,580,185**Net
                loss before other items**
            
            (3,873,403)
            
            (878,582)
            
            (2,580,185)**Other
                items**Excess
                of consideration over net assets purchased from Rotoblock Inc. (Note
                1)
            
            (138)
            
            -
            
            -Write-off
                of property and equipment
            
            (9,870)
            
            -
            
            (9,870)(Write-off)
                recovery of related party receivable (Note 9)
            
            (162,204)
            
            15,000
            
            (177,204)**Net
                loss for the period**
            
            (4,045,615)
            
            (863,582)
            
            (2,767,259)**Basic
                and diluted loss per common share**
            
            
            
            (0.03)
            
            (0.10)**Weighted
                average number of common shares used in per share
                calculations**
            
            
            
            29,470,208
            
            27,073,876**Comprehensive
                loss**Net
                loss for the period
            
            (4,045,615)
            
            (863,582)
            
            (2,767,259)Foreign
                currency translation adjustment
            
            (4,258)
            
            (5)
            
            (950)**Comprehensive
                loss**
            
            (4,049,873)
            
            (863,587)
            
            (2,768,209)**Comprehensive
                loss per common share**
            
            
            
            (0.03)
            
            (0.10)





27


**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Consolidated
      Statements of Cash Flows


(Expressed
      in U.S. Dollars)


____________________________________________________________________________________________________________________________________________





**For
                the period from the date of inception on 2 September 2003 to**
              **30
                April 2007**
            **For
                the year ended 30 April 2007**
            **For
                the year ended 30 April 2006****$**
            
            **$**
            
            **$****Cash
                flows from operating activities**Net
                loss for the period
            
            (4,045,615)
            
            (863,582)
            
            (2,767,259)Adjustments
                to reconcile loss to net cash used by operating activitiesContributions
                to capital by related party - expenses (Notes 9 and 13)
            
            100,000
            
            100,000
            
            -Depreciation
            
            3,968
            
            -
            
            1,044Non-cash
                interest
            
            11,705
            
            -
            
            -Shares
                issued for services (Notes 9, 10 and 13)
            
            796,122
            
            307,424
            
            488,700Stock-based
                compensation (Notes 9, 10 and 13)
            
            2,315,888
            
            414,711
            
            1,901,177Write-off
                of property and equipment
            
            9,870
            
            -
            
            9,870Write-off
                of related party receivable (Notes 9 and 13)
            
            177,204
            
            -
            
            177,204Changes
                in operating assets and liabilities(Increase)
                decrease in accounts receivable
            
            (199)
            
            487
            
            6,594Decrease
                in prepaid expenses
            
            -
            
            1,369
            
            9,081Increase
                in accounts payable and accrued liabilities
            
            32,677
            
            5,193
            
            6,170(598,380)
            
            (34,398)
            
            (167,419)**Cash
                flows from investing activities**Purchase
                of equipment
            
            (13,838)
            
            -
            
            -Purchase
                of patents
            
            (108,745)
            
            -
            
            -(122,583)
            
            -
            
            -**Cash
                flows from financing activities**Common
                shares issued for cash
            
            706,105
            
            24,000
            
            143,441Warrants
                exercised
            
            10,000
            
            -
            
            10,000Advances
                payable
            
            -
            
            -
            
            (1,060)Convertible
                promissory note payable (Notes 6 and 12)
            
            10,000
            
            10,000
            
            -Increase
                (decrease) in due to related party (Note 8)
            
            598
            
            1
            
            (33,988)726,703
            
            34,001
            
            118,393**Foreign
                exchange effect on cash**
            
            (4,258)
            
            (5)
            
            (950)**Increase
                (decrease) in cash and cash equivalents**
            
            1,482
            
            (402)
            
            (49,976)**Cash
                and cash equivalents, beginning of period**
            
            -
            
            1,884
            
            51,860**Cash
                and cash equivalents, end of period**
            
            1,482
            
            1,482
            
            1,884





**Supplemental
      Disclosures with Respect to Cash Flows (** Note
      13 **)**














28


**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Consolidated
      Statements of Changes in Stockholders’ Equity


(Expressed
      in U.S. Dollars)


___________________________________________________________________________________________________________________________




**Number
                of shares issued**
            **Capital**
              **stock**
            **Additional
                paid-in capital**
            **Accumulated
                comprehensive loss**
            **Deficit
                accumulated during the development stage**
            **Stockholders’
                equity****$**
            
            **$**
            
            **$**
            
            **$**
            
            **$****Balance
                at 2 September 2003**Shares
                issued for cash
            
            7,000,000
            
            -
            
            534
            
            -
            
            -
            
            534Shares
                issued for cash
            
            200,000
            
            -
            
            38,130
            
            -
            
            -
            
            38,130Adjustment
                to number of shares issued as a result of the acquisition of net
                assets of
                Rotoblock Inc. (Note 1)
            
            (7,200,000)
            
            -
            
            -
            
            -
            
            -
            
            -Shares
                issued in connection with the acquisition of net assets of Rotoblock
                Inc.
                (Note 1)
            
            15,000,000
            
            15,000
            
            (15,000)
            
            -
            
            -
            
            -Excess
                of consideration over net assets purchased from Rotoblock Inc. (Note
                1)
            
            -
            
            -
            
            -
            
            -
            
            (138)
            
            (138)Foreign
                currency translation adjustment
            
            -
            
            -
            
            -
            
            (1,918)
            
            -
            
            (1,918)Net
                loss for the period
            
            -
            
            -
            
            -
            
            -
            
            (108,443)
            
            (108,443)**Balance
                at 30 April 2004**
            
            15,000,000
            
            15,000
            
            23,664
            
            (1,918)
            
            (108,581)
            
            (71,835)Shares
                issued for cash ($0.05 per share)
            
            10,000,000
            
            10,000
            
            490,000
            
            -
            
            -
            
            500,000Foreign
                currency translation adjustment
            
            -
            
            -
            
            -
            
            (1,385)
            
            -
            
            (1,385)Net
                loss for the year
            
            -
            
            -
            
            -
            
            -
            
            (306,193)
            
            (306,193)**Balance
                at 30 April 2005**
            
            25,000,000
            
            25,000
            
            513,664
            
            (3,303)
            
            (414,774)
            
            120,587Shares
                issued for cash ($0.26 per share) (Note 10)
            
            548,160
            
            548
            
            142,893
            
            -
            
            -
            
            143,441Shares
                issued for services rendered ($0.31 per share) (Note 10)
            
            2,418,130
            
            2,418
            
            751,459
            
            -
            
            -
            
            753,877Shares
                issued for inventory ($0.29 per share) (Note 10)
            
            611,048
            
            611
            
            176,593
            
            -
            
            -
            
            177,204Warrants
                exercised ($0.25 per share) (Note 10)
            
            40,000
            
            40
            
            9,960
            
            -
            
            -
            
            10,000Stock-based
                compensation (Note 10)
            
            -
            
            -
            
            1,901,1777
            
            -
            
            -
            
            1,901,177Foreign
                currency translation adjustment
            
            -
            
            -
            
            -
            
            (950)
            
            -
            
            (950)Net
                loss for the year
            
            -
            
            -
            
            -
            
            -
            
            (2,767,259)
            
