United States Securities and Exchange Commission
Washington, D.C. 20549
_________________________________________________
FORM 20-F/A
AMENDMENT NO. 2
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 - For the fiscal year ended April 30, 2008 |
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended: N/A |
OR |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report: N/A
Commission File Number 0-24342
Reg Technologies Inc.
(Exact name of Registrant as specified in its charter)
(Translation of Registrant’s name into English)
British Columbia, Canada
(Jurisdiction of incorporation or organization)
240-11780 Hammersmith Way
Richmond, British Columbia V7A 5E9, Canada
(Address of principal executive offices)
John Robertson, President
240-11780 Hammersmith Way, Richmond, British Columbia V7A 5E9, Canada
Phone: 604-278-5996 Fax 604-278-3409
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer's class of capital or common stock as of the close of the period covered by the annual report.
Title of Each Class Common Shares, no par value | Outstanding at April 30, 2008 23,942,759 |
Indicate by check mark if the registration is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
o Yes x No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
o Yes x No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ___
Indicate by check mark whether the registrant is a large accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated file o Non-accelerated filer x
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
o U.S. GAAP o International Financial Reporting Standards as issued x Other
by the International Accounting Standards Board
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17. x Item 18. __
If this is an annual report, indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ____ No x
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TABLE OF CONTENTS | ||
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We are amending the Annual Report of Reg Technologies, Inc., on Form 20-F, that we filed with the Securities and Exchange Commission on November 13, 2008, and our Form 20-F/A that we filed with the Securities and Exchange Commission on December 3, 2008 (“20-F/A Amendment No. 1”) for the purpose of responding to comments made by the Securities and Exchange Commission in a letter dated January 26, 2009.
We hereby amend our Form 20-F/A Amendment No. 1, filed on December 3, 2008 by this 20-F/A Amendment No. 2 for the following purposes:
§ | Item 15, Controls and Procedures - we have revised our disclosure to: clearly indicate management’s conclusion that the disclosure controls and procedures were ineffective; identify the material weaknesses management identified due to material weakness in the Company’s internal controls over financial reporting which rendered the Company’s internal controls ineffective; and disclose the Company’s actions and plans to remedy this deficiency; and |
§ | Financial Statements- we have amended Note 12(ii) to amend the correct technology under the agreement; and Note 15 “Reconciliation of United States and Canadian Generally Accepted Accounting Principals” to reflect an amendment to the accounting of the change in the Company’s proportionate share of it’s subsidiary equity which should have been accounted as an equity transaction for calculation of the gains recognized on the sale of subsidiary’s shares. |
We are also updating Exhibits 12.1, 12.2, 13.1, 13.2 and 15.1.
Other than as expressly set forth above, this Form 20-F/A Amendment No. 2 does not, and does not purport to, amend, update or restate the information in any other Item of the Form 20-F/A Amendment No. 1 filed on December 3, 2008, or reflect any events that have occurred after the Form 20-F/A Amendment No. 1 was filed. The filing of this Form 20-F/A Amendment No. 2 shall not be deemed an admission that the original Form 20-F or the 20-F/A Amendment No. 1, when filed, included any untrue statement of a material fact or omitted to state a material fact necessary to make a statement not misleading.
Any forward-looking statements included in this 20-F/A Amendment No. 2 represent management’s view as of the filing date of the original 20-F and 20-F/A Amendment No. 1. Such forward looking statements include statements about events and projections after the date of the filing of the original 20-F and 20-F/A Amendment No. 1 and are identified by words such as “believes,” “projects,” “anticipates,” “expects,” “estimates,” “intend,” “should,” “would,” “could,” “potentially,” “will,” “may” or other words that convey uncertainty of future events or outcomes. Such forward-looking statements should not be assumed to be accurate as of any future date, including the date hereof. Accordingly, this 20-F/A Amendment No. 2 should be read in conjunction with the “Risk Factors” and the other statements contained in the original 20-F and 20-F/A Amendment No. 1 and the Company’s other filings made with the SEC subsequent to the filing date of the original 20-F and the 20-F/A Amendment No. 1.
ITEM 15. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated
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and communicated to management including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer, and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of April 30, 2008. Based upon that evaluation, our company's Chief Executive Officer and Chief Financial Officer concluded that subject to the inherent limitations noted below as of April 30, 2008, our disclosure controls and procedures were not effective due to the existence of material weaknesses in our internal controls over financial reporting. The material weakness occurred because the Company’s financial reporting is carried out by our contracted management accountants, who discovered a deficiency due to sophisticated and highly technical accounting issues, and the Company did not monitor and review the work performed by our management accountants closely enough in the preparation of financial statements, footnotes and financial data provided to the Company’s registered public accounting firm in connection with the annual audit.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act, regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of April 30, 2008, based on certain criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management identified a material weakness and concluded that because there was a material weakness in the Company’s internal controls, its internal control over financial reporting was not effective at the time the material weakness was identified.
The material weakness occurred because:
- | the Company’s financial reporting is carried out by our contracted management accountants, and the Company did not monitor and review the work performed by our management accountants closely enough in the preparation of financial statements, footnotes and financial data provided to the Company’s registered public accounting firm in connection with the annual audit; and |
- | Our company does not have in-house personnel with the technical knowledge to identify and address some of the reporting issues surrounding certain complex or non-routine transactions. |
The material weakness identified resulted in the restatement of previously reported financial statements for the fiscal years ended April 30, 2007 and 2006. Management believes that it did not have any effect on the accuracy of the Company’s financial statements for the current reporting period.
During the audit for the year ended April 30, 2008, the Company restated past years financial statements, as follows, based upon advice of its management accountants due to certain highly technical accounting issues:
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To adjust dilution of the parent company’s ownership due to the subsidiary issuing shares to third parties,
a) | To reinstate previously eliminated foreign currency translation adjustments upon consolidation, |
b) | To reclassify subscriptions received by a subsidiary as equity, |
c) | To reclassify research and development, and amortization, and |
d) | To adjust non-controlling interest as a result of the changes in a) and b) above. |
The effect of the restatements was an increase to net loss for the year ended April 30, 2007, of $121,755 from $519,698 to $641,453 and to increase basic and diluted net loss per share by $0.01 per share from $0.02 to $0.03 per share.
