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, 2006





[
      ]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 Rose, 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, 2006.





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, 2006, there were 28,617,338 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, computed by reference to the closing price
      on July 21, 2006 ($0.16 per share), is **** $3,652,283.20.





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____




**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.








**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
      $3,181,895, 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).




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
      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
      intend
      to continue 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.




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


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, 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.




***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
      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.





Subsequent
      to-April 30, 2006, we were contacted by a Brazilian micro-car manufacturer
      and a
      $5,000,000 Non-exclusive Development and Licensing Agreement for the OPE was
      negotiated and executed on July 18, 2006 (signed by Rotoblock on July 25, 2006),
      a copy of which is attached to this annual report. The $5,000,000 will be
      payable in increments of $500 for each engine installed or sold. Upon receiving
      the $5 million, we will also receive $100 per vehicle sold that incorporated
      the
      OPE technology. We are very excited about the prospect of having the OPE
      manufactured in Brazil, as the manufacturer enjoys the full support of the
      Brazilian Government. Having made a non-exclusive arrangement with the above
      manufacturer, however, does not curtail our efforts to continue seeking
      symbiotic relationships with additional manufacturers who are sharing our
      vision. Our Management team will work closely with our manufacturing partners
      to
      provide the highest quality support to assure maximum OPE technology
      proliferation in the market. We will further, to the best of our ability,
      perfect and expand the technology to meet specific needs, such as exploring
      the
      possibility of running the OPE on alternate fuels, especially hydrogen or
      ethanol. In such instances, we expect our joint venture partner(s) will be
      responsible for research and development costs associated with expanding the
      technology to meet their specific requirements.




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.





***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 **.**





***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.




*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 have been prepared assuming that we will
      continue as a going concern. During the fiscal years ended April 30, 2006 and
      2005 we suffered net losses of $2,767,259 and $306,193, respectively. At April
      30, 2006, our stockholders' equity was $338,077 and $120,587, respectively.
      There is no assurance that we can successfully complete our prototype 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 $1,884 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 candidate for acquisition that seeks access to the public marketplace
      and its 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 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 use it for up June 2, 2007, 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 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 14,462,160 shares of our Common Stock for issuance upon exercise of
      outstanding warrants at prices between $0.25 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 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
      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 is for a period of one year
      commencing November 1, 2005 and expiring October 31, 2006, with a total value
      of
      $24,800. 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
                Quarter**
            **High
                Closing Price**
            **Low
                Closing Price****Fiscal
                Year End**
            4thQuarter (2/1/06 - 4/30/06)
            $0.44
            $0.21**30-Apr-06
                ***
            3rdQuarter
                (11/1/05- 1/31/06)
            $0.46
            $0.122ndQuarter (8/1/05 - 10/31/05)
            $0.49
            $0.191stQuarter (5/1/05 - 7/31/05)
            $2.10
            $0.36





*
      Our
      common stock was not listed for trading until the 1 st quarter
      of FYE 4/30/06 and, therefore, no quarterly high/low closing prices are
      disclosed for FYE 4/30/05.





The
      closing price of the Common Stock as reported on July 21, 2006, was $0.16 per
      share.




***Holders***




As
      of
      July 21, 2006, there were 115 holders of Common Stock, who collectively held
      28,617,338 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
      it
      may do so if its financial position changes.




***Equity
      Compensation Plans***




We
      have
      not adopted any equity compensation plans; however, during the year ended April
      30, 2006, we issued a total of 9,502,160 incentive share purchase warrants
      with
      exercise prices of $0.25 and $0.50 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 registration statement on February 1,
      2006.





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.





***Other
      Provisions***





The
      following table gives information about the Common Stock that may be issued
      upon
      the exercise of the warrants as of April 30, 2006:


**Plan
                Category**
            **(a)
                Number of Securities to be Issued Upon Exercise of Outstanding Options,
                Warrants and Rights**
            **(b)
                Weighted Average Exercise Price of Outstanding Options, Warrants
                and
                Rights**
            **(c)
                Number of Securities Remaining Available for Future Issuance Under
                Equity
                Compensation Plans (Excluding Securities Reflected in Column
                (a))****Incentive
                Share Purchase Warrants**
            **14,462,160**
            **$0.45**
            **0****TOTAL**
            **14,462,160**
            **$0.45**
            **0**


***Recent
      Sales of Unregistered Securities***




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





During
      the 2006 fiscal year, we completed a private placement of 548,160 common shares
      valued between $0.14 and $0.36 per share. Total proceeds to us were
      $143,441.





During
      the 2006 fiscal year, we issued 40,000 shares for exercised warrants with an
      option price of $0.25 per share. The total proceeds to us were
      $10,000.





During
      the 2006 fiscal year, we entered into a contract with an unrelated party for
      the
      purchase of certain inventory for a related party in exchange for 611,048 shares
      valued at $0.29 per share for a total value of $177,204.





During
      the 2006 fiscal year, we issued 2,418,130 shares for services valued at
      $753,877.  Details
      of the shares issued for services are as follows:




**Date
                Issued**
            
            **Number**
              **of
                shares**
            
            **Price**
            
            **Price**
              **per
                share**
            **Service**August
                24, 2005
            
            250,000
            
            95,000
            
            0.38
            Consulting*August
                24, 2005
            
            25,000
            
            9,500
            
            0.38
            Computer
                and ITAugust
                24, 2005
            
            50,000
            
            19,000
            
            0.38
            Public
                relationsAugust
                24, 2005
            
            25,000
            
            9,500
            
            0.38
            Investor
                relationsAugust
                24, 2005
            
            300,000
            
            114,000
            
            0.38
            LegalAugust
                24, 2005
            
            250,000
            
            95,000
            
            0.38
            Consulting*August
                24, 2005
            
            25,000
            
            9,500
            
            0.38
            AccountingSeptember
                28, 2005
            
            104,171
            
            29,168
            
            0.28
            Investor
                relationsSeptember
                29, 2005
            
            100,000
            
            25,000
            
            0.25
            ConsultingSeptember
                29, 2005
            
            150,000
            
            37,500
            
            0.25
            Consulting*October
                27, 2005
            
            327,586
            
            95,000
            
            0.29
            Investor
                relationsOctober
                28, 2005
            
            99,360
            
            24,840
            
            0.25
            RentNovember
                1, 2005
            
            50,000
            
            14,000
            
            0.28
            Public
                relationsNovember
                1, 2005
            
            125,000
            
            35,000
            
            0.28
            ConsultingNovember
                2, 2005
            
            80,000
            
            23,200
            
            0.29
            ConsultingNovember
                14, 2005
            
            100,000
            
            50,000
            
            0.50
            PrintingJanuary
                12, 2006
            
            250,000
            
            37,500
            
            0.15
            ConsultingJanuary
                12, 2006
            
            16,667
            
            2,500
            
            0.15
            LegalJanuary
                25, 2006
            
            68,287
            
            21,169
            
            0.31
            Commission
                bonusFebruary
                7, 2006
            
            22,059
            
            7,500
            
            0.34
            ConsultingTotal
            
            2,418,130
            
            $
                753,877**
                Shares issued for services from related parties.*





There
      were no stock options issued or outstanding at April 30, 2006.