            (2,767,259)**Balance
                at 30 April 2006**
            
            28,617,338
            
            28,617
            
            3,495,746
            
            (4,253)
            
            (3,182,033)
            
            338,077Shares
                issued for cash ($0.21 per share) (Note 10)
            
            114,286
            
            114
            
            23,886
            
            -
            
            -
            
            24,000Shares
                issued for services rendered (Notes 10 and 13)
            
            1,709,262
            
            1,709
            
            190,356
            
            -
            
            -
            
            192,065Contribution
                to capital by related parties - services (Notes 9 and 13)
            
            -
            
            -
            
            100,000
            
            -
            
            -
            
            100,000Stock-based
                compensation (Note 9, 10 and13)
            
            -
            
            -
            
            414,711
            
            -
            
            -
            
            414,711Foreign
                currency translation adjustment
            
            -
            
            -
            
            -
            
            (5)
            
            -
            
            (5)Net
                loss for the period
            
            -
            
            -
            
            -
            
            -
            
            (863,582)
            
            (863,582)**Balance
                at 30 April 2007**
            
            30,440,886
            
            30,440
            
            4,224,699
            
            (4,258)
            
            (4,045,615)
            
            205,266





29














**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Schedule
      1 - Consolidated General and Administrative Expenses


(Expressed
      in U.S. Dollars)






**For
                the period from the date of inception on 2 September 2003 to**
              
              **30
                April 2007**
            **For
                the year ended 30 April 2007**
            **For
                the year ended 30 April 2006****$**
            
            **$**
            
            **$**Consulting
                fees (Notes 9, 10 and 13)
            
            460,452
            
            114,935
            
            326,517Depreciation
            
            3,968
            
            -
            
            1,044Foreign
                exchange (gain) loss
            
            1,545
            
            195
            
            (371)Interest
            
            15,744
            
            540
            
            1,082Investor
                relations (Notes 10 and 13)
            
            143,878
            
            45,358
            
            98,520Listing,
                filing and transfer agent fees
            
            28,583
            
            7,294
            
            11,028Management
                fees (Notes 9 and 13)
            
            100,000
            
            100,000
            
            -Office
                and sundry
            
            42,387
            
            4,672
            
            18,284Professional
                fees
            
            186,430
            
            64,562
            
            83,049Public
                relations and shareholder information (Notes 10 and 13)
            
            140,909
            
            96,679
            
            44,230Rent
                (Notes 10 and 13)
            
            79,205
            
            27,861
            
            21,321Research
                and development
            
            314,256
            
            418
            
            47,331Stock-based
                compensation (Notes 10 and 13)
            
            2,315,888
            
            414,711
            
            1,901,177Travel
                and entertainment
            
            40,158
            
            1,357
            
            26,9733,873,403
            
            878,582
            
            2,580,185








30


**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Notes
      to
      Consolidated Financial Statements


(Expressed
      in U.S. Dollars)


**30
      April 2007**


**______________________________________________________________________________________________________________________________________________**





**1.**
            **Nature
                and Continuance of
                Operations**





Rotoblock
      Corporation (the “Company”) was incorporated under the laws of the State of
      Nevada on 22 March 2004.





The
      Company is a development stage enterprise, as defined in Statements
      of Financial Accounting Standards (“SFAS”)
      No. 7, “ *Accounting
      and Reporting by Development Stage Enterprises* ”.
      The
      Company is devoting all of its present efforts to develop and market a new
      type
      of patented oscillating piston engine. No revenue has been derived during the
      organization period and our planned principle operations have not commenced.





The
      Company’s financial statements as at 30 April 2007 and for the years then ended
      have been prepared on a going concern basis, which contemplates the realization
      of assets and the settlement of liabilities and commitments in the normal course
      of business. The Company has a loss of $863,582 for the year ended 30 April
      2007
      (30 April 2006 - $2,767,259) and has working capital of $96,521 at 30 April
      2007
      (30 April 2006 - $229,332).





On
      30
      March 2004, the Company entered into a Share Exchange Agreement (the
“Agreement”) with Rotoblock Inc., a Canadian corporation, wherein the Company
      agreed to issue to the stockholders of Rotoblock Inc. 15,000,000 common shares
      in exchange for the 7,200,000 shares that constituted all the issued and
      outstanding shares of Rotoblock Inc. Effective 30 March 2004, Rotoblock Inc.
      completed the reverse acquisition under the Agreement with the Company.





Immediately
      after the acquisition, the management of Rotoblock Inc. took control of the
      board and office positions of the Company, constituting a change of control.
      Because the former owners of Rotoblock Inc. gained control of the Company,
      the
      transaction would normally have been considered a purchase by Rotoblock Inc.
      However, since the Company was not a business, the transaction was not
      considered to be a business combination, and the transaction was accounted
      for
      as a recapitalization of Rotoblock Inc. and the issuance of stock by Rotoblock
      Inc. for the assets and liabilities of the Company. The value of the net assets
      of the Company acquired by Rotoblock Inc. was the same as their historical
      book
      value, being a deficiency of $138.





Rotoblock
      Inc. was incorporated on 2 September 2003, under the laws of Canada. The
      accompanying financial statements are the historical financial statements of
      Rotoblock Inc.





Management
      cannot provide assurance that the Company will ultimately achieve profitable
      operations or become cash flow positive, or raise additional debt and/or equity
      capital. However, based on its prior demonstrated ability to raise capital,
      management believes that the Company’s capital resources should be adequate to
      continue operating and maintaining its business strategy during the fiscal
      year
      ending 30 April 2008. However, if the Company is unable to raise additional
      capital in the near future, due to the Company’s liquidity problems, management
      expects that the Company will need to curtail operations, liquidate assets,
      seek
      additional capital on less favorable terms and/or pursue other remedial
      measures. These financial statements do not include any adjustments related
      to
      the recoverability and classification of assets or the amounts and
      classification of liabilities that might be necessary should the Company be
      unable to continue as a going concern.


31





**Rotoblock
        Corporation**
 **(A
        Development Stage Company)**
 Notes
        to
        Consolidated Financial Statements
 (Expressed
        in U.S. Dollars)
 **30
        April 2007**
 **______________________________________________________________________________________________________________________________________________**


At
      30
      April 2007, the Company has suffered losses from development stage activities
      to
      date. Although management is currently attempting to implement its business
      plan, and is seeking additional sources of equity or debt financing, there
      is no
      assurance these activities will be successful. Accordingly, the Company must
      rely on its management to perform essential functions without compensation
      until
      a business operation can be commenced. These factors raise substantial doubt
      about the ability of the Company to continue as a going concern. The financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.





**2.**
            **Significant
                Accounting Policies**





The
      following is a summary of significant accounting policies used in the
      preparation of these financial statements.





**Basis
      of presentation**





The
      consolidated financial statements have been prepared as of 30 April 2007, in
      accordance with accounting principles generally accepted in the United States
      of
      America relating to the preparation of financial statements. Accordingly, they
      do not include all the information and footnotes required by generally accepted
      accounting principles for complete financial statements. In the opinion of
      management, all adjustments (consisting of normal recurring accruals) considered
      necessary for a fair presentation have been included.