The effect for the year ended April 30, 2006, was a decrease to net loss of $769,804 to $263,594 from $1,033,398, and to decrease basic and diluted net loss per share by $0.03 per share from $0.04 to $0.01 per share.
This discovery represented a deficiency due to sophisticated and highly technical accounting issues which were discovered by the Company’s then management accountants.
In order to mitigate this material weakness to the fullest extent possible, subsequent to the year ended April 30, 2008, the Company’s management, (with the participation of the Company’s Chief Executive Officer the Company’s Chief Financial Officer),
- | replaced its management accounting professionals with new management accountants with the requisite technical accounting knowledge, and will more closely monitor the work of, and communicate with, our new management accountants; |
- | engaged a new independent registered public accounting firm as announced by the Company on its Form 6-K filed November 19, 2008, and as filed in Canada on SEDAR (www.sedar.com) on October 1, 2008; and |
- | will gain a thorough understanding of transactions involving material, complex and non-routine matters and seek guidance from third-party experts or consultants. |
These material weaknesses have since been corrected and does not exist as of the date of this filing.
This Annual Report does not include an attestation report of the Company’s independent auditors regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent auditors pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this Annual Report.
Changes in Internal Control Over Financial Reporting
Other than as described above, management does not believe that there have been any other changes in the Company’s internal control over financial reporting during year ended April 30, 2008, which have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 17. FINANCIAL STATEMENTS
We have elected to provide financial statements pursuant to Item 17.
Reference is made to Item 19 for a list of all financial statements filed as part of this annual report.
Our consolidated financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance
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with Canadian Generally Accepted Accounting Principles (GAAP). See Note 15 to the consolidated financial statements for a reconciliation to U.S. GAAP. The consolidated financial statements as required under Item 17 are included immediately following the text of this Report.
ITEM 19. EXHIBITS
(a) The following consolidated financial statements, together with the report of Smythe Ratcliffe LLP for fiscal 2008, 2007, and 2006, on the annual financial statements referred to below, are filed as part of this annual report, and are included immediately following the text of this 20-F/A Amendment No. 2:
Index to Consolidated Financial Statements
Independent Auditors’ Reports
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Consolidated Statements of Shareholders’ Equity
Notes to the Consolidated Financial Statements
(b) Documents filed as exhibits to this annual report:
Number | Description | |
1.1 | Articles of Incorporation with Bylaws dated October 6, 1982 | (1) |
1.2 | Certificate of Name Change and Special Resolution dated February 23, 1993 | (1) |
1.3 | Memorandum and articles of incorporation amended effective April 5, 2005 | (9) |
2.1 | Special rights and restrictions attaching to the Common Shares without par value and the Class A non-voting shares without par value. Special resolution dated November 25, 1985 | (1) |
4. (a) 1 | Contract among the Company, Rand Technologies Corp. and Rand Energy Group Inc. regarding formation of Rand Energy Group Inc. and arrangement of various inter- related matters, dated March 28, 1990 | (1) |
4. (a) 2 | Energy Group Acquisition Agreement among the Company, Rand Cam-Engine Corporation, James L. McCann and Rand Energy Group Inc. regarding acquisition of technology, and rights to the Rand Cam-Engine, dated March 28, 1990 | (1) |
4. (a) 3 | Contract among the Company, Rand Cam-Engine Corporation Rand Energy Group Inc. and James L. McCann regarding arrangement of various inter-related matters concerning issuance of shares, payments, royalties, etc., dated July 30, 1992 | (1) |
4. (a) 4 | Agreement with Center for Industrial Research Applications (CIRA) regarding Year 2: Engine Refinement and Testing on the Rand-Cam Engine | (1) |
4. (a) 5 | Research & Development Agreement Between Members of the Consortium of Reg Technologies Inc., Rand Energy Group Inc., Hercules Incorporated and The West Virginia University Research Corporation, dated May 10, 1994 | (1) |
4. (a) 6 | Agreement dated October 31, 1995 between the Company and REGI U.S., Inc. regarding assignment of Machine Vision Technology agreement with Integral Vision Systems, Inc. | (2) |
4. (a) 7 | Cooperative Agreement between the Company and Global Aircraft Corporation regarding NASA General Aviation Propulsion Program | (3) |
4. (a) 8 | Agreement dated June 22, 1997 between John Weston and the Company regarding the acquisition of rights to Air/Vapour Flow Systems by the Company from Weston | (4) |
4. (a) 9 | Agreement dated September 23, 1997 between the Company, REGI U.S., Inc. and SMR Investments Ltd. regarding the assignment of the above agreement by the Company to REGI and SMR pending regulatory approval of the original agreement | (4) |
4. (a) 10 | Agreement dated December 31, 1997 between the Company REGI U.S., Inc. and SMR Investments Ltd. regarding the Canadian rights to the AVFS and repayment of advances to Weston by SMR | (4) |
4. (a) 11 | Joint Venture Agreement dated July 28, 1998 between REGI U.S., Inc and Trans Air Manufacturing Corporation regarding development and manufacturing of a prototype Bus Compressor | (4) |
4. (a) 12 | Agreement dated August 5, 1998 between the Company and T.W. Blasingame Company, Inc. (Blasingame) regarding the licensing of certain Rand Cam/Direct Charge Engine manufacturing rights to Blasingame and licensing of certain rights to the "Vane Restraint Mechanism" by Blasingame to the Company | (5) |
4. (a) 13 | Cooperative and Licensing Agreement dated December 14, 1998 between the Company, REGI U.S., Inc. Rand Energy Group, Inc. USA and Global Aircraft Corporation regarding the NASA SBIR Phase I Contract for development of the Rand-Cam Diesel Aircraft Engine | (5) |
4. (a) 14 | Agreement made as of October 27, 2000 with GHM Inc. regarding 50% interest in the rights to the hydrogen separator technology | (7) |
4. (a) 15 | Agreement between Radian, Inc., Reg Technologies Inc., REGI U.S., Inc. and Rand Energy Group Inc. made as of April 24, 2002 | (8) |
4. (a) 16 | Agreement between REGI and Advanced Ceramics Research dated March 20, 2002 | (8) |
4. (a) 17 | Agreement between REGI U.S, Inc. and Reg Technologies Inc. and Anuvu Incorporation dated June 29, 2005 | (9) |
4. (b) 1 | Management Agreement between the Company and SMR Investments Ltd., dated April 2, 1993 | (1) |
4. (b) 2 | Agreement between Brian Cherry, Sky Technologies, Inc. and Rand Energy Group Inc., regarding U.S. rights to the Rand Cam/Direct Charge Engine dated August 20, 1993 | (1) |
4. (b) 3 | Employment Agreement between Sky Technologies, Inc. and Patrick Badgley dated February 9, 1994 | (1) |
4. (b) 4 | Management Agreement between Sky Technologies, Inc. and Access Information Services, Inc., dated April 1, 1994 | (1) |
4. (b) 5 | Agreement between the Company and Rand Energy Group Inc. granting the Company rights to negotiate and sell licenses and marketing rights for the Rand Cam Engine, dated February 27, 1992 | (1) |
4. (b) 6 | Management Agreement dated May 1, 1996 between the Company and SMR Investments Ltd. | (3) |
8.1 | List of Parents and Subsidiaries of the Company | (10) |
(11) | ||
(11) | ||
(11) | ||
(11) | ||
(11) |
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incorporated by reference to the Registrant’s Registration Statement on Form 20-F filed on June 15, 1994 with the US Securities and Exchange Commission |
(1) | incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 1996 |
(2) | incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 1997 |
(3) | incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 1998 |
(4) | incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 1999 |
(5) | incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2000 |
(6) | incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2001 |
(7) | incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2002 |
(8) | incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended April 30, 2006 |
(9) | incorporated by reference to the Registrant’s Annual Report on Form 20-F/A for the fiscal year ended April 30, 2006 |
(10) | Exhibits filed herewith |
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Reg Technologies Inc.