**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.





***Results
      of Operations***





For
      the
      year ended April 30, 2006, we incurred a net operating loss of $2,767,259,
      as
      compared to a net loss of $306,193 for the period year ended April 30,
      2005.





We
      incurred total expenses of $2,580,185 for the year ended April 30, 2006. The
      majority of the expense was $1,901,177, the estimated fair value of the
      9,502,160 incentive share purchase warrants issued to directors, officers and
      employees during the period. A total of $326,517 in consulting fees was paid,
      of
      which $19,073 was paid to a former director. A total of $98,520 was paid for
      investor relations during the period and $44,230 in public relations and
      preparation and dissemination of shareholder information. A total of $83,049
      was
      paid in professional expenses for the year ended April 30, 2006, 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 $47,331 for the year ended April 30, 2006. 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, $9,870 of property and equipment was written off when Management
      was
      relocated to California.





The
      Company also purchased certain 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 April 30, 2006, the amount of $177,204 was written off
      although management expects to receive future advertising for consideration
      from
      the related party.





***Liquidity
      and Capital Resources***





We
      currently have only $1,884 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, 2006 was $118,393,
      attributed to $143,441 in private sales of Common Stock and $10,000 received
      from exercise of warrants, less repayments of outstanding notes to related
      parties in the amount of $35,048.





There
      was
      no cash used in investing activities for the year ended April 30,
      2006.





Our
      net
      loss for the year ended April 30, 2006 was $2,767,259.





Net
      cash
      provided by operating activities for the year ended April 30, 2006 was
      ($167,419), consisting of $1,044 in depreciation expense; $488,700 as the fair
      value of 2,418,130 shares issued for services during the year; $1,901,177 as
      the
      fair value of the incentive share warrants issued to officers, directors and
      employees; $9,870 for property and equipment written off when the Company
      relocated its operations from Canada to the US; and $177,204 in bad debt
      expense. Adjustments to reconcile net loss to net cash used by operating
      activities were attributed to accounts receivable and other receivables in
      the
      amount of $6,594; accounts payable
      in the amount of ($4,704); prepaid expense and deposits in the amount of $9,081;
      and accrued liabilities in the amount of $10,874.




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.





***Subsequent
      Events***





Subsequent
      to April 30, 2006, we entered into an Engine Development and License Agreement
      with an unrelated third party, Obvio ! Automotoveiculos S.A. (“Obvio !”),
      located in Brazil, whereby Obvio ! will incorporate the Oscillating Piston
      Engine (“OPE”) technology into their vehicles. The parties have agreed to enter
      into a non-exclusive joint venture to develop a third generation OPE suitable
      for hybrid applications. Pursuant to the terms of the Agreement, we will grant
      Obvio ! a license for the OPE technology in exchange for $5,000,000, which
      will
      be payable in increments of $500 for each engine installed or sold. Upon
      receiving the $5,000,000 from Obvio !, we will also receive royalties of $100
      per vehicle sold that incorporated the OPE technology. A copy of the Agreement
      is attached to this annual report as Exhibit 99 and is incorporated herein
      by
      this reference.





***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. 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
      May
      30, 2005, Morgan & Company, our former accountants, resigned as our
      principal independent accounting firm and auditor and on May 31, 2005, we
      engaged Staley, Okada & Partners as our auditor to audit our financial
      statements.





The
      report on the financial statements prepared by Morgan & Company for the
      fiscal year ended April 30, 2004 did not contain an adverse opinion or a
      disclaimer of opinion, nor was it qualified or modified as to audit scope or
      accounting principles. However, the report included a going concern emphasis.
      We
      did not have any disagreements with Morgan & Company on any accounting
      principles or practices, financial statement disclosure, or auditing scope
      or
      procedure at any time during our most recent fiscal year, or any subsequent
      interim period, through the date of Morgan & Company's resignation on May
      30, 2005.





Neither
      Rotoblock Corporation nor anyone on our behalf consulted Staley, Okada &
Partners on any matter relating to the application of accounting principles
      to a
      specific completed or contemplated transaction or the type of audit opinion
      that
      might be rendered on our financial statements.





**Item
      8a. Accounting 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.





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, 2006.





**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 and Principal Executive Officer
            
            May,
                2006 to present
            
            51
            
            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
            
            58
            
            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.Renay
                Cude, Secretary and Director
            
            August
                11, 2005 to Present
            
            29
            
            Ms.
                Cude was appointed as director and corporate secretary of ZAP in
                October
                of 2002. She is the President of ZAP’s subsidiary, Voltage Vehicles, where
                she works closely with corporate counsel in obtaining all the required
                licensing in the 50 states for the proper distribution of advanced
                technology vehicles. Ms. Cude is also the President of ZAP Manufacturing
                and ZAP Rentals. Prior to joining ZAP, from 1997 to 2002, Ms. Cude
                worked
                as a legal secretary for various law firms. Ms. Cude has over five
                years
                experience working in the bankruptcy field where she helped companies
                through the reorganization process. Ms. Cude holds an Associates
                Degree in
                General Education from Santa Rosa Junior College.Ching
                Chen Chan, Director
            
            September
                26, 2005 to Present
            
            65
            
            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.





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.





***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, 2006 and 2005 with respect to each of the individuals who were the
      Company's chief executive officer 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.




**FISCAL
                  YEAR COMPENSATION**
              
              
              
              
              **LONG
                  TERM COMPENSATION****Awards**
              
              **Payouts****Name
                  and Principal**
              **Year**
              **Salary**
              **Bonus**
              **Other**
              **Securities**
              **Restricted
                  Shares**
              **LTIP
                  Payouts**
              **All
                  other****Position**
              
              **($)**
              **($)**
              **Annual**
              **Underlying**
              **or
                  Restricted Share**
              **($)**
              **Compensation****Compensation****(4)**
              **Option/SARs**
              **Units**
              
              **($)****Granted**Matthias
                  Heinze, President and Principal Executive Officer
              2005
              0
              0
              0
              0
              0
              0
              02006
              0
              0
              0
              500,000
              250,000
              0
              0Thomas
                  M. Howard, Chief Financial Officer, Principal Accounting Officer,
                  Director
              2005
              0
              0
              0
              0
              0
              0
              02006
              0
              0
              0
              1,000,000
              0
              0
              0Renay
                  Cude, Secretary and Director
              2005
              0
              0
              0
              0
              0
              0
              02006
              0
              0
              0
              1,250,000
              0
              0
              0Steven
                  M. Schneider, Director
              2005
              0
              0
              0
              0
              0
              0
              02006
              0
              0
              0
              750,000
              0
              0
              0Ching
                  Chen Chan, Director
              2005
              0
              0
              0
              0
              0
              0
              02006
              0
              0
              0
              150,000
              150,000
              0
              0


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 2006 to the Named Executive
      Officers.