**Basis
      of consolidation**





These
      consolidated financial statements include the accounts of the Company from
      the
      date of reverse acquisition on 30 March 2004, and its wholly owned Canadian
      subsidiary, Rotoblock Inc. since its date of incorporation on 2 September 2003.
      All inter-company balances and transactions have been eliminated on
      consolidation (Note 1).





**Fiscal
      period**





The
      Company’s fiscal year ends on 30 April.





**Risks
      and uncertainties**





The
      Company operates in an emerging industry that is subject to market acceptance
      and technological change. The Company’s operations are subject to significant
      risks and uncertainties, including financial, operational, technological and
      other risks associated with operating an emerging business, including the
      potential risk of business failure.





**Cash
      and cash equivalents**





Cash
      and
      cash equivalents include highly liquid investments with original maturities
      of
      three months or less.


32





**Rotoblock
        Corporation**
 **(A
        Development Stage Company)**
 Notes
        to
        Consolidated Financial Statements
 (Expressed
        in U.S. Dollars)
 **30
        April 2007**
 **______________________________________________________________________________________________________________________________________________**





**Financial
      instruments**





The
      Company’s financial instruments consist of cash, amounts receivable, accounts
      payable and amounts due to related parties. Unless otherwise noted, it is
      management’s opinion that this Company is not exposed to significant interest or
      credit risks arising from these financial instruments. The fair value of these
      financial instruments approximate their carrying values, unless otherwise
      noted.





**Concentrations
      and credit risk**





The
      Company’s financial instruments that are exposed to concentrations of credit
      risk primarily consist of its cash, accounts payable, interest payable, and
      amounts due to related party. The Company places its cash with financial
      institutions of high credit worthiness. At times, its cash with a particular
      financial institution may exceed any applicable government insurance limits.
      The
      Company’s existence and survival presently depends on its acquisition of certain
      patents (Note 3).





**Derivative
      financial instruments**





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





**Income
      taxes**





Deferred
      income taxes are reported for timing differences between items of income or
      expense reported in the financial statements and those reported for income
      tax
      purposes in accordance with SFAS No. 109, “ *Accounting
      for Income Taxes* ”,
      which
      requires the use of the asset/liability method of accounting for income taxes.
      Deferred income taxes and tax benefits are recognized for the future tax
      consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective tax
      bases, and for tax losses and credit carry-forwards. Deferred tax assets and
      liabilities are measured using enacted tax rates expected to apply to taxable
      income in the years in which those temporary differences are expected to be
      recovered or settled. The Company provides for deferred taxes for the estimated
      future tax effects attributable to temporary differences and carry-forwards
      when
      realization is more likely than not.





**Basic
      and diluted net loss per share**





The
      Company computes net income (loss) per share in accordance with SFAS No. 128,
      “ *Earnings
      per Share* ”.
      SFAS
      No. 128 requires presentation of both basic and diluted earnings per share
      (“EPS”) on the face of the income statement. Basic EPS is computed by dividing
      net income (loss) available to common shareholders (numerator) by the weighted
      average number of shares outstanding (denominator) during the period. Diluted
      EPS gives effect to all dilutive potential common shares outstanding during
      the
      period using the treasury stock method and convertible preferred stock using
      the
      if-converted method. In computing diluted EPS, the average stock price for
      the
      period is used in determining the number of shares assumed to be purchased
      from
      the exercise of stock options or warrants. Diluted EPS excludes all dilutive
      potential shares if their effect is anti-dilutive.


33


**Rotoblock
        Corporation**
 **(A
        Development Stage Company)**
 Notes
        to
        Consolidated Financial Statements
 (Expressed
        in U.S. Dollars)
 **30
        April 2007**
 **______________________________________________________________________________________________________________________________________________**





**Comprehensive
      loss**





SFAS
      No.
      130, “ *Reporting
      Comprehensive Income* ”,
      establishes standards for the reporting and display of comprehensive loss and
      its components in the financial statements.





**Long
      lived assets**





SFAS
      No.
      144 “ *Accounting
      for the Impairment or Disposal of Long-Lived Assets* ”
      requires that long-lived assets be reviewed for impairment whenever events
      or
      changes in circumstances indicate that the carrying amount of an asset may
      not
      be recoverable. It establishes guidelines for determining recoverability based
      on future net cash flows from the use of the asset and for the measurement
      of
      the impairment loss. Impairment loss under SFAS No. 144 is calculated as the
      difference between the carrying amount of the asset and its fair value. Any
      impairment loss is recorded in the current period in which recognition criteria
      are first applied and met. Under the successful efforts method of accounting
      for
      oil and gas operations, the Company must periodically assess it proved
      properties for impairments by comparing the aggregate net book carrying amount
      of all proved properties with their aggregate future net cash flows. The
      statement requires that the impairment review be performed on the lowest level
      of asset groupings for which there are identifiable cash flows.





**Segments
      of an enterprise and related information**





SFAS
      No.
      131, “ *Disclosures
      about Segments of an Enterprise and Related Information* ”,
      supersedes SFAS No. 14, “ *Financial
      Reporting for Segments of a Business Enterprise* ”.
      SFAS
      No. 131 establishes standards for the way that public companies report
      information about operating segments in annual financial statements and requires
      reporting of selected information about operating segments in interim financial
      statements issued to the public. It also establishes standards for disclosures
      regarding products and services, geographic areas and major customers. SFAS
      No.
      131 defines operating segments as components of a company about which separate
      financial information is available that is evaluated regularly by the chief
      operating decision maker in deciding how to allocate resources and in assessing
      performance. The Company has evaluated this SFAS and does not believe it is
      applicable at this time.








**Foreign
      currency translation**





The
      Company’s functional and reporting currency is the U.S. dollar. The financial
      statements of the Company are translated to U.S. dollars in accordance with
      SFAS
      No. 52, “ *Foreign
      Currency Translation* ”.
      Monetary assets and liabilities denominated in foreign currencies are translated
      using the exchange rate prevailing at the balance sheet date. Gains and losses
      arising on translation or settlement of foreign currency denominated
      transactions or balances are included in the determination of income. The
      Company has not, to the date of these financial statements, entered into
      derivative instruments to offset the impact of foreign currency fluctuations.


34











**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Notes
      to
      Consolidated Financial Statements


(Expressed
      in U.S. Dollars)


**30
      April 2007**


**______________________________________________________________________________________________________________________________________________**




Unrealized exchange gains and losses arising from such translations are deferred
      until realization and are included as a separate component of shareholders’


equity  as a component of comprehensive
      income or
      loss. Upon realization, the amount deferred is recognized in income in the
      period when it is realized.