(A Development Stage Company)
Consolidated Financial Statements
April 30, 2008
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
Management is responsible for preparing the Company's consolidated financial statements and the other information that appears in this annual report. Management believes that the consolidated financial statements fairly reflect the form and substance of transactions and reasonably present the Company's consolidated financial condition and results of operations in conformity with Canadian generally accepted accounting principles. Management has included in the Company's consolidated financial statements amounts that are based on estimates and judgments, which it believes are reasonable under the circumstances.
The Company maintains a system of internal accounting policies, procedures and controls intended to provide reasonable assurance, at appropriate cost, that transactions are executed in accordance with Company authorization and are properly recorded and reported in the financial statements and that assets are adequately safeguarded.
The Board of Directors approves the financial statements and ensures that management discharges its financial responsibilities. The Board’s review is accomplished principally through the audit committee.
The financial statements have been audited by Smythe Ratcliffe LLP, Chartered Accountants, on behalf of the shareholders and their report follows.
“John Robertson” “Jennifer Lorette”
....................…………………...... ....................…………………......
President/Director & #160; Director
Vancouver, British Columbia
September 12, 2008
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
TO THE DIRECTORS OF REG TECHNOLOGIES INC.
(A Development Stage Company)
We have audited the consolidated balance sheets of Reg Technologies Inc. (A Development Stage Company) as at April 30, 2008 and 2007 and the consolidated statements of operations, cash flows and shareholders’ equity for the years ended April 30, 2008, 2007 and 2006. 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 Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at April 30, 2008 and 2007 and the results of its operations and its cash flows for the years ended April 30, 2008, 2007 and 2006 in conformity with Canadian generally accepted accounting principles.
“Smythe Ratcliffe LLP” (signed)
Chartered Accountants
Vancouver, British Columbia
August 22, 2008
Comments by Auditors for U.S. Readers on Canada-U.S. Reporting Difference
In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the company's ability to continue as a going concern, such as those described in Note 1 to the financial statements. Our report to the shareholders dated August 22, 2008 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditor's report when these are adequately disclosed in the financial statements.
The consolidated financial statements for the years ended April 30, 2007 and 2006 have been restated to adjust for the dilution of the parent company’s ownership due to the subsidiary issuing shares to third parties, to reinstate previously eliminated foreign currency translation adjustments upon consolidation, and to reclassify subscriptions received by a subsidiary as equity, as described in Note 13.
“Smythe Ratcliffe LLP” (signed)
Chartered Accountants
Vancouver, British Columbia
August 22, 2008
7th Floor, Marine Building 355 Burrard Street, Vancouver, BC Canada V6C 2G8 | Fax: 604.688.4675 Telephone: 604.687.1231 Web: SmytheRatcliffe.com |
F-2
Reg Technologies Inc.