**OPTION/SAR
        GRANTS IN PREVIOUS YEAR - 2006**
 **INDIVIDUAL
        GRANTS**
 **Name**
                **Number
                    of Securities Underlying Options/SARs**
                **%
                    of Total Option/SARs Granted to Employees in Fiscal
                    Year**
                **Exercise
                    or Base Price**
                **Expiration
                    Date**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
                    Cudeenay 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
                    Chen 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 Exercise (#)**
            **Value
                Realized ($)**
            **Number
                of Securities Underlying Unexercised Options/SARs at FY-End
                (#)**
            **Value
                of Unexercised Options/SARs at FY-End ($) Exercisable or
                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**





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
                and Principal Executive Officer
            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


________________________


All
      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.





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





During
      the year, we paid $19,073 in consulting fees to Peter Scholl, a former director
      of the Company.





In
      addition, the four current directors received a total of 3,150,000 share
      purchase warrants at an exercise price of $0.25 - $0.50 and a fair value of
      $492,719, and Peter Scholl and Lance Waymen, former directors and continuing
      consultants, received a total of3,250,000 share purchase warrants at an exercise
      price of $0.50 and a fair value of $779,977. In addition, the President received
      a total of 500,000 share purchase warrants at an exercise price of $0.25 with
      a
      fair value of $93,582.





At
      April
      30, 2006, a total of $597 was due to Lance Waymen, a former director for
      consulting fees and expenses paid on our behalf.





During
      the period, we purchased certain inventory from an unrelated party in the amount
      of $177,204 *(See
      Note 10a)* 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
      April 30, 2006, the amount of $177,204 was written off although management
      expects to receive future advertising for consideration from the related
      company.





**Item
      13. Exhibits and Reports on Form 8-K**





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, 2006 were $12,500and $10,282 for the fiscal year ended April
      30,
      2005. The reviews for the financial statements included in our quarterly reports
      on Form 10-QSB during the fiscal years ended April 30, 2006 were $10,838.





***Audit
      Related Fees***





We
      incurred no fees for the fiscal years ended April 30, 2006 and 2005 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.





***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, 2006 and 2005 were nil.





***All
      Other Fees***





We
      incurred no other fees during the fiscal years ended April 30, 2006 and 2005
      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 24, 2006      /s/   
      Matthias Heinze


By:
      Matthias Heinze, President and
      Principal Executive Officer





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/ 
Renay
      Cude


By:
      Renay Cude, Secretary and
      Director





/s/   Ching
      Chen Chan


By:
      Ching Chen Chan,
      Director


























**ROTOBLOCK
      CORPORATION**


**(A
      Development Stage
      Company)**








**CONSOLIDATED
      FINANCIAL STATEMENTS**








**APRIL
      30, 2006 and
      2005**





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
























STALEY,
                OKADA & PARTNERS
              CHARTERED
                ACCOUNTANTS
            Suite
                400 - 889 West Pender Street
              Vancouver,
                BC Canada V6C 3B2
              **Tel**604
                694-6070
              **Fax**604
                585-8377
              info@staleyokada.com
              www.staleyokada.com


**Report of Independent Registered Public Accounting Firm**




**To
      the Stockholders of Rotoblock Corporation:**




We
      have
      audited the accompanying consolidated balance sheets of Rotoblock Corporation
      (the “Company”) as at April 30, 2006 and 2005 and the related consolidated
      statements changes in stockholders’ equity, operations, and cash flows for each
      of the years ended April 30, 2006 and 2005. 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 audits.




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






In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of the Company as at April
      30,
      2006 and 2005, and the results of its operations and its cash flows for each
      of
      the years ended April 30, 2006 and 2005, in conformity with United States
      generally accepted accounting principles.






The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 1 to the
      financial statements, the Company is dependent upon financing to continue
      operations and had suffered recurring losses from operations. These matters
      raise substantial doubt about the Company's ability to continue as a going
      concern. Management's plans in regards to these matters are discussed in Note
      1.
      The financial statements do not include any adjustments that might result from
      the outcome of this uncertainty.






The
      April
      30, 2004 figures, which are presented for comparative purposes, were audited
      by
      another firm of Chartered Accountants, who expressed an unqualified auditors’
report dated May 14, 2004.




***“Staley,
      Okada & Partners”***





Vancouver,
                BC, Canada
            STALEY,
                OKADA & PARTNERSJuly
                7, 2006*(except as to Note 12, which is as of July 18, 2006)*
            CHARTERED
                ACCOUNTANTS





Staley,
        Okada & Partners, with offices in Vancouver and Surrey, is a Member of MSI,
        a Network of Independent Professional Firms • A Member of the Institute of
        Chartered Accountants of British Columbia










**ROTOBLOCK
                CORPORATION**
              *(A
                Development Stage Company)***Consolidated
                Balance Sheets***(Stated
                in U.S. Dollars)***ASSETS**
            **April
                30,**
              **2006**
            April
                30,
              2005**Current**Cash
            **$**
            **1,884**
            $
            51,860Amounts
                receivables
            
            **686**
            
            7,280Prepaid
                expenses
            
            **266,546**
            
            10,450**269,116**
            
            69,590**Patents***(Note
                4)*
            
            **108,745**
            
            108,745**Property
                and Equipment***(Note
                6)*
            
            **-**
            
            10,914**$**
            **377,861**
            $
            189,249**LIABILITIES****Current**Accounts
                payable
            **$**
            **6,608**
            $
            11,312Accrued
                liabilities
            
            **20,874**
            
            10,000Advances
                payable
            
            **-**
            
            1,060Due
                to related party*(Note
                8)*
            
            **597**
            
            34,585Interest
                payable*(Note
                7)*
            
            **11,705**
            
            11,705**39,784**
            
            68,662**Continued
                Operations***(Note
                1)***STOCKHOLDERS’
                EQUITY****Capital
                Stock**Authorized:75,000,000
                common shares with a par value of $0.001 per shareIssued
                and fully paid:28,617,338
                common shares (2005 - 25,000,000)*(Note
                10)*
            
            **28,617**
            
            25,000Additional
                paid-in capital
            
            **3,495,746**
            
            513,664**Accumulated
                Comprehensive Loss**
            
            **(4,253)**
            
            (3,303)**Deficit**-
                accumulated during the development stage
            
            **(3,182,033)**
            
            (414,774)**338,077**
            
            120,587**$**
            **377,861**
            $
            189,249














-
          See
          Accompanying Notes -





**ROTOBLOCK
                CORPORATION**
              *(A
                Development Stage Company)***Consolidated
                Statement of Changes in Stockholders’ Equity***(Stated
                in U.S. Dollars)*Common
                Stock
            
            Additional
                Paid-in Capital
            Accumulated
                Comprehensive Loss
            Deficit
                Accumulated During the Development Stage
            Total
                Stockholders’ EquityNumber
                of Common Shares
            
            Par
                ValueShares
                issued for cash
            7,000,000
            $
            -
            $
            534
            $
            -
            $
            -
            $
            534Shares
                issued for cash
            200,000
            