**Stock-based
      compensation**





Effective
      1 January 2006, the Company adopted the provisions of SFAS No. 123(R),
“ *Share-Based
      Payment* ,”
which
      establishes accounting for equity instruments exchanged for employee services.
      Under the provisions of SFAS No. 123(R), stock-based compensation cost is
      measured at the grant date, based on the calculated fair value of the award,
      and
      is recognized as an expense over the employees’ requisite service period
      (generally the vesting period of the equity grant). Before 1 January 2006,
      the
      Company accounted for stock-based compensation to employees in accordance with
      Accounting Principles Board Opinion No. 25, “ *Accounting
      for Stock Issued to Employees,* ”
and
      complied with the disclosure requirements of SFAS No. 123, “ *Accounting
      for Stock-Based Compensation.* ” 
      The Company adopted SFAS NO. 123(R) using the modified prospective method,
      which
      requires the Company to record compensation expense over the vesting period
      for
      all awards granted after the date of adoption, and for the unvested portion
      of
      previously granted awards that remain outstanding at the date of adoption.
      Accordingly, financial statements for the periods prior to 1 January 2006 have
      not been restated to reflect the fair value method of expensing share-based
      compensation. Adoption of SFAS No. 123(R) does not change the way the
      Company accounts for share-based payments to non-employees, with guidance
      provided by SFAS No. 123 (as originally issued) and Emerging Issues Task Force
      Issue No. 96-18, “ *Accounting
      for Equity Instruments That Are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services* .”





**Research
      and development**





Research
      and development costs are expensed as incurred.





**Patents**





The
      Company accounts for patent costs in accordance with SFAS No. 142 -
“ *Goodwill
      and Other Intangible Assets* .”
In
      accordance with that statement, intangible assets with estimatable lives, such
      as a patent, are amortized on a straight-line basis over the estimated useful
      lives and are reviewed for impairment in accordance with SFAS No. 144 -
“ *Accounting
      for the Impairment of Long-Lived Assets* .”
The
      patent costs will be amortized over their estimated useful lives upon exercise
      of the option (Note 3).


35


**Rotoblock
        Corporation**
 **(A
        Development Stage Company)**
 Notes
        to
        Consolidated Financial Statements
 (Expressed
        in U.S. Dollars)
 **30
        April 2007**
 **______________________________________________________________________________________________________________________________________________**





**Use
      of estimates**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the amounts of assets and liabilities
      and
      disclosures of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenditures during the
      reporting period. Actual results could differ from these estimates.





**Recent
      accounting pronouncements**





In
      February 2007, the Financial Accounting Standards Board (the “FASB”) issued SFAS
      No. 159, *“The
      Fair Value Option for Financial Assets and Financial Liabilities”* (SFAS
      159). SFAS 159 allows the company to choose to measure many financial assets
      and
      financial liabilities at fair value. Unrealized gains and losses on items for
      which the fair value option has been elected are reported in earnings. SFAS
      159
      is effective for fiscal years beginning after 15 November 2007. The Company
      is
      currently evaluating the requirements of SFAS 159 and the potential impact
      on
      the Company’s financial statements.





In
      March
      2006, the FASB  issued
      SFAS No. 156, “ *Accounting
      for Servicing of Financial Assets* ”,
      which
      amends SFAS No. 140. SFAS No. 156 may be adopted as early as 1 January 2006,
      for
      calendar year-end entities, provided that no interim financial statements have
      been issued. Those not choosing to early adopt are required to apply the
      provisions as of the beginning of the first fiscal year that begins after 15
      October 2006 (e.g., 1 January 2007, for calendar year-end entities).  The
      intention of the new statement is to simplify accounting for separately
      recognized servicing assets and liabilities, such as those common with mortgage
      securitization activities, as well as to simplify efforts to obtain hedge-like
      accounting.  Specifically, the FASB said SFAS No. 156 permits a servicer
      using derivative financial instruments to report both the derivative financial
      instrument and related servicing asset or liability by using a consistent
      measurement attribute, or fair value.  The adoption of SFAS No. 156 is
      not expected to have a material impact on the Company’s financial position,
      results of operations or cash flows.





In
      February 2006, the FASB issued SFAS No. 155, “ *Accounting
      for Certain Hybrid Financial Instruments* ”,
      which
      amends SFAS No. 133, “ *Accounting
      for Derivative Instruments and Hedging Activities* ”
and
      SFAS No. 140, “ *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities* ”.
      SFAS
      No. 155 permits fair value measurement for any hybrid financial instrument
      that contains an embedded derivative that otherwise would require bifurcation,
      establishes a requirement to evaluate interests in securitized financial assets
      to identify interests that are freestanding derivatives or hybrid financial
      instruments containing embedded derivatives. The adoption of SFAS No. 155
      is not expected to have a material impact on the Company’s financial position,
      results of operations or cash flows.





In
      September 2006, the FASB issued SFAS No.
      158, *“Employers’
      Accounting for Defined Benefit Pension and Other Postretirement Plans - an
      amendment of FASB Statements No. 87, 88, 106 and 132(R)”* (SFAS
      158”). SFAS 158 requires an employer that sponsors one or more single-employer
      defined benefit plans to (a) recognize the overfunded or underfunded status
      of a
      benefit plan in its statement of financial position, (b) recognize as a
      component of other comprehensive income, net of tax, the gains or losses and
      prior service costs or credits that arise during the period but are
      not


36


**Rotoblock
        Corporation**
 **(A
        Development Stage Company)**
 Notes
        to
        Consolidated Financial Statements
 (Expressed
        in U.S. Dollars)
 **30
        April 2007**
 **______________________________________________________________________________________________________________________________________________**


recognized
      as components of net periodic benefit cost pursuant to SFAS 87, “Employers’
Accounting for Pensions”, or SFAS 106, *“Employers’
      Accounting for Postretirement Benefits Other Than Pensions”* ,
      (c)
      measure defined benefit plan assets and obligations as of the date of the
      employer’s fiscal year-end, and (d) disclose in the notes to financial
      statements additional information about certain effects on net periodic benefit
      cost for the next fiscal year that arise from delayed recognition of the gains
      or losses, prior service costs or credits, and transition asset or obligation.
      SFAS 158 is effective for the Company’s fiscal year ending 30 April 2007. The
      Company is currently reviewing the impact of this statement.





In
      September 2006, the FASB issued SFAS No. 157, *"Fair
      Value Measurement"* ("SFAS
      157"). The Statement provides guidance for using fair value to measure assets
      and liabilities. The Statement also expands disclosures about the extent to
      which companies measure assets and liabilities at fair value, the information
      used to measure fair value, and the effect of fair value measurement on
      earnings. This Statement applies under other accounting pronouncements that
      require or permit fair value measurements. This Statement does not expand the
      use of fair value measurements in any new circumstances. Under this Statement,
      fair value refers to the price that would be received to sell an asset or paid
      to transfer a liability in an orderly transaction between market participants
      in
      the market in which the entity transacts. SFAS 157 is effective for the Company
      for fair value measurements and disclosures made by the Company in its fiscal
      year beginning on 1 May 2008. The Company is currently reviewing the impact
      of
      this statement.