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in Canadian dollars)
April 30, 2008 | April 30, 2007 (Restated – Note 13) | |||||||
$ | $ | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash | 258 | 294,463 | ||||||
GST and interest receivable | 7,020 | 11,329 | ||||||
Prepaid expenses | 5,016 | 47,933 | ||||||
Due from related parties [Note 10(a)] | 16,491 | 58,420 | ||||||
Advances to equity accounted investee [Note 8] | 112,312 | – | ||||||
Total Current Assets | 141,097 | 412,145 | ||||||
Equipment [Note 9] | 10,199 | 12,731 | ||||||
151,296 | 424,876 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued liabilities | 44,589 | 373,259 | ||||||
Shareholders’ Equity | ||||||||
Share Capital [Note 5] | 11,356,689 | 11,356,689 | ||||||
Contributed Surplus [Note 7] | 2,024,832 | 849,839 | ||||||
Foreign Currency Translation Adjustments | – | 639,758 | ||||||
Deficit | (13,274,814 | ) | (12,794,669 | ) | ||||
106,707 | 51,617 | |||||||
151,296 | 424,876 | |||||||
Going Concern [Note 1] Commitments [Note 12] Subsequent Events [Note 14] |
Approved on behalf of the Board |
"John Robertson" (signed) |
John G. Robertson, Director |
"Jennifer Lorette" (signed) |
Jennifer Lorette, Director |
(The accompanying notes are an integral part of these consolidated financial statements)
F-3
Reg Technologies Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(Expressed in Canadian dollars)
For the Year Ended April 30, 2008 | For the Year Ended April 30, 2007 (Restated – Note 13) | For the year Ended April 30, 2006 (Restated – Note 13) | ||||||||||
$ | $ | $ | ||||||||||
Operating Expenses | ||||||||||||
General and administrative [Note 10 (b)(c)(e)] | 1,428,432 | 1,677,956 | 1,418,948 | |||||||||
Research and development [Note 10 (d)] | 276,616 | 205,103 | 155,135 | |||||||||
Impairment loss on intangible assets [Note 4] | – | – | 245,356 | |||||||||
Foreign exchange | 46,850 | (3,819 | ) | 72,860 | ||||||||
Mineral property maintenance costs | 8,200 | 7,560 | – | |||||||||
Amortization | 3,869 | 1,413 | – | |||||||||
Operating Loss | (1,763,967 | ) | (1,888,213 | ) | (1,892,299 | ) | ||||||
Other Income | ||||||||||||
Gain on sale of subsidiary’s shares | 292,149 | 616,974 | 385,853 | |||||||||
Gain on issue by subsidiary of its own shares outside the consolidated group [Note 6] | 228,934 | 147,414 | 331,949 | |||||||||
Interest | 1,276 | 14,414 | 428 | |||||||||
Non-controlling interest | 761,463 | 467,958 | 910,475 | |||||||||
Net Loss and Comprehensive Loss for the Year | (480,145 | ) | (641,453 | ) | (263,594 | ) | ||||||
Basic Loss Per Share | (0.02 | ) | (0.03 | ) | (0.01 | ) | ||||||
Weighted Average Number of Common Shares outstanding | 23,849,000 | 23,831,000 | 23,404,000 | |||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-4
Reg Technologies Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
For the Year Ended April 30, 2008 | For the Year Ended April30, 2007 (Restated – Note 13) | For the Year Ended April 30, 2006 (Restated – Note 13) | ||||||||||
$ | $ | $ | ||||||||||
Operating Activities | ||||||||||||
Net loss | (480,145 | ) | (641,453 | ) | (263,594 | ) | ||||||
Items not involving cash | ||||||||||||
Accounts payable written-off | – | – | (87,209 | ) | ||||||||
Stock-based compensation | 247,059 | 296,528 | 129,830 | |||||||||
Non-controlling interest | (761,463 | ) | (467,958 | ) | (910,475 | ) | ||||||
Gain on issue by subsidiary of its own shares | (228,934 | ) | (147,414 | ) | (331,949 | ) | ||||||
Gain on sale of subsidiary’s shares | (292,149 | ) | (616,974 | ) | (385,853 | ) | ||||||
Shares issued for services | 36,722 | 54,055 | – | |||||||||
Impairment loss on intangible assets | – | – | 245,356 | |||||||||
Amortization of deferred compensation | – | 1,138 | 14,246 | |||||||||
Amortization | 3,869 | 1,413 | – | |||||||||
Changes in non-cash working capital items | ||||||||||||
GST and interest receivable | 4,309 | (6,256 | ) | (1,883 | ) | |||||||
Prepaid expenses | 25,325 | 33,852 | (50,961 | ) | ||||||||
Accounts payable and accrued liabilities | 96,588 | 295,307 | 41,636 | |||||||||
Net Cash Used In Operating Activities | (1,348,819 | ) | (1,197,762 | ) | (1,600,856 | ) | ||||||
Financing Activities | ||||||||||||
Shares issued | – | – | 262,468 | |||||||||
Shares issued by subsidiary | 651,140 | 552,935 | 1,278,188 | |||||||||
Subscriptions received by subsidiary | – | – | 4,452 | |||||||||
Net Cash Provided by Financing Activities | 651,140 | 552,935 | 1,545,108 | |||||||||
Investing Activities | ||||||||||||
Advances from (to) investee and other affiliates | 166,215 | (102,800 | ) | (114,626 | ) | |||||||
Net cash from deemed disposition of subsidiary | (7,748 | ) | – | – | ||||||||
Proceeds on sale of subsidiary’s shares | 261,820 | 621,526 | 390,653 | |||||||||
Purchase of equipment | (1,338 | ) | (14,144 | ) | – | |||||||
Net Cash Provided by Investing Activities | 418,949 | 504,582 | 276,027 | |||||||||
Effect of Exchange Rate Changes on Cash | (15,475 | ) | 6,931 | 40,764 | ||||||||
(Decrease)/Increase in Cash | (294,205 | ) | (133,314 | ) | 261,043 | |||||||
Cash - Beginning of Year | 294,463 | 427,777 | 166,734 | |||||||||
Cash - End of Year | 258 | 294,463 | 427,777 | |||||||||
Supplemental Disclosures | ||||||||||||
Interest paid | – | – | – | |||||||||
Income tax paid | – | – | – | |||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-5
Reg Technologies Inc.
(A Development Stage Company)
Consolidated Statements of Shareholders’ Equity
From April 30, 2006 to April 30, 2008
(Expressed in Canadian Dollars)
Common Shares Issued # | Common Shares $ | Contributed Surplus $ | Other Comprehensive Income (Loss) $ | Deficit Accumulated During the Exploration Stage $ | Total Shareholders’ Equity $ | |||||||||||||||||||
Balance – April 30, 2006 [Restated - Note 13] | 23,899,009 | 11,343,564 | 552,173 | 631,794 | (12,153,216 | ) | 374,315 | |||||||||||||||||
Options exercised | 43,750 | 13,125 | – | – | – | 13,125 | ||||||||||||||||||
Stock-based compensation | – | – | 296,528 | – | – | 296,528 | ||||||||||||||||||
Deferred compensation | – | – | 1,138 | – | – | 1,138 | ||||||||||||||||||
Foreign currency translation adjustment | – | – | – | 7,964 | – | 7,964 | ||||||||||||||||||
Net loss for the year | – | – | – | – | (641,453 | ) | (641,453 | ) | ||||||||||||||||
Balance – April 30, 2007 [Restated - Note 13] | 23,942,759 | 11,356,689 | 849,839 | 639,758 | (12,794,669 | ) | 51,617 | |||||||||||||||||
Stock- based compensation | – | – | 247,059 | – | – | 247,059 | ||||||||||||||||||
Deconsolidation adjustment [Note 7] | – | – | (886,589 | ) | (648,763 | ) | – | (1,535,352 | ) | |||||||||||||||
Deconsolidation of subsidiary [Note 7] | – | – | 1,808,851 | – | – | 1,808,851 | ||||||||||||||||||
Foreign currency translation adjustment | – | – | 5,672 | 9,005 | – | 14,677 | ||||||||||||||||||
Net loss for the year | – | – | – | – | (480,145 | ) | (480,145 | ) | ||||||||||||||||
Balance – April 30, 2008 | 23,942,759 | 11,356,689 | 2,024,832 | – | (13,274,814 | ) | 106,707 |
(The accompanying notes are an integral part of these consolidated financial statements)
F-6
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
1. | NATURE OF OPERATIONS AND GOING CONCERN |
Reg Technologies Inc. (the “Company”) is a development stage company engaged in the business of developing and commercially exploiting an improved axial vane type rotary engine known as the Rand Cam™/Direct Charge Engine and other RandCam™ applications, such as compressors and pumps (the “Technology”). The worldwide marketing and intellectual rights, other than the U.S., are held by the Company. REGI U.S., Inc. (“REGI”) owns the U.S. marketing and intellectual rights (Note 7). The Company and REGI have a project cost sharing agreement whereby these companies each fund 50% of the development of the Technology.