            -
            
            38,130
            
            -
            
            -
            
            38,130Adjustment
                to number of shares issued and outstanding as a result of the acquisition
                of net assets of Rotoblock Inc.*(Note 3)*
            (7,200,000)
            
            -
            
            -
            
            -
            
            -
            
            -Shares
                issued in connection with the acquisition of net assets of Rotoblock
                Inc.*(Note
                3)*
            15,000,000
            
            15,000
            
            (15,000)
            
            -
            
            -
            
            -Excess
                of consideration over net assets purchased from Rotoblock Inc.*(Note
                3)*
            -
            
            -
            
            -
            
            -
            
            (138)
            
            (138)Foreign
                currency translation adjustment
            -
            
            -
            
            -
            
            (1,918)
            
            -
            
            (1,918)Loss
                for the period
            -
            
            -
            
            -
            
            -
            
            (108,443)
            
            (108,443)Balance
                - April 30, 2004
            15,000,000
            
            15,000
            
            23,664
            
            (1,918)
            
            (108,581)
            
            (71,835)Shares
                issued for cash
            10,000,000
            
            10,000
            
            490,000
            
            -
            
            -
            
            500,000Foreign
                currency translation adjustment
            -
            
            -
            
            -
            
            (1,385)
            
            -
            
            (1,385)Loss
                for the year
            -
            
            -
            
            -
            
            -
            
            (306,193)
            
            (306,193)Balance
                - April 30, 2005
            25,000,000
            
            25,000
            
            513,664
            
            (3,303)
            
            (414,774)
            
            120,587Shares
                issued for cash*(Note 10a)*
            548,160
            
            548
            
            142,893
            
            -
            
            -
            
            143,441Shares
                issued for services*(Note
                10a)*
            2,418,130
            
            2,418
            
            751,459
            
            -
            
            -
            
            753,877Shares
                issued for inventory
              *(Notes
                8 and 10a)*
            611,048
            
            611
            
            176,593
            
            -
            
            -
            
            177,204Shares
                issued for exercised warrants*(Note
                10)*
            40,000
            
            40
            
            9,960
            
            -
            
            -
            
            10,000Consulting
                expense - stock-based compensation*(Notes
                10b and 10c)*
            -
            
            -
            
            1,901,177
            
            -
            
            -
            
            1,901,177Foreign
                currency translation adjustment
            -
            
            -
            
            -
            
            (950)
            
            -
            
            (950)Loss
                for the year
            -
            
            -
            
            -
            
            -
            
            (2,767,259)
            
            (2,767,259)Balance
                - April 30, 2006
            28,617,338
            $
            28,617
            $
            3,495,746
            $
            (4,253)
            
            (3,182,033)
            $
            338,077











-
          See
          Accompanying Notes -





**ROTOBLOCK
                CORPORATION**
              *(A
                Development Stage Company)***Consolidated
                Statements of Operations***(Stated
                in U.S. Dollars)***For
                the**
              **Year
                Ended**
              **April
                30,**
              **2006**
            
            For
                the
              Year
                Ended
              April
                30,
              2005
            For
                the period
              from
              Commencement
              of
                Operations
              (September
                2,
              2003)
              to
                April 30,
              2004
            For
                the period
              from
              Commencement
              of
                Operations
              (September
                2,
              2003)
              to
                April 30,
              2006**Expenses**Consulting
                fees
            **$**
            **326,517**
            $
            19,000
            $
            -
            $
            345,517Consulting
                expense - stock-based compensation*(Notes
                10b and 10c)*
            
            **1,901,177**
            
            -
            
            -
            
            1,901,177Depreciation
            
            **1,044**
            
            2,924
            
            -
            
            3,968Foreign
                exchange loss (gain)
            
            **(371)**
            
            1,721
            
            -
            
            1,350Interest
            
            **1,082**
            
            14,122
            
            -
            
            15,204Investor
                relations
            
            **98,520**
            
            -
            
            -
            
            98,520Listing,
                filing and transfer agent fees
            
            **11,028**
            
            10,261
            
            -
            
            21,289Office
                and sundry
            
            **18,284**
            
            16,410
            
            3,021
            
            37,715Professional
                fees
            
            **83,049**
            
            30,204
            
            8,615
            
            121,868Public
                relations and shareholder information
            
            **44,230**
            
            -
            
            -
            
            44,230Rent
            
            **21,321**
            
            17,569
            
            12,454
            
            51,344Research
                and development
            
            **47,331**
            
            187,633
            
            78,874
            
            313,838Travel
                and promotion
            
            **26,973**
            
            6,349
            
            5,479
            
            38,801**Total
                Expenses**
            
            **2,580,185**
            
            306,193
            
            108,443
            
            2,994,821**Loss
                for the Period from Operations**
            
            **(2,580,185)**
            
            (306,193)
            
            (108,443)
            
            (2,994,821)**Other
                Items**Write-off
                of property and equipment*(Note
                6)*
            
            **(9,870)**
            
            -
            
            -
            
            (9,870)Write-off
                of related party receivable*(Note
                8)*
            
            **(177,204)**
            
            -
            
            -
            
            (177,204)**Loss
                for the Period**
            **$**
            **(2,767,259)**
            $
            (306,193)
            $
            (108,443)
            $
            (3,181,895)**Basic
                and Diluted Loss per Share**
            **$**
            **(0.10)**
            $
            (0.02)
            $
            (0.01)**Weighted
                Average Shares Outstanding**
            
            **27,073,876**
            
            17,575,342
            
            15,000,000**Comprehensive
                Loss**Loss
                for the period
            **$**
            **(2,767,259)**
            $
            (306,193)
            $
            (108,443)
            $
            (3,181,895)Foreign
                currency translation adjustment
            
            **(950)**
            
            (1,385)
            
            (1,918)
            
            (4,253)**Total
                Comprehensive Loss**
            **$**
            **(2,768,209)**
            $
            (307,578)
            $
            (110,361)
            $
            (3,186,148)**Comprehensive
                Loss per Share**
            **$**
            **(0.10)**
            $
            (0.02)
            $
            (0.01)


























-
          See
          Accompanying Notes -





**ROTOBLOCK
                CORPORATION**
              *(A
                Development Stage Company)***Consolidated
                Statements of Cash Flows***(Stated
                in U.S. Dollars)***For
                the**
              **Year
                Ended**
              **April
                30,**
              **2006**
            
            For
                the
              Year
                Ended
              April
                30,
              2005
            For
                the period
              From
              Commencement
              of
                Operations
              (September
                2,
              2003)
              to
                April 30,
              2004
            For
                the period
              From
              Commencement
              of
                Operations
              (September
                2,
              2003)
              to
                April 30,
              2006**Operating
                Activities**Loss
                for the period
            **$**
            **(2,767,259)**
            $
            (306,193)
            $
            (108,443)
            $
            (3,181,895)Items
                not involving an outlay of cash:Non-cash
                interest
            