In
      May 2005, FASB issued SFAS 154, *“Accounting
      Changes and Error Corrections”* ,
      which
      replaces APB Opinion No. 20, *“Accounting
      Changes,”* and
      supersedes FASB Statement No. 3, *“Reporting
      Accounting Changes in Interim Financial Statements - an amendment of APB Opinion
      No. 28.”* SFAS 154
      requires retrospective application to prior periods’ financial statements of
      changes in accounting principle, unless it is impracticable to determine either
      the period-specific effects or the cumulative effect of the change. When it
      is
      impracticable to determine the period-specific effects of an accounting change
      on one or more individual prior periods presented, SFAS 154 requires that the
      new accounting principle be applied to the balances of assets and liabilities
      as
      of the beginning of the earliest period for which retrospective application
      is
      practicable and that a corresponding adjustment be made to the opening balance
      of retained earnings for that period rather than being reported in an income
      statement. When it is impracticable to determine the cumulative effect of
      applying a change in accounting principle to all prior periods, SFAS 154
      requires that the new accounting principle be applied as if it were adopted
      prospectively from the earliest date practicable. SFAS 154 shall be effective
      for accounting changes and corrections of errors made in fiscal years beginning
      after 15 December 2005. The Company does not expect the provisions of SFAS
      154
      will have a significant impact on its results of operations.





**Comparative
      figures**





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








37


**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Notes
      to
      Consolidated Financial Statements


(Expressed
      in U.S. Dollars)


**30
      April 2007**


**______________________________________________________________________________________________________________________________________________**




**3.**
            **Patents**





On
      15
      September 2003, the Company entered into an option agreement (the “Option”) to
      purchase certain patents related to the Oscillating Piston Engine (the “OPE
      Patents”). Under the terms of the Option, the Company is required to pay
      $100,000 in cash by 31 May 2004 (paid) plus interest at the rate of 24% per
      annum calculated from 31 January 2004 until the $100,000 cash was paid (total
      interest paid - $8,745), and $1,500,000 in cash by 2 June 2007.





On
      25
      October 2006, the Company negotiated an extension to exercise the Option by
      thirty seven months. Pursuant to the amended option agreement the Company must
      pay a royalty of $50 per engine on the sale of up to 10,000 oscillating piston
      engines (“OPE”), and a royalty of $2 per engine on the sale of up to 100,000
      OPE.





**Balance
                at 30 April 2007**
            
            **Balance
                at 30 April 2006****$**
            
            **$**Patent
                costs to date
            
            108,745
            
            108,745Accumulated
                depreciation
            
            -
            
            -108,745
            
            108,745





**4.**
            **Accounts
                Payable and Accrued Liabilities**





Accounts
      payable and accrued liabilities are non-interest bearing, unsecured and have
      settlement dates within one year.





**5.**
            **Interest
                Payable**





On
      30
      March 2004, the Company entered into a loan agreement, as amended, for $500,000,
      of which $350,000 was received by 30 November 2004. During the prior fiscal
      year, the principal portion of the loan was paid out in full. The loan was
      secured by all the assets of the Company, bore interest at 5% per annum and
      was
      payable on demand. Accrued interest on the loan has been calculated at $11,705;
      however, this amount has not yet been paid to the lender.





**6.**
            **Convertible
                Promissory Note**





On
      30
      April 2007, the Company entered into a convertible promissory note agreement
      for
      $10,000 cash. The note is non-interest bearing, unsecured and repayable in
      cash
      or 100,000 shares by 13 November 2008.

















38


**Rotoblock
        Corporation**
 **(A
        Development Stage Company)**
 Notes
        to
        Consolidated Financial Statements
 (Expressed
        in U.S. Dollars)
 **30
        April 2007**
 **______________________________________________________________________________________________________________________________________________**


**7.**
            **Joint
                Venture Agreements**





On
      27
      January 2006, the Company entered into a letter of intent with Apollo Energy
      Systems, Inc. for the purpose of developing hybrid electric car technology.
      All
      administrative and legal costs would be shared, and an operational cost sharing
      pan will be based on partner contribution. No significant activities occurred
      in
      the joint venture during the period ended 30 April 2007.





On
      18
      July 2006, the Company entered into an Engine Development and License Agreement
      (the “License Agreement”) with an unrelated party, Obvio ! Automotoveiculos S.A.
      (“Obvio !”), located in Brazil. Pursuant to the terms of the License Agreement
      the parties have agreed to enter into a non-exclusive joint venture to develop
      a
      third generation OPE suitable for hybrid applications. The Company will grant
      Obvio ! with a license for OPE technology in consideration of $5,000,000, which
      will be payable in increments of $500 for each engine installed or sold. Upon
      receipt of $5,000,000 from Obvio !, the Company will receive royalties of $100
      per vehicle sold that incorporates OPE technology. According to the terms of
      the
      License Agreement, the Company has committed to:





iii)
            keep
                the OPE patents in good standing and ensure that maintenance fees
                are paid
                in a timely manner (Note 3); and





iv)
            exercise
                the Option for all patents on or before 31 May 2007 or negotiate
                an
                extension.





No
      significant activities occurred in the joint venture during the period ended
      30
      April 2007.





On
      28
      August 2006, the Company entered into a letter of intent with Autocraft
      Industries, Inc. for the purpose of developing energy efficient propulsion
      systems for on and off road vehicles. No significant activities occurred in
      the
      joint venture during the period ended 30 April 2007.





**8.**
            **Due
                to Related Party**





As
      at 30
      April 2007, the amount in due to a related party consists of $598 (30 April
      2006
      - $597) payable to a former director and stockholder of the Company. These
      balances are non-interest bearing, unsecured, and have no fixed terms of
      repayment.





**9.**
            **Related
                Party Transactions******





During
      the year ended 30 April 2007, the Company recovered $15,000 from a related
      company with two directors in common. This amount relates to the $177,204,
      previously written off during the year ended 30 April 2006, that management
      deemed to be uncollectible from related company.





During
      the year ended 30 April 2007, the Company issued 2,500,000 share purchase
      warrants to officers and directors of the Company with fair value of $219,824.
      Each share purchase warrant entitles the holder to purchase an additional common
      share at a price of $0.15 up to 7 December 2011 (Note 10).





39





**Rotoblock
        Corporation**
 **(A
        Development Stage Company)**
 Notes
        to
        Consolidated Financial Statements
 (Expressed
        in U.S. Dollars)
 **30
        April 2007**
 **______________________________________________________________________________________________________________________________________________**


During
      the year ended 30 April 2007, the Company recognized stock compensation expense
      of $78,061 on the amendment of the expiry date of 2,000,000 warrants issued
      on
      11 August 2005 to 11 August 2009 (Note 10).





During
      the year ended 30 April 2007, the Company recognized stock compensation expense
      of $58,413 on the amendment of the expiry date of 1,500,000 warrants issued
      on
      24 August 2005 to 24 August 2009 (Note 10).





During the year ended 30 April 2007, officers and directors of the Company
      made
      contributions to capital for management fees $100,000 (30 April 2006 - $Nil,
      cumulative -


$100,000). These amounts have been recorded as an increase in expenditures
      and
      an increase in additional paid-in capital.





During
      the year ended 30 April 2006, the Company issued 2,000,000 share purchase
      warrants to officers and directors of the Company with fair value of $494,999.
      Each share purchase warrant entitles the holder to purchase an additional common
      share at a price of $0.50 up to 11 August 2007 (Note 10).





During
      the year ended 30 April 2006, the Company issued 750,000 share purchase warrants
      to officers and directors of the Company with fair value of $185,622. Each
      share
      purchase warrant entitles the holder to purchase an additional common share
      at a
      price of $0.50 up to 23 August 2007 (Note 10).