In a development stage company, management devotes most of its activities to establishing a new business. Planned principal activities have not yet produced any revenues and the Company has suffered recurring operating losses as is normal in development stage companies. The Company has accumulated losses of $13,274,814 since inception. These factors raise substantial doubt about the Company’s ability to continue as a going-concern. The ability of the Company to emerge from the development stage with respect to its planned principal business activity is dependent upon its successful efforts to raise additional equity financing, receive funding from affiliates and controlling shareholders, and develop a market for its products.
The Company plans to raise funds through loans from Rand Energy Group Inc. (“Rand”), a 51% owned subsidiary. The Company also receives interim support from affiliated companies and plans to raise additional capital through debt and/or equity financings. There continues to be insufficient funds to provide enough working capital to fund ongoing operations for the next twelve months. The Company may also raise additional funds through the exercise of warrants and stock options.
2. | SIGNIFICANT ACCOUNTING POLICIES |
a) | Basis of accounting and principles of consolidation These consolidated financial statements are prepared using Canadian generally accepted accounting principles (“GAAP”) and are presented in Canadian dollars. These financial statements include the accounts of the Company and its 51% owned subsidiary, Rand, which owns a 9% interest in REGI. The Company also owns a 12% (2007 - 12%) interest in REGI. Prior to April 30, 2008, REGI was considered a controlled subsidiary for consolidation purposes by way of control through an annually renewable voting trusts agreement, with other affiliated companies. This trust agreement gave the Company 50% control of the voting shares of REGI. The agreement could be cancelled by the President of the 51% owned subsidiary with seven days’ written notice to the affiliated companies. Effective April 30, 2008, the voting trusts agreement was cancelled (Note 7). All inter-company accounts and transactions have been eliminated. | |
b) | Investments Investments in which the Company has the ability to exert significant influence but does not have control are accounted for using the equity method whereby the original cost of the investment is adjusted annually for the Company's share of earnings, losses and dividends during the current year. When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. |
F-7
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
2. | SIGNIFICANT ACCOUNTING POLICIES (Continued) |
c) | Consolidation of variable interest entities The Company has adopted Accounting Guideline 15, “Consolidation of Variable Interest Entities”, issued by the Canadian Institute of Chartered Accountants (”CICA”) for annual and interim periods beginning on or after November 1, 2004. This guideline addresses the application of consolidation principles to entities that are subject to control on a basis other than ownership of voting interests. The adoption of this guideline did not have any impact on the Company’s financial statements. | |
d) | Cash and cash equivalents The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. | |
e) | Use of estimates The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management estimates relate to the impairment of mineral property interests, useful life and recoverability of long-lived assets, accrued liabilities, assumptions used in the determination of the fair value of stock-based compensation and future income tax asset valuation allowances. Actual results could differ from those estimates. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities, and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations and future cash flows would be affected. | |
f) | Intangible assets The Company accounts for goodwill and intangible assets in accordance with CICA Handbook Section 3062, “Goodwill and Other Intangible Assets”. Intangible assets with indefinite useful lives are not amortized, but instead tested for impairment at least annually by comparing the carrying value to the respective fair value. Intangible assets with estimated useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment by assessing the recoverability of the carrying values. | |
g) | Equipment Equipment consists of office furniture and equipment, and computer hardware recorded at cost and amortized on a straight-line basis over a five-year and three-year period, respectively. | |
h) | Research and development costs The Company is in the development stage and all costs relating to research and development are charged to operations as incurred. | |
i) | Long-lived assets The Company monitors the recoverability of long-lived assets, based on factors such as current market value, future asset utilization, business climate and future undiscounted cash flows expected to result from the use of the related assets. The Company's policy is to record an impairment loss in the period when it is determined that the carrying amount of the assets may not be recoverable. The impairment loss is calculated as the amount by which the carrying amount of the assets exceeds the undiscounted estimate of future cash flows from the asset. |
F-8
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
2. | SIGNIFICANT ACCOUNTING POLICIES (Continued) |
j) | Foreign currency translation | ||
(i) | Translation of foreign currency transactions and balances Monetary balance sheet items are translated at the rate prevailing at the balance sheet date. Revenues, expenses and non-monetary balance sheet items in foreign currencies are translated into Canadian dollars at the rate of exchange prevailing on the transaction dates. The resulting exchange gain or loss is included in operations. | ||
(ii) | Translation of foreign subsidiary balances Foreign currency transactions are translated using the current method. Assets and liabilities of non-integrated foreign subsidiaries are translated into Canadian dollars at the rates of exchange on the balance sheet date. The foreign subsidiary’s operating results are translated into Canadian dollars using the average exchange rate for the year. Any resulting translation gain or loss is deferred and included as a separate component of shareholders’ equity. | ||
k) | Income taxes The Company follows the asset and liability method of accounting for income taxes. Under this method of tax allocation, future income tax assets and liabilities are determined based on differences between the financial statement carrying values and their respective income tax basis (temporary differences). Future income tax assets and liabilities are measured using the tax rates expected to be in effect when temporary differences are likely to reverse. The effect on future income tax assets and liabilities of a change in tax rates is included in operations in the period in which the change is enacted or substantially assured. The amount of future income tax assets recognized is limited to the amount of the benefit that is likely to be realized. | ||
l) | Share issue costs Costs of issuing shares are offset against the related share proceeds. | ||
m) | Stock-based compensation plans The Company accounts for stock-based compensation using a fair value based method with respect to all stock-based payments measured and recognized, to directors, employees and non-employees. For directors and employees, the fair value of the options is measured at the date of grant. For non-employees, the fair value of the options is measured on the earlier of the date at which the counterparty performance is complete or the date the performance commitment is reached or the date at which the equity instruments are granted if they are fully vested and non-forfeitable. For directors, employees and non-employees, the fair value of the options is accrued and charged to operations over the vesting period, with the offset credited to contributed surplus. If and when the stock options are ultimately exercised, the applicable amounts of contributed surplus are transferred to share capital. | ||