            **-**
            
            11,705
            
            -
            
            11,705Depreciation
            
            **1,044**
            
            2,924
            
            -
            
            3,968Shares
                for services*(Note
                10a)*
            
            **488,700**
            
            -
            
            -
            
            488,700Consulting
                expense - stock-based compensation*(Notes
                10b and 10c)*
            
            **1,901,177**
            
            -
            
            -
            
            1,901,177Write-off
                of property and equipment*(Note
                6)*
            
            **9,870**
            
            -
            
            -
            
            9,870Write-off
                of related party receivable*(Note
                8)*
            
            **177,204**
            
            -
            
            -
            
            177,204**(189,264)**
            
            (291,564)
            
            (108,443)
            
            (589,271)Change
                in non cash items:Accounts
                receivable and other receivables
            
            **6,594**
            
            (4,381)
            
            (2,899)
            
            (686)Prepaid
                expenses and deposits
            
            **9,081**
            
            (938)
            
            (9,512)
            
            (1,369)Accounts
                payable
            
            **(4,704)**
            
            7,041
            
            4,271
            
            6,608Accrued
                liabilities
            
            **10,874**
            
            10,000
            
            -
            
            20,874**(167,419)**
            
            (279,842)
            
            (116,583)
            
            (563,844)**Investing
                Activities**Purchase
                of equipment
            
            **-**
            
            (4,087)
            
            (9,751)
            
            (13,838)Deficiency
                of purchase of net assets
            
            **-**
            
            -
            
            (138)
            
            (138)Purchase
                of patents
            
            **-**
            
            (108,745)
            
            -
            
            (108,745)**-**
            
            (112,832)
            
            (9,889)
            
            (122,721)**Financing
                Activities**Issuance
                of common stock
            
            **143,441**
            
            500,000
            
            38,664
            
            682,105Issuance
                of shares for warrants exercised
            
            **10,000**
            
            -
            
            -
            
            10,000Advances
                payable
            
            **(1,060)**
            
            88
            
            972
            
            -Loan
                payable
            
            **-**
            
            (150,000)
            
            150,000
            
            -Due
                to related parties
            
            **(33,988)**
            
            4,985
            
            29,600
            
            597**118,393**
            
            355,073
            
            219,236
            
            692,702**Foreign
                Exchange Effect on Cash**
            
            **(950)**
            
            (1,385)
            
            (1,918)
            
            (4,253)**Net
                Increase (Decrease) in Cash**
            
            **(49,976)**
            
            (38,986)
            
            90,846
            
            1,884Cash
                - Beginning of period
            
            **51,860**
            
            90,846
            
            -
            
            -**Cash
                - End of Period**
            **$**
            **1,884**
            $
            51,860
            $
            90,846
            $
            1,884**Supplemental
                Schedule of Non-cash Investing and Financing
                Activities**Shares
                issued for services*(Note
                10a)*
            **$**
            **753,877**
            $
            -
            $
            -
            $
            753,877Shares
                issued for inventory*(Notes
                8 and 10a)*
            **$**
            **177,204**
            $
            -
            $
            -
            $
            177,204Consulting
                expense - stock-based compensation*(Notes 10b and 10c)*
            **$**
            **1,901,177**
            $
            -
            $
            -
            $
            1,901,177Shares
                issued for acquisition of Rotoblock Inc.
            **$**
            **-**
            $
            -
            $
            (138)
            $
            (138)








-
            See
            Accompanying Notes -





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*








**1.
      CONTINUED OPERATIONS**





Organization





Rotoblock
      Corporation (the “Company”) was incorporated in the State of Nevada, U.S.A., on
      March 22, 2004. Rotoblock Inc., the Company’s wholly owned Canadian subsidiary,
      was incorporated under the Canada Business Corporations Act on September 2,
      2003.




Development
      Stage Activities





The
      Company has entered into an Option Agreement to acquire the rights to develop
      and market a new type of patented oscillating piston engine.





The
      Company is in the development stage; therefore, recovery of its assets is
      dependent upon future events, the outcome of which is indeterminable. In
      addition, successful completion of the Company’s development program and its
      transition, ultimately to the attainment of profitable operations, is dependent
      upon obtaining adequate financing to fulfil its development activities and
      achieve a level of sales adequate to support its cost structure.





Going
      Concern





Since
      inception, the Company has incurred losses and net cash outflows from
      operations. The Company expects to continue to incur substantial losses to
      complete the development of its business and, as disclosed in Note 4, will
      be
      required to make substantial payments within 13 months to acquire the
      patents. Since its inception, the Company has funded operations through common
      stock issuances and debt in order to meet its strategic objectives.





The
      Company plans to continue to fund its operations and to finance the acquisition
      of patents through common stock issuances and debt. However, there can be no
      assurance that the Company will be able to obtain sufficient funds to complete
      the acquisition of the patents and continue the development of and, if
      successful, to commence the sale of its products under development. As a result
      of the foregoing, there exists substantial doubt about the Company’s ability to
      continue as a going concern. These consolidated financial statements do not
      include any adjustments that might result from the outcome of this uncertainty.





If
      the
      going concern assumption were not appropriate for these consolidated financial
      statements, then adjustments would be necessary in the carrying value of assets
      and liabilities, the reported revenue and expenses, and the balance sheet
      classifications used.


46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**2.**  **SIGNIFICANT
      ACCOUNTING POLICIES**





The
      financial statements of the Company have been prepared in accordance with United
      States generally accepted accounting principles. Because a precise determination
      of many assets and liabilities is dependent upon future events, the preparation
      of financial statements for a period necessarily involves the use of estimates,
      which have been made using careful judgment. The financial statements have,
      in
      management’s opinion, been properly prepared within reasonable limits of
      materiality and within the framework of the significant accounting policies
      summarized below:





a)  **Basis
      of Consolidation**





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





b)  **Fiscal
      Period**





The
      Company’s fiscal year ends on April 30.





c)  **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.





d)  **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
      certain estimates and assumptions that affect the reported amounts and timing
      of
      revenues and expenses, the reported amounts and classification of assets and
      liabilities, and disclosure of contingent assets and liabilities. These
      estimates and assumptions are based on the Company’s historical results as well
      as management’s future expectations. The Company’s actual results could vary
      materially from management’s estimates and assumptions .





e)  **Development
      Stage Company**





The
      Company is a development stage company as defined by Financial Accounting
      Standards No. 7. The Company is devoting substantially all of its present
      efforts to establish a new business. All losses accumulated since inception
      has
      been considered as part of the Company’s development stage
      activities.





f)  **Cash
      and Cash Equivalents**





Cash
      equivalents consist of highly liquid debt instruments purchased with an initial
      maturity of three months or less.