During
      the year ended 30 April 2006, the Company issued 1,500,000 share purchase
      warrants to officers and directors of the Company with fair value of $346,853.
      Each share purchase warrant entitles the holder to purchase an additional common
      share at a price of $0.50 up to 24 August 2007 (Note 10).





During
      the year ended 30 April 2006, the Company issued 150,000 share purchase warrants
      to officers and directors of the Company with fair value of $21,713. Each share
      purchase warrant entitles the holder to purchase an additional common share
      at a
      price of $0.50 up to 28 September 2007 (Note 10).





During
      the year ended 30 April 2006, the Company issued 2,500,000 share purchase
      warrants to officers and directors of the Company with fair value of $317,068.
      Each share purchase warrant entitles the holder to purchase an additional common
      share at a price of $0.25 up to 12 January 2011 (Note 10).





During
      the year ended 30 April 2006, the Company purchased inventory from an unrelated
      party in the amount of $177,204 on behalf of a related company with two
      directors in common. The Company issued 611,048 common shares to the unrelated
      party valued at $0.29 per share for a total value of $177,204. At 30 April
      2006,
      the amount of $177,204 was written off as management deemed the amount to be
      uncollectible from the related company (Note 8).





40


**Rotoblock
        Corporation**
 **(A
        Development Stage Company)**
 Notes
        to
        Consolidated Financial Statements
 (Expressed
        in U.S. Dollars)
 **30
        April 2007**
 **______________________________________________________________________________________________________________________________________________**


**10.**
            **Capital
                Stock******





Authorized
      capital stock consists of 75,000,000 common shares with par value of $0.001
      per
      share.





i.
            During
                the year ended 30 April 2004, the Company issued 15,000,000 common
                shares
                pursuant to the acquisition of the net assets of Rotoblock Inc (Note
                1).
                Theses shares are restricted from trading as defined in Rule 144
                of the
                United States Securities Act of
                1933.





ii.
            During
                the year ended 30 April 2005, the Company issued 10,000,000 units
                at a
                price of $0.05 per unit. Each unit consists of one common share and
                one-half common share purchase warrant. Each whole common share purchase
                warrant entitles the holder to purchase an additional common share
                at a
                price of $0.50 per share for a period of two years from the date
                of
                offering. As at 30 April 2007, none of the share purchase warrants
                in this
                series remain outstanding.





iii.
            During
                the year ended 30 April 2006, the Company issued 548,160 common shares
                valued at prices in the range of $0.14 and $0.36 per share for total
                cash
                proceeds of $143,411.





iv.
            During
                the year ended 30 April 2006, the Company issued 40,000 common shares
                at a
                price of $0.25 per share upon the exercise of previously outstanding
                share
                purchase warrants. As at 30 April 2007, 2,960,000 share purchase
                warrants
                in this series remain outstanding.





v.
            During
                the year ended 30 April 2006, the Company issued 611,048 common shares
                valued at a price of $0.29 per share for the acquisition of inventory
                (Note 9).





vi.
            During
                the year ended 30 April 2006, the Company issued 2,418,130 common
                shares
                for services valued at $753,877. Of this amount, $226,098 was expensed
                during the period ended 30 April 2007 (31 January 2006 - $435,728;
                Cumulative - $661,826) and the remaining $92,051 was classified as
                prepaid
                expense which will be expensed as the services are received in subsequent
                periods.





vii.
            During
                the year ended 30 April 2007, the Company issued 114,286 restricted
                common
                shares at a price of $0.21 per share. These shares are restricted
                from
                trading for a period of one year as defined by Rule 144 of the United
                States Securities Act of 1933.





viii.
            During
                the year ended 30 April 2007, the Company issued 24,513 common shares
                valued at $4,658 for consulting
                services.





ix.
            During
                the year ended 30 April 2007, the Company issued 150,000 common shares
                valued at $28,500 for investor relations
                services.





x.
            During
                the year ended 30 April 2007, the Company issued 33,333 common shares
                at a
                price of $0.15 per share for legal services. Of this amount, $2,992
                was
                expensed during the year, and the remaining $2,008 was classified
                as
                prepaid expense which will be expensed as the legal services are
                received
                in the subsequent year.


41


**Rotoblock
        Corporation**
 **(A
        Development Stage Company)**
 Notes
        to
        Consolidated Financial Statements
 (Expressed
        in U.S. Dollars)
 **30
        April 2007**
 **_____________________________________________________________________________________________________________________________________________**


xi.
            During
                the year ended 30 April 2007, the Company issued 57,820 common shares
                valued at $5,782 for consulting
                services.





xii.
            During
                the year ended 30 April 2007, the Company issued 69,000 common shares
                valued at $6,210 for consulting
                services.





xiii.
            During
                the year ended 30 April 2007, the Company issued 75,000 common shares
                at a
                price of $0.10 per share for consulting services. These shares are
                restricted from trading for a period of one year as defined by Rule
                144 of
                the United States Securities Act 1933.





xiv.
            During
                the year ended 30 April 2007, the Company issued 800,000 common shares
                at
                a price of $0.12 per share for public relations services. Of this
                amount,
                $40,241 was expensed during the year, and the remaining $55,759 was
                classified as prepaid expense which will be expensed as the public
                relations services are received in the subsequent year. These shares
                are
                restricted from trading for a period of one year as defined by Rule
                144 of
                the United States Securities Act
                1933.





xv.
            During
                the year ended 30 April 2007, the Company issued 192,363 common shares
                valued at $15,389 for rent.





xvi.
            During
                the year ended 30 April 2007, the Company issued 135,850 common shares
                valued at $10,868 for consulting
                services.





xvii.
            During
                the year ended 30 April 2007, the Company issued 93,750 common shares
                valued at $7,500 for public relations. These shares are restricted
                from
                trading for a period of one year as defined by Rule 144 of the United
                States Securities Act of 1933.





xviii.
            During
                the year ended 30 April 2007, the Company issued 77,633 common shares
                valued at $4,658 for consulting
                services.





xix.
            During
                the year ended 30 April 2007, the Company issued 2,500,000 share
                purchase
                warrants to officer and directors of the Company with fair value
                of
                $219,824. Each share purchase warrant entitles the holder to purchase
                an
                additional common share at a price of $0.15 up to 7 December
                2011.





xx.
            During
                the year ended 30 April 2007, the Company recognized stock compensation
                expense of $78,061 on the amendment of the expiry date of 2,000,000
                warrants issued on 11 August 2005 to 11 August
                2009.





xxi.
            During
                the year ended 30 April 2007, the Company recognized stock compensation
                expense of $116,825 on the amendment of the expiry date of 3,000,000
                warrants issued on 24 August 2005 to 24 August
                2009.