n) | Loss per share Basic loss per share is calculated using the weighted average number of common shares outstanding during the year. The Company uses the treasury stock method for calculating diluted loss per share. Under this method the dilutive effect on loss per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the period. However, diluted loss per share is not presented where the effects of various conversions and exercise of options and warrants would be anti-dilutive. Shares held in escrow, other than where their release is subject to the passage of time, are not included in the calculation of the weighted average number of common shares outstanding. |
F-9
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
2. | SIGNIFICANT ACCOUNTING POLICIES (Continued) |
o) | Future accounting changes The following changes (i - iii) will apply for the Company to interim and annual consolidated financial statements, commencing May 1, 2008, while change (iv) will apply from May 1, 2009. The Company is in the process of assessing the impact of these changes on its consolidated financial statements. | ||
(i) | Capital Disclosures In February 2007, the CICA issued Handbook Section 1535, “Capital Disclosures”, which requires the disclosure of both qualitative and quantitative information that provides users of financial statements with information to evaluate the entity’s objectives, policies and procedures for managing capital. | ||
(ii) | Financial Instruments In February 2007, the CICA issued two new standards, Section 3862, “Financial Instruments Disclosures”, and Section 3863, “Financial Instruments Presentation”. These sections will replace the existing Section 3861, “Financial Instruments Disclosure and Presentation”. Section 3862 provides users with information to evaluate the significance of the financial instruments of the entity’s financial position and performances, nature and extent of risks arising from financial instrument, and how the entity manages those risks. Section 3863 deals with the classification of financial instruments, related interest, dividends, losses and gains, and the circumstances in which financial assets and financial liabilities are offset. | ||
(iii) | Going concern In June 2007, the CICA amended Handbook Section 1400, “General Standards of Financial Statement Presentation”, which requires management to make an assessment of a company’s ability to continue as a going-concern. When financial statements are not prepared on a going-concern basis that fact shall be disclosed together with the basis on which the financial statements are prepared and the reason why the Company is not considered a going-concern. | ||
(iv) | Goodwill and Intangible Assets In February 2008, the CICA issued Handbook Section 3064, “Goodwill and intangible assets”, replacing Section 3062, “Goodwill and other intangible assets”, and Section 3450, “Research and development costs”. This section establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented enterprises. Standards concerning goodwill are unchanged from the standards included in the previous Section 3062. | ||
(v) | International Financial Reporting Standards ("IFRS") In 2006, the Canadian Accounting Standards Board ("AcSB") published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian generally accepted accounting principles with IFRS over an expected five year transitional period. In February 2008, the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canada's own generally accepted accounting principles. The date is for interim and annual financial statements beginning on April 30, 2011. Implementation of the change will require the restatement for comparative purposes of amounts reported by the Company for the year ended April 30, 2010. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time. |
F-10
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
3. | FINANCIAL INSTRUMENTS |
Effective May 1, 2007, the Company adopted the CICA Handbook Section 3855 - Financial Instruments, Recognition and Measurement. This new standard requires the Company to account for certain financial assets and liabilities at each balance sheet date.
Financial instruments must be classified into one of these five categories: held-for-trading, held-to-maturity, loans and receivables, available-for-sale financial assets or other financial liabilities. All financial instruments are measured in the balance sheet at fair value except for loans and receivables, held-to-maturity investments and other financial liabilities, which are measured at amortized cost. Subsequent measurement and changes in fair value will depend on their initial classification as follows: held-for-trading financial assets are measured at fair value and changes in fair value are recognized in net income; available-for-sale financial instruments are measured at fair value with changes in fair value recorded in other comprehensive income until the investment is no longer recognized or impaired, at which time the amounts would be recorded in net income.
Transaction costs other than those related to financial instruments classified as held-for-trading, which are expensed as incurred, are added to the fair value of the financial asset or financial liability on initial recognition and amortized using the effective interest method.
The Company has implemented the following classification
· Cash and cash equivalents | Held for trading | |
· Accounts receivable and other receivables | Other receivables | |
· Accounts payable and accrued liabilities | Other financial liabilities |
Effective May 1, 2007, the Company adopted the CICA Handbook Section 1530 – Comprehensive Income, which establishes standards for presentation and disclosure of a statement of comprehensive income (loss). Comprehensive income (loss) is the overall change in the net assets of the Company for a period, other than changes attributable to transactions with shareholders. It is made up of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) consists of gains and losses affecting shareholders’ equity that, under generally accepted accounting principles are excluded from net income (loss).
The Company has no items of other comprehensive income (loss) in any period presented. Therefore, net loss as presented in the Company’s statement of operations equals comprehensive loss.
Fair values
The fair values of cash and cash equivalents, amounts receivable, accounts payable and accrued liabilities, and due from related parties approximate their carrying values because of the short-term maturity of these financial instruments.
Credit risk
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. The Company limits its exposure to credit loss by placing its cash and cash equivalents with high quality financial institutions.
Interest rate risk
Interest rate risk consists of two components:
a) | To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in prevailing market interest rates, the Company is exposed to interest rate cash flow risk. |
b) | To the extent that changes in prevailing market interest rates differ from the interest rates in the Company’s monetary assets and liabilities, the Company is exposed to interest rate price risk. |
F-11
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
3. | FINANCIAL INSTRUMENTS (Continued) |
Interest rate risk (Continued)
The Company is not exposed to significant interest rate price risk due to the short-term maturity of its monetary assets and liabilities.