46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**2.**  **SIGNIFICANT
      ACCOUNTING POLICIES** **-** *Continued*





g)  **Property
      and Equipment and Depreciation**





Property
      and equipment are stated at cost. Depreciation is computed using the
      straight-line method to allocate the cost of depreciable assets over the
      estimated useful lives of the assets as follows:





Estimated
                useful life (in years)Office
                and computer equipment
            5





Maintenance,
      repairs and minor renewals are charged directly to the statement of operations
      as incurred. When assets are disposed of, the related cost and accumulated
      depreciation thereon are removed from the financial statements and any resulting
      gain or loss is included in the statement of operations.





h)  **Long
      Lived Assets**





Long-lived
      assets are reviewed for impairment whenever events or changes in circumstances
      indicate that the carrying amount of the assets might not be recoverable or
      at
      least at the end of each reporting period. Conditions that would necessitate
      an
      impairment assessment include a significant decline in the observable market
      value of an asset, a significant change in the extent or manner in which an
      asset is used, or a significant adverse change that would indicate that the
      carrying amount of an asset or group of assets is not recoverable. For
      long-lived assets to be held and used, management measures fair value based
      on
      quoted market prices or based on discounted estimates of future cash
      flows .





i)  **Foreign
      Currency Translations**





The
      Company’s functional and reporting currency is the U.S. Dollar. All transactions
      initiated in other currencies are translated into U.S. dollars as
      follows:





i)  Assets
      and liabilities at the rate of exchange in effect at the balance sheet date,


ii)  Equity
      at
      historical rates, and


iii)
            Revenue
                and expense items at the average rate of exchange prevailing during
                the
                period.





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.


46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**2.**  **SIGNIFICANT
      ACCOUNTING POLICIES** ***-*** *Continued*





j)  **Income
      Taxes**





The
      Company has adopted Statement of Financial Accounting Standards No. 109 -
“Accounting for Income taxes” (SFAS 109). This standard requires the use of an
      asset and liability approach for financial accounting, and reporting on income
      taxes. Deferred tax assets and liabilities 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 operating loss and tax credit carryforwards. 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 effect on deferred tax assets and liabilities of
      a
      change in tax rates is recognized in income in the period that includes the
      enactment date. A valuation allowance is provided for significant deferred
      tax
      assets when it is more likely than not that such assets will not be recovered.







k)  **Fair
      Value of 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.





l)  **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
      4)* .





m)  **Derivative
      Financial Instruments**





The
      Company was not a party to any derivative financial instruments during any
      of
      the reported fiscal periods.





n)  **Segment
      Reporting**





SFAS
      No.
      131, *"Disclosures
      about Segments of an Enterprise and Related Information,”* changed
      the way public companies report information about segments of their business
      in
      their quarterly reports issued to stockholders. It also requires entity-wide
      disclosures about the products and services an entity provides, the material
      countries in which it holds assets and reports revenues and its major customers.
      The Company currently operates in one segment, the United States, as declared
      in
      the accompanying statement of operations.


46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**2.**  **SIGNIFICANT
      ACCOUNTING POLICIES** ***-*** *Continued*





o)  **Stock-Based
      Compensation**





Effective
      January 1, 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 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 January 1, 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 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 January 1, 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 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* .”





p)  **Comprehensive
      Income (Loss)**





SFAS
      No.
      130, *"Reporting
      Comprehensive Income,”* establishes standards for reporting and display of comprehensive income and
      its
      components in a full set of general-purpose financial statements.





q)  **Loss
      per Share**





The
      Company computes net loss per common share using SFAS No. 128 *"Earnings
      Per Share."* Basic
      loss per common share is computed based on the weighted average number of shares
      outstanding for the period. Diluted loss per share is computed by dividing
      net
      loss by the weighted average shares outstanding assuming all dilutive potential
      common shares were issued. There were no dilutive potential common shares at
      April 30, 2006. The Company has incurred net losses and has no potentially
      dilutive common shares; therefore, basic and diluted loss per share are the
      same. Additionally, for the purposes of calculating diluted loss per share,
      there were no adjustments to net loss.





46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**2.**  **SIGNIFICANT
      ACCOUNTING POLICIES** ***-*** *Continued*





r)  **Research
      and Development**





Research
      and development costs are expensed as incurred.





s)  **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
      4)* .





t)  **Recent
      Accounting Standards**





In
      May 2005, the 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 December 15, 2005. The Company does not expect the provisions of SFAS
      154
      will have a significant impact on its results of operations.


46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**2.**  **SIGNIFICANT
      ACCOUNTING POLICIES** ***-*** *Continued*





t)  **Recent
      Accounting Standards** ***-*** *Continued*





In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments, an amendment of FASB Statements No. 133 and 140.” This
      statement permits fair value re-measurement for any hybrid financial instrument
      that contains an embedded derivative that otherwise would require bifurcation.
      It establishes a requirement to evaluate interests in securitized financial
      assets to identify interests that are freestanding derivatives or that are
      hybrid financial instruments that contain an embedded derivative requiring
      bifurcation. In addition, SFAS 155 clarifies which interest-only strips and
      principal-only strips are not subject to the requirements of Statement 133.
      It
      also clarifies that concentrations of credit risk in the form of subordination
      are not embedded derivatives. SFAS 155 amends Statement 140 to eliminate the
      prohibition on a qualifying special-purpose entity from holding a derivative
      financial instrument that pertains to a beneficial interest other than another
      derivative financial instrument. This Statement is effective for all financial
      instruments acquired or issued after the beginning of an entity’s first fiscal
      year that begins after September 15, 2006. The adoption of this standard is
      not
      expected to have a material effect on the Company’s results of operations or
      financial position.


46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**2.**  **SIGNIFICANT
      ACCOUNTING POLICIES** ***-*** *Continued*





t)  **Recent
      Accounting Standards** ***-*** *Continued*





In
      March
      2006, the FASB issued SFAS 156, “Accounting for Servicing of Financial Assets—an
      amendment of FASB Statement No. 140.” This statement amends FASB Statement No.
      140, “Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities,” with respect to the accounting for separately
      recognized servicing assets and servicing liabilities. This statement: (1)
      requires an entity to recognize a servicing asset or servicing liability each
      time it undertakes an obligation to service a financial asset by entering into
      a
      servicing contract in any of the following situations: (a) a transfer of the
      servicer’s financial assets that meets the requirements for sale accounting, (b)
      a transfer of the servicer’s financial assets to a qualifying special-purpose
      entity in a guaranteed mortgage securitization in which the transferor retains
      all of the resulting securities and classifies them as either available-for-sale
      securities or trading securities in accordance with FASB Statement No. 115,
      “Accounting for Certain Investments in Debt and Equity Securities,” (c) an
      acquisition or assumption of an obligation to service a financial asset that
      does not relate to financial assets of the servicer or its consolidated
      affiliates; (2) requires all separately recognized servicing assets and
      servicing liabilities to be initially measured at fair value, if practicable;
      (3) permits an entity to choose either of the following subsequent measurement
      methods for each class of separately recognized servicing assets and servicing
      liabilities: (a) Amortization method—Amortize servicing assets or servicing
      liabilities in proportion to and over the period of estimated net servicing
      income or net servicing loss and assess servicing assets or servicing
      liabilities for impairment or increased obligation based on fair value at each
      reporting date, or (b) Fair value measurement method—Measure servicing assets or
      servicing liabilities at fair value at each reporting date and report changes
      in
      fair value in earnings in the period in which the changes occur; (4) at its
      initial adoption, permits a one-time reclassification of available-for-sale
      securities to trading securities by entities with recognized servicing rights,
      without calling into question the treatment of other available-for-sale
      securities under Statement 115, provided that the available-for-sale securities
      are identified in some manner as offsetting the entity’s exposure to changes in
      fair value of servicing assets or servicing liabilities that a servicer elects
      to subsequently measure at fair value; and (5) requires separate presentation
      of
      servicing assets and servicing liabilities subsequently measured at fair value
      in the statement of financial position and additional disclosures for all
      separately recognized servicing assets and servicing liabilities. An entity
      should adopt this statement as of the beginning of its first fiscal year that
      begins after September 15, 2006. Earlier adoption is permitted as of the
      beginning of an entity’s fiscal year, provided the entity has not yet issued
      financial statements, including interim financial statements, for any period
      of
      that fiscal year. The effective date of this Statement is the date an entity
      adopts the requirements of this statement.