42


**** **Rotoblock
        Corporation**
 **(A
        Development Stage Company)**
 Notes
        to
        Consolidated Financial Statements
 (Expressed
        in U.S. Dollars)
 **30
        April 2007**
 **_____________________________________________________________________________________________________________________________________________**


Details
      of common shares issued for services are as follows:





**Date
                Issued**
            
            **Number**
              **of
                shares**
            
            **Price**
            
            **Price**
              **per
                share**
            
            **Service****$**
            
            **$**24
                August 2005
            
            250,000
            
            95,000
            
            0.38
            
            Consulting*24
                August 2005
            
            25,000
            
            9,500
            
            0.38
            
            Computer
                and IT24
                August 2005
            
            50,000
            
            19,000
            
            0.38
            
            Public
                relations24
                August 2005
            
            25,000
            
            9,500
            
            0.38
            
            Investor
                relations24
                August 2005
            
            300,000
            
            114,000
            
            0.38
            
            Legal24
                August 2005
            
            250,000
            
            95,000
            
            0.38
            
            Consulting*24
                August 2005
            
            25,000
            
            9,500
            
            0.38
            
            Accounting28
                September 2005
            
            104,171
            
            29,168
            
            0.28
            
            Investor
                relations29
                September 2005
            
            100,000
            
            25,000
            
            0.25
            
            Consulting29
                September 2005
            
            150,000
            
            37,500
            
            0.25
            
            Consulting*27
                October 2005
            
            327,586
            
            95,000
            
            0.29
            
            Investor
                relations28
                October 2005
            
            99,360
            
            24,840
            
            0.25
            
            Rent1
                November 2005
            
            50,000
            
            14,000
            
            0.28
            
            Public
                relations1
                November 2005
            
            125,000
            
            35,000
            
            0.28
            
            Consulting2
                November 2005
            
            80,000
            
            23,200
            
            0.29
            
            Consulting14
                November 2005
            
            100,000
            
            50,000
            
            0.50
            
            Printing12
                January 2006
            
            250,000
            
            37,500
            
            0.15
            
            Consulting12
                January 2006
            
            16,667
            
            2,500
            
            0.15
            
            Legal25
                January 2006
            
            68,287
            
            21,169
            
            0.31
            
            Commission
                bonus7
                February 2006
            
            22,059
            
            7,500
            
            0.34
            
            Consulting28
                June 2006
            
            24,513
            
            4,658
            
            0.19
            
            Consulting29
                June 2006
            
            150,000
            
            28,500
            
            0.19
            
            Investor
                relations9
                August 2006
            
            33,333
            
            5,000
            
            0.15
            
            Legal3
                October 2006
            
            57,820
            
            5,782
            
            0.10
            
            Consulting19
                October 2006
            
            69,000
            
            6,210
            
            0.09
            
            Consulting10
                November 2006
            
            75,000
            
            7,500
            
            0.10
            
            Public
                relations29
                November 2006
            
            800,000
            
            96,000
            
            0.12
            
            Public
                relations22
                December 2006
            
            192,363
            
            15,389
            
            0.08
            
            Rent2
                January 2007
            
            135,850
            
            10,868
            
            0.08
            
            Consulting7
                February 2007
            
            93,750
            
            7,500
            
            0.08
            
            Public
                relations3
                April 2007
            
            77,633
            
            4,658
            
            0.06
            
            ConsultingTotal
            
            4,127,392
            
            945,942





***Common
      shares issued for services from related parties.**











43


**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Notes
      to
      Consolidated Financial Statements


(Expressed
      in U.S. Dollars)


**30
      April 2007**


**___________________________________________________________________________________________________________________________________________**





**Share
      Purchase Warrants**





The
      following share purchase warrants were outstanding at 30 April
      2007:


**Exercise
                price**
            
            **Number**
              **of
                warrants**
            
            **Remaining**
              **contractual
                life (years)****$**Warrants
            
            0.50
            
            2,000,000
            
            2.29Warrants
            
            0.50
            
            1,125,000
            
            0.32Warrants
            
            0.50
            
            3,000,000
            
            2.32Warrants
            
            0.50
            
            250,000
            
            0.42Warrants
            
            0.50
            
            1,154
            
            0.59Warrants
            
            0.50
            
            125,000
            
            0.60Warrants
            
            0.50
            
            1,006
            
            0.65Warrants
            
            0.25
            
            2,960,000
            
            3.71Warrants
            
            0.15
            
            2,500,000
            
            4.6111,962,160





The
      following is a summary of warrant activities during the years ended 30 April
      2007 and 2006:


**Number
                of warrants**
            
            **Weighted
                average exercise price****$**Outstanding
                and exercisable at 1 May 2005
            
            5,000,000
            
            0.50Granted
            
            9,502,160
            
            0.50Exercised
            
            (40,000)
            
            0.25Expired
            
            -
            
            -Outstanding
                and exercisable at 30 April 2006
            
            14,462,160
            
            0.50Weighted
                average fair value of warrants granted during the year ended 30 April
                2006
            
            
            
            0.23Outstanding
                and exercisable at 1 May 2006
            
            14,462,160
            
            0.45Granted
            
            2,500,000
            
            0.15Exercised
            
            -
            
            -Expired
            
            (5,000,000)
            
            0.50Outstanding
                and exercisable at 30 April 2007
            
            11,962,160
            
            0.45Weighted
                average fair value of warrants granted during the year ended 30 April
                2007
            
            
            
            0.09








44








**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Notes
      to
      Consolidated Financial Statements


(Expressed
      in U.S. Dollars)


**30
      April 2007**


**___________________________________________________________________________________________________________________________________________**





The
      weighted average grant date fair value of warrants issued during the year ended
      30 April 2007, amounted to $0.09 per warrant (30 April 2006 - $0.23 per
      warrant). The fair value of each warrant granted was determined using the
      Black-Scholes option pricing model and the following weighted average
      assumptions:





**As
                at 30 April 2007**
            
            **As
                at 30 April 2006**Risk
                free interest rate
            
            
            
            4.04
                - 4.82 %
            
            4.04
                - 4.42%Expected
                life
            
            
            
            2.0
                - 5.0 years
            
            2.0
                - 5.0 yearsAnnualized
                volatility
            
            
            
            117
                - 141%
            
            134
                - 141%Expected
                dividends
            
            
            
            -
            
            -








**Restricted
      Common Shares**





During
      the year ended 30 April 2007, the Company issued 1,823,548 common shares (30
      April 2006 - 3,617,338 common shares). Of these, 1,083,036 common shares (30
      April 2006 - 3,555,279 common shares) were restricted from trading as defined
      under Rule 144 of the United States Securities Act of 1933.





As
      at 30
      April 2007, a total of 30,440,886 common shares are outstanding. Of these,
      19,638,315 were restricted from trading as defined under Rule 144 of the United
      States Securities Act of 1933.





**11.**
            **Income
                Taxes**





The
      Company has losses carried forward for income tax purposes to 30 April 2007.
      There are no current or deferred tax expenses for the period ended 30 April
      2007
      due to the Company’s loss position. The Company has not reserved for any
      benefits of these losses. The deferred tax consequences of temporary differences
      in reporting items for financial statement and income tax purposes are
      recognized, as appropriate. Realization of the future tax benefits related
      to
      the deferred tax assets is dependent on many factors, including the Company’s
      ability to generate taxable income within the net operating loss carry forward
      period. Management has considered these factors in reaching its conclusion
      as to
      the valuation allowance for financial reporting purposes.





