Currency risk
The Company is exposed to foreign currency fluctuations to the extent expenditures incurred by the Company are not denominated in Canadian dollars. The Company has not entered into derivative instruments or other currency management techniques to offset the impact of foreign currency fluctuations.
4. | INTANGIBLE ASSETS |
During the year ended April 30, 2006, the Company recorded an impairment loss for the costs of distribution rights for the Anuvu fuel cell technology of $245,356.
5. | SHARE CAPITAL |
Authorized:
50,000,000 | Common shares without par value | |
10,000,000 | Preferred shares with a $1 par value, redeemable for common shares on the basis of 1 common share for 2 preferred shares | |
5,000,000 | Class A non-voting shares without par value. Special rights and restrictions apply. |
a) | Treasury shares |
At April 30, 2008, Rand owns 217,422 (2007 – 217,422) shares of the Company valued at $43,485 that have been deducted from the total shares issued and outstanding. |
b) | Escrowed shares |
There are 93,750 shares held in escrow, the release of which is subject to the direction and determination of regulatory authorities. |
c) | Stock options |
The Company has implemented a stock option plan (the "Plan") to be administered by the Board of Directors. Pursuant to the Plan, the Board of Directors has discretion to grant options for up to a maximum of 10% of the issued and outstanding common shares of the Company at the date the options are granted. The option price under each option shall be not less than the discounted market price on the grant date. The expiry date of an option shall be set by the Board of Directors at the time the option is awarded, and shall not be more than five years after the grant date. These options have the following vesting schedule: |
i) | 25% of the options vest upon granting of the option; such initial vest is referred to as the “First Vesting”; |
ii) | The second 25% of the options vest 90 days from the date of exercise of the First Vesting; such second vesting is referred to as the “Second Vesting”; |
iii) | The third 25% of the options vest 90 days from the date of exercise of the Second Vesting; such third vesting is referred to as the “Third Vesting”; |
iv) | The fourth and final 25% of the options vest 90 days from the date of exercise of the Third Vesting; and |
v) | The options expire 60 months from the date of grant. |
Options granted to consultants engaged in investor relations activities will vest in stages over a minimum period of 12 months with no more than 25% of the options vesting in any three-month period |
F-12
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
5. | SHARE CAPITAL (Continued) |
The following table summarizes activity under the Plan for the years ended April 30, 2008 and 2007:
2008 | 2007 | |||||||||||||||
Options | Weighted Average Exercise Price | Options | Weighted Average Exercise Price | |||||||||||||
# | $ | # | $ | |||||||||||||
Outstanding at beginning of year | 1,125,000 | 0.27 | 1,168,750 | 0.27 | ||||||||||||
Exercised | – | – | (43,750 | ) | 0.30 | |||||||||||
Outstanding at end of year | 1,125,500 | 0.27 | 1,125,000 | 0.27 | ||||||||||||
Exercisable at end of year | 300,000 | 0.27 | 300,000 | 0.27 |
Additional information regarding options outstanding and exercisable as at April 30, 2008 is as follows:
Expiry Date | Exercise Price | Shares Under Option | Aggregate Intrinsic Value | Weighted Average Remaining Contractual Life (in years) | ||||||||||||
$ | # | $ | # | |||||||||||||
September 18, 2008 | 0.30 | 37,500 | 4,500 | 0.39 | ||||||||||||
March 4, 2009 | 0.19 | 62,500 | 14,375 | 0.84 | ||||||||||||
April 8, 2009 | 0.14 | 12,500 | 3,500 | 0.94 | ||||||||||||
October 20, 2010 | 0.30 | 187,500 | 22,500 | 2.47 | ||||||||||||
Options outstanding and exercisable | 300,000 | 44,875 | 1.81 |
The fair value of each option granted was estimated on the grant date using the Black-Scholes option pricing model. There were no stock options granted during the fiscal years ended April 30, 2008 and 2007.
6. | GAIN ON SHARES ISSUED BY SUBSIDIARY |
During 2008, 2007 and 2006, REGI issued shares outside the consolidated group. These issuances effectively reduced the Company’s interest (through RAND) in REGI, which resulted in a deemed gain on sale of subsidiary’s shares as follows:
$ | 2008 | $ | 2007 | $ | 2006 | |||||||
Gain due to ownership of new assets resulting from subsidiary shares issued | 228,934 | 147,414 | 331,949 | |||||||||
F-13
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
7. | DECONSOLIDATION OF SUBSIDIARY |
Prior to April 30, 2008, REGI was considered a controlled subsidiary of Rand for consolidation purposes by way of control through an annually renewable voting trusts agreement with certain affiliated companies. This trusts agreement gave the Company approximately over 50% control of the voting shares of REGI. The consolidation process resulted in the Company recognizing $1,808,851 of assets, liabilities and certain equity amounts of REGI at April 30, 2008. The consolidated statements of operations and cash flows include the operations of REGI to April 30, 2008.
Effective April 30, 2008, the voting trusts agreement was cancelled, and REGI was deconsolidated. The investment in REGI is now accounted for under the equity method. The following shows the result of no longer recognizing the assets, liabilities and certain equity amounts of REGI as a result of the deconsolidation.
2008 | ||||
$ | ||||
Assets | (8,632 | ) | ||
Liabilities | 169,820 | |||
Due to related parties | 112,311 | |||
Contributed surplus | 886,589 | |||
Accumulated foreign exchange adjustments | 648,763 | |||
Result of deconsolidation of subsidiary | 1,808,851 |
All parties involved in the voting trusts agreement are deemed related parties as they are all under common control. Accordingly, the result of deconsolidation has been stated as an addition to contributed surplus at carrying amounts as there was no independent evidence that the consideration paid or received (nil) represented the fair value of the percentage ownership given up.
8. | EQUITY ACCOUNTED INVESTEE |
The investment in REGI is now accounted for under the equity method. The Company recognizes its share of losses to the extent of its investment in REGI:
2008 | ||||
$ | ||||
Investment at cost | 215,800 | |||
Cumulative share of losses recognized | (215,800 | ) | ||
– |
At April 30, 2008, the Company is owed an aggregate of $112,312 (2007 - $nil). The amounts owed are unsecured, non-interest bearing and due on demand.
9. | EQUIPMENT |
2008 | ||||||||||||
Cost $ | Accumulated Amortization $ | Net Book Value $ | ||||||||||
Computer Hardware | 6,632 | 2,776 | 3,856 | |||||||||
Office furniture and equipment | 8,849 | 2,506 | 6,343 | |||||||||
15,481 | 5,282 | 10,199 |
F-14
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
9. | EQUIPMENT (Continued) |
2007 | ||||||||||||
Cost $ | Accumulated Amortization $ | Net Book Value $ | ||||||||||
Computer Hardware | 5,295 | 677 | 4,618 | |||||||||
Office furniture and equipment | 8,849 | 736 | 8,113 | |||||||||
14,144 | 1,413 | 12,731 |
10. | RELATED PARTY TRANSACTIONS |
Related party transactions not otherwise disclosed in these financial statements are as follows:
a) | At April 30, 2008, the Company is owed an aggregate of $16,491 (2007 - $58,420) by related parties. The amounts owed are unsecured, non-interest bearing and due on demand. These parties are companies that the president of the Company controls or significantly influences. |
b) | During the year ended April 30, 2008, fees in the aggregate of $65,003 (2007 - $134,193; 2006 - $15,475) for legal services have been paid or are payable to a professional law firm in which a partner of the law firm is an officer and director of the Company. |
c) | During the year ended April 30, 2008, rent of $12,857 (2007 - $14,840; 2006 - $11,375) was paid to a company having common officers and directors. |
d) | During the year ended April 30, 2008, project management fees of $30,688 (2007 - $34,140; 2006 - $65,616) were paid to a company having common officers and directors. |
e) | During the year ended April 30, 2008, administrative fees, consulting fees, and management and directors’ fees were paid to officers, directors and companies controlled by officers and directors totalling $75,214 (2007 - $59,406; 2006 – 163,788) for services rendered. |
f) | On April 30, 2008, the Company realized a gain of $1,808,851 as a result of de-consolidation of a former subsidiary (see Note 7). |
The above transactions have been in the normal course of operations and are recorded at their exchange amounts with the exception of (f), which is recorded at carrying amounts.
11. | INCOME TAXES |
As at April 30, 2008, the Company has non-capital losses carried forward totalling $2,110,000 for Canadian tax purposes, which expire starting in the tax year commencing 2008. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the years ended April 30, 2008, 2007 and 2006 is as follows:
2008 | 2007 | 2006 | ||||||||||
Statutory income tax rate | 33.25 | % | 34.12 | % | 35 | % | ||||||
Adjust foreign country | – | 0.50 | % | – | ||||||||
Adjust for change in rate | (7.25 | %) | – | – | ||||||||
Valuation adjustment | (26.00 | %) | (34.62 | %) | (35 | %) | ||||||
Effective income tax rate | – | – | – | |||||||||
F-15
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
11. | INCOME TAXES (Continued) |
The tax effect (computed by applying the federal statutory rates as stated above) of the significant temporary differences, which comprise future tax assets and liabilities, are as follows:
2008 | 2007 | |||||||
$ | $ | |||||||
Future income tax assets | ||||||||
Tax value in excess of carrying values of - Intangible assets | 153,000 | 144,000 | ||||||
- Property and equipment | 53,000 | 70,000 | ||||||
Non-capital loss carry forwards | 549,000 | 642,000 | ||||||
Total gross future income tax assets | 755,000 | 856,000 | ||||||
Valuation allowance | (755,000 | ) | (856,000 | ) | ||||
Net future income tax asset | – | – | ||||||
Future income tax assets (of subsidiary) | ||||||||
Non-capital loss carry forwards | – | 2,711,000 | ||||||
Total gross future income tax assets | – | 2,711,000 | ||||||
Valuation allowance | – | (2,711,000 | ) | |||||
Net future income tax asset | – | – |
The Company and Rand have combined Canadian income tax losses of approximately $2,110,000, which are available to reduce Canadian taxable income of future years. The losses expire as follows:
$ | ||||
2008 | 135,000 | |||
2009 | 138,000 | |||
2010 | 190,000 | |||
2014 | 145,000 | |||
2015 | 212,000 | |||
2026 | 402,000 | |||
2027 | 317,000 | |||
2028 | 571,000 | |||
2,110,000 |
In assessing the realizability of future tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will not be realized. The ultimate realization of future tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of future tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The amount of future tax assets considered realizable could change materially in the near term based on future taxable income during the carry-forward period.
12. | COMMITMENTS |
a) | In connection with the acquisition of Rand, the Company has the following royalty obligations: |
i) | A participating royalty is to be paid based on 5% of all net profits from sales, licenses, royalties or income derived from the patented technology, to a maximum amount of $10,000,000. The participating royalty is to be paid in minimum annual instalments of $50,000 per year beginning on the date the first revenues are derived from the license or sale of the patented technology. |
F-16
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
12. | COMMITMENTS (Continued) |
ii) | Pursuant to a letter of understanding between the Company and REGI (collectively called the grantors) and West Virginia University Research Corporation (“WVURC”), the grantors have agreed that WVURC shall own 5% of the direct charge engine technology and will receive 5% of all net profits from sales, licenses, royalties or income derived from the direct charge engine technology. |
iii) | A 1% net profit royalty will be payable to a director on all U.S - based sales. |
b) | On June 15, 2006, the Company entered into a lease agreement to lease office premises for a period of three years and the option to renew the lease for one additional term of three years, in consideration for $16,994 per year. The future commitment is as follows: |
Amount $ | ||||
2009 | 16,994 | |||
2010 | 2,124 | |||
19,118 |
13. | RESTATEMENT |
The Company has restated its consolidated financial statements for the years ended April 30, 2007 and 2006:
· | To adjust dilution of the parent company’s ownership due to the subsidiary issuing shares to third parties, |
· | To reinstate previously eliminated foreign currency translation adjustments upon consolidation, and |
· | To reclassify subscriptions received by a subsidiary as equity. |
Prior period statements have been retroactively restated as follows:
April 30, 2007 As Previously Reported $ | Adjustment $ | April 30, 2007 As Restated $ | |||||||||||
Consolidated Balance Sheet | |||||||||||||
Current Liabilities | |||||||||||||
Accounts payable and accrued liabilities | 83,952 | 289,307 | (a) | 373,259 | |||||||||
Shareholders’ Equity | |||||||||||||
Subscriptions Received | 289,307 | (289,307 | ) | (a