46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**3.**  **ACQUISITION
      OF ROTOBLOCK INC.**





Effective
      March 30, 2004, Rotoblock Corporation acquired all the issued common shares
      of
      Rotoblock Inc., a Canadian development stage company, by the issuance of
      15,000,000 common shares. As the former shareholders of Rotoblock Inc. owned
      the
      majority of the issued capital of Rotoblock Corporation and Rotoblock
      Corporation is in the development stage, the transaction has been treated for
      accounting purposes as a purchase of the net assets of Rotoblock
      Corporation.





Rotoblock
      Corporation had a net asset deficiency at the purchase date and, therefore,
      the
      15,000,000 common shares issued in exchange for the net assets were issued
      at a
      fair value of $Nil with the net asset deficiency of $138 charged to deficit.





The
      following summarized the assets acquired and liabilities assumed:





Current
                Assets
            $
            149,862Current
                Liabilities
            
            (150,000)Net
                Asset Deficiency
            $
            (138)





Under
      this method of accounting, these financial statements include the accounts
      of
      Rotoblock Inc. from inception and the accounts of Rotoblock Corporation from
      the
      date of acquisition.








**4.**  **PATENTS**





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





In
      addition, the Company agreed to contract the vendor of the patents for services
      to be provided at a rate of $250 per day for a minimum of 150 days within the
      first 36 months of operations. The services have not yet been provided as of
      April 30, 2006.





Patent
                costs to date
            $
            108,745Accumulated
                depreciation
            
            -$
            108,745





There
      has
      been no depreciation recorded to date.


46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**5.**  **JOINT
      VENTURE AGREEMENT**





On
      January 27, 2006, the Company signed a letter of intent for a joint venture
      agreement with Apollo Energy Systems, Inc. This joint venture would be formed
      for the purpose of developing Hybrid Electric Car Technology. All administrative
      and legal costs would be shared and an operational cost sharing plan will be
      developed based on partner contribution. During the year, no significant
      activities occurred in the joint venture .








**6.**  **PROPERTY
      AND EQUIPMENT**





Details
      are as follows:





Cost
            
            Accumulated
                Depreciation
            Write-off
                of equipment
            
            **Net
                Book**
              **Value**
              **April
                30,**
              **2006**
            
            Net
                Book
              Value
              April
                30,
              2005Office
                and computer equipment
            $
            13,838
            $
            3,968
            $
            9,870
            **$**
            **-**
            $
            10,914





During
      the year, management was relocated to California, and the office and computer
      equipment was written down.








**7.**  **LOAN
      PAYABLE**





On
      March
      30, 2004, the Company entered into a loan agreement, as amended, for $500,000,
      of which $350,000 was received by November 30, 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.


46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**8.**  **RELATED
      PARTY BALANCES AND TRANSACTIONS**





During
      the year, the Company paid $19,073 (2005 - $61,516) in consulting fees to two
      former directors of the Company, which are included in research and development
      expenses.





In
      addition, four current directors received, in total, share purchase warrants
      with a fair value of $492,719, two former directors received, in total, share
      purchase warrants with a fair value of $779,977, and the current president
      received share purchase warrants with a fair value of $93,582.





At
      April
      30, 2006, an amount of $597 (2005 - $34,585) is due to a former director for
      consulting fees and expenses paid on behalf of the Company.





The
      Company purchased certain inventory from an unrelated party in the amount of
      $177,204 *(Note
      10a)* 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
      April 30, 2006, the amount of $177,204 was written off as management deemed
      the
      amount to be uncollectible from the related company.








**9.**  **INCOME
      TAX**





The
      Company has incurred non-capital losses for Canadian tax purposes of
      approximately $92,503, which may be carried forward until 2012 - 2016 and used
      to reduce taxable income of future years. At April 30, 2006, the Company also
      had accumulated net operating losses for U.S. federal income tax purposes of
      approximately $761,875, which begin expiring fiscal 2024 - 2026.





Details
      of future income tax assets:





Future
                income tax assets:
            
            **April
                31,**
              **2006**
            
            April
                30,
              2005Non-capital
                tax loss
            **$**
            **414,158**
            $
            126,500Valuation
                allowance
            
            **(414,158)**
            
            (126,500)**$**
            **-**
            $
            -





The
      potential future tax benefits of these losses have not been recognized in these
      financial statements due to uncertainty of their realization. When
      the
      future utilization of some portion of the carryforwards is determined not to
      be
“more likely than not,” a valuation allowance is provided to reduce the recorded
      tax benefits from such assets.





46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**10.**
            **SHARE
                CAPITAL**


a)
            Common
                Stock





During
      the 2004 fiscal year, the Company issued 15,000,000 shares in connection with
      the acquisition of the net assets of Rotoblock Inc. *(Note
      3)* .
      These
      shares are restricted from trading as defined in Rule 144 of the United States
      Securities Act of 1933.





During
      the 2005 fiscal year, the Company completed its initial offering of 10,000,000
      Units at $0.05 per Unit. Each Unit consists of one share of common stock and
      one-half common stock purchase warrant. Each one whole common stock purchase
      warrant will entitle the holder to purchase one additional share of common
      stock
      at a price of $0.50 per share for a period of two years from the date of this
      offering.





During
      the 2006 fiscal year, the Company completed a private placement of 548,160
      common shares valued between $0.14 and $0.36 per share. Total proceeds to the
      Company were $143,441.





During
      the 2006
      fiscal year, the Company issued 40,000 shares for exercised warrants with an
      option price of $0.25 per share. The total proceeds to the Company were
      $10,000.





During
      the 2006 fiscal year, the Company entered into a contract with an unrelated
      party for the purchase of certain inventory for a related party in exchange
      of
      611,048 shares valued at $0.29 per share for a total value of $177,204 *(Note
      8)* .





During
      the 2006 fiscal year, the Company issued 2,418,130 shares for services valued
      at
      $753,877. Of this amount, $488,700 was expensed during the year and the
      remaining $265,177 was classified as prepaid expense, which will be expensed
      as
      incurred during the subsequent period.
































46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**10.**
            **SHARE
                CAPITAL**-*Continued*





Details
      of the shares issued for services are as follows:





**Date
                Issued**
            
            **Number**
              **of
                shares**
            
            **Price**
            
            **Price**
              **per
                share**
            **Service**August
                24, 2005
            
            250,000
            
            95,000
            
            0.38
            Consulting*August
                24, 2005
            
            25,000
            
            9,500
            
            0.38
            Computer
                and ITAugust
                24, 2005
            
            50,000
            
            19,000
            
            0.38
            Public
                relationsAugust
                24, 2005
            
            25,000
            
            9,500
            
            0.38
            Investor
                relationsAugust
                24, 2005
            
            300,000
            
            114,000
            
            0.38
            LegalAugust
                24, 2005
            
            250,000
            
            95,000
            
            0.38
            Consulting*August
                24, 2005
            
            25,000
            
            9,500
            
            0.38
            AccountingSeptember
                28, 2005
            
            104,171
            
            29,168
            
            0.28
            Investor
                relationsSeptember
                29, 2005
            
            100,000
            
            25,000
            
            0.25
            ConsultingSeptember
                29, 2005
            
            150,000
            
            37,500
            
            0.25
            Consulting*October
                27, 2005
            
            327,586
            
            95,000
            
            0.29
            Investor
                relationsOctober
                28, 2005
            
            99,360
            
            24,840
            
            0.25
            RentNovember
                1, 2005
            
            50,000
            
            14,000
            
            0.28
            Public
                relationsNovember
                1, 2005
            
            125,000
            
            35,000
            
            0.28
            ConsultingNovember
                2, 2005
            
            80,000
            
            23,200
            
            0.29
            ConsultingNovember
                14, 2005
            
            100,000
            
            50,000
            
            0.50
            PrintingJanuary
                12, 2006
            
            250,000
            
            37,500
            
            0.15
            ConsultingJanuary
                12, 2006
            
            16,667
            
            2,500
            
            0.15
            LegalJanuary
                25, 2006
            
            68,287
            
            21,169
            
            0.31
            Commission
                bonusFebruary
                7, 2006
            
            22,059
            
            7,500
            
            0.34
            ConsultingTotal
            
            2,418,130
            
            $
                753,877**
                Shares issued for services from related parties.*





At
      April
      30, 2006, there were no common stock purchase options outstanding.





46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**10.
      SHARE CAPITAL** ***-*** *Continued*





b)
      Share
      Purchase Warrants





During
      the year, the Company issued a total of 9,502,160 new incentive share purchase
      warrants with an exercise price of $0.25 and $0.50 per share to directors,
      officers, consultants and employees. The Company estimated the fair value of
      all
      warrants to be $1,901,177 on the issue date which has been expensed during
      the
      current year.




Details
      of warrants are as follows:





Number
                of warrants
            
            Weighted
                average exercise price per shareWarrants
                outstanding, April 30, 2005
            5,000,000
            $
            0.50Warrants
                granted
            9,502,160*
            
            0.42Warrants
                exercised
            (40,000)
            
            0.25Warrants
                cancelled
            -Warrants
                outstanding, April 30, 2006
            14,462,160
            $
            0.45


**
      Of
      this, 6,900,000 warrants were granted to related parties.*





As
      at
      April 30, 2006, the following share purchase warrants were
      outstanding:





Warrants
            Number
            Price
                per Share
            Expiry
                Date5,000,000
            $0.50
            November
                26, 20062,000,000
            $0.50
            August
                11, 20071,125,000
            $0.50
            August
                23, 20073,000,000
            $0.50
            August
                24, 2007250,000
            $0.50
            September
                28, 20071,154
            $0.50
            November
                29, 2007125,000
            $0.50
            December
                5, 20071,006
            $0.50
            December
                23, 20072,960,000
            $0.25
            January
                12, 201114,462,160





At
      April
      30, 2006, all warrants are fully vested.


46





**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**10.
      SHARE CAPITAL** ***-*** *Continued*





c)
      Consulting Expense - Stock-Based Compensation








The
      fair
      value of each warrant issued is estimated on the date of issuance using the
      Black-Scholes option-pricing model with the following assumptions:





Expected
                dividend yield
            
            0.00%Expected
                stock price volatility
            
            134-141%Risk-free
                interest rate
            
            4.04-4.42%Expected
                life of options
            
            2.0-5.0
                years





Warrant
      pricing models require the input of highly subjective assumptions including
      the
      estimate of the share price volatility. Changes in the subjective input
      assumptions can materially affect the fair value estimate; therefore, the
      existing models do not necessarily provide a reliable single measure of the
      fair
      value of the Company’s share purchase warrants.





d)
      Restricted Common Shares





During
      the year, the Company issued a total of 3,617,338 common shares. Of these,
      3,555,279 shares were restricted from trading as defined under Rule 144 of
      the
      United States Securities Act of 1933.





As
      at
      year end, a total of 28,617,338 common shares were outstanding. Of these,
      18,555,279 shares were restricted from trading as defined under Rule 144 of
      the
      United States Securities Act of 1933.








**11.**
            **SUPPLEMENTARY
                CASH FLOW INFORMATION**





**Year
                Ended April 30, 2006**
            
            Year
                Ended
              April
                30, 2005
            
            Period
                from Commencement of Operations September 2, 2003
              to
                April 30, 2006Interest
                paid
            **$**
            **200**
            $
            11,162
            $
            11,362Income
                taxes paid
            **$**
            **-**
            $
            -
            $
            -




















46








**ROTOBLOCK
      CORPORATION**


*(A
      Development Stage Company)*





**Notes
      to Consolidated Financial Statements**





**April
      30, 2006 and 2005**





*(Stated
      in U.S. Dollars)*











**12.**  **SUBSEQUENT
      EVENTS**





Subsequent
      to April 30, 2006, the Company made a private placement to an unrelated party
      by
      issuing 114,286 restricted common shares, valued at $24,000.





The
      Company entered into a one-year consulting agreement with an unrelated party
      for
      the assistance in locating real estate properties for lease and purchase. A
      total of 24,513 common shares were issued, valued at $4,658.





The
      Company also entered into a three-month marketing consulting agreement with an
      unrelated party by issuing 150,000 common shares, valued at $28,500.





The
      Company entered into an Engine Development and License Agreement with an
      unrelated party, Obvio ! Automotoveiculos S.A. (“Obvio !”), located in Brazil,
      which Obvio ! will be incorporating the Oscillating Piston Engine (“OPE”) into
      their vehicles. 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 the unrelated party with the license for the OPE technology
      for $5,000,000, which will be payable in increments of $500 for each engine
      installed or sold. Upon receiving the $5,000,000 from the Obvio !, the Company
      will also receive royalties of $100 per vehicle sold that incorporated the
      OPE
      technology.