45





**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Notes
      to
      Consolidated Financial Statements


(Expressed
      in U.S. Dollars)


**30
      April 2007**


**___________________________________________________________________________________________________________________________________________**





The
      provision for refundable federal income tax consists of the
      following:





**For
                the year ended 30 April 2007**
            
            **For
                the year ended 30 April 2006****$**
            
            **$**Deferred
                tax asset attributable to:Current
                operations
            
            293,618
            
            940,868Contributions
                to capital by related party - expenses
            
            (34,000)
            
            -Stock-based
                compensation
            
            (141,002)
            
            (646,400)Less:
                Change in valuation allowance
            
            (118,616)
            
            (294,468)Net
                refundable amount
            
            -
            
            -





The
      composition of the Company’s deferred tax asset as at 30 April 2007 and 2006 is
      as follows:





**As
                at 30 April 2007**
            
            **As
                at 30 April 2006****$**
            
            **$**Net
                operating loss carry forward
            
            1,629,727
            
            1,280,856Statutory
                federal income tax rate
            
            34%
            
            34%Effective
                income tax rate
            
            0%
            
            0%Deferred
                tax asset
            
            554,107
            
            435,491Less:
                Valuation allowance
            
            (554,107)
            
            (435,491)Net
                deferred tax asset
            
            -
            
            -





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





As
      at 30
      April 2007, the Company has unused net operating losses for U.S. federal income
      tax purposes of approximately $1,629,727 that are available to offset future
      taxable income. This unused net operating loss carry forward balance for income
      tax purposes expires between the years 2024 and 2027.





46


**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Notes
      to
      Consolidated Financial Statements


(Expressed
      in U.S. Dollars)


**30
      April 2007**


**____________________________________________________________________________________________________________________________________________**





**12.**  **Commitments**





i.
            The
                Company has outstanding commitments with respect to the License Agreement
                (Note 5).





ii.
            On
                30 April 2007, the Company entered into a convertible promissory
                note
                agreement for $10,000 cash. The note is non-interest bearing, unsecured
                and repayable in cash or 100,000 shares by 13 November
                2008





iii.
            On
                10 November 2006 the Company entered into an agreement with Econ
                Corporate
                Services, Inc. for consulting services. The Company is committed
                to issues
                shares equivalent to $2,500 US Funds on a quarterly basis for a period
                of
                one year effective on the date of the
                agreement.





iv.
            On
                25 October 2006, the Company negotiated an extension to exercise
                the
                Option by thirty seven months. Pursuant to the amended option agreement
                the Company must pay a royalty of $50 per engine on the sale of up
                to
                10,000 oscillating piston engines (“OPE”), and a royalty of $2 per engine
                on the sale of up to 100,000 OPE. (Note
                3)





**13.**  **Supplemental
      Disclosure with Respect to Cash Flows** ****





**For
                the period from the date of inception on 2 September 2003 to**
              **30
                April 2007**
            
            **For
                the year ended**
              **30
                April 2007**
            
            **For
                the year ended**
              **30
                April 2006****$**
            
            **$**
            
            **$**Cash
                paid during the year for interest
            
            11,362
            
            -
            
            200Cash
                paid during the year for income taxes
            
            -
            
            -
            
            -





During
      the year ended 30 April 2007, officers and directors of the Company made
      contributions to capital for management fees of $100,000 (2006 - $Nil;
      cumulative - $100,000) (Note 9 ).





During
      the year ended 30 April 2007, the Company issued 24,513 common shares valued
      at
      $4,658 for consulting services (Note 10).





During
      the year ended 30 April 2007, the Company issued 150,000 common shares valued
      at
      $28,500 for investor relations services (Note 10).





47


**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Notes
      to
      Consolidated Financial Statements


(Expressed
      in U.S. Dollars)


**30
      April 2007**


**____________________________________________________________________________________________________________________________________________**





During
      the year ended 30 April 2007, the Company issued 33,333 common shares at a
      price
      of $0.15 per share for legal services. Of this amount, $2,992 was expensed
      during the year, and the remaining $2,008 was classified as prepaid expense
      which will be expensed as the legal services are received in the subsequent
      year
      (Note 10).





During
      the year ended 30 April 2007, the Company issued 57,820 common shares valued
      at
      $5,782 for consulting services (Note 10).





During
      the year ended 30 April 2007, the Company issued 69,000 common shares valued
      at
      $6,210 for consulting services (Note 10).





During
      the year ended 30 April 2007, the Company issued 75,000 common shares at a
      price
      of $0.10 per share for consulting services. These shares are restricted from
      trading for a period of one year as defined by Rule 144 of the United States
      Securities Act 1933 (Note 10).





During
      the year ended 30 April 2007, the Company issued 800,000 common shares at a
      price of $0.12 per share for public relations services. Of this amount, $40,241
      was expensed during the year, and the remaining $55,759 was classified as
      prepaid expense which will be expensed as the public relations services are
      received in the subsequent year. These shares are restricted from trading for
      a
      period of one year as defined by Rule 144 of the United States Securities Act
      1933 (Note 10).





During
      the year ended 30 April 2007, the Company issued 192,363 common shares valued
      at
      $15,389 for rent (Note 10).





During
      the year ended 30 April 2007, the Company issued 135,850 common shares valued
      at
      $10,868 for consulting services (Note 10).





During
      the year ended 30 April 2007, the Company issued 93,750 common shares valued
      at
      $7,500 for public relations (Note 10).





During
      the year ended 30 April 2007, the Company issued 77,633 common shares valued
      at
      $4,658 for consulting services (Note 10).





During
      the year ended 30 April 2007, the Company issued 2,500,000 share purchase
      warrants to officer and directors of the Company with fair value of $219,824.
      Each share purchase warrant entitles the holder to purchase an additional common
      share at a price of $0.15 up to 7 December 2011 (Note 10).





During
      the year ended 30 April 2007, the Company recognized stock compensation expense
      of $78,061 on the amendment of the expiry date of 2,000,000 warrants issued
      on
      11 August 2005 to 11 August 2009 (Note 10).





During
      the year ended 30 April 2007, the Company recognized stock compensation expense
      of $116,825 on the amendment of the expiry date of 3,000,000 warrants issued
      on
      24 August 2005 to 24 August 2009 (Note 10).


48








**Rotoblock
      Corporation**


**(A
      Development Stage Company)**


Notes
      to
      Consolidated Financial Statements


(Expressed
      in U.S. Dollars)


**30
      April 2007**


**_____________________________________________________________________________________________________________________________________________**





During
      the year ended 30 April 2006, the Company issued 2,418,130 common shares for
      services valued at $753,877. Of this amount, $226,098 was expensed during the
      period ended 30 April 2007 (31 January 2006 - $435,728; Cumulative - $661,826)
      and the remaining $92,051 was classified as prepaid expense which will be
      expensed as the services are received in subsequent periods (Note
      10).





During
      the year ended 30 April 2006, the Company purchased inventory from an unrelated
      party in the amount of $177,204 on behalf of a related company with two
      directors in common. 611,048 shares were issued to the unrelated party valued
      at
      $0.29 per share for a total value of $177,204. At 30 April 2006, the amount
      of
      $177,204 was written off as management deemed the amount to be uncollectible
      from the related company (Notes 9 and 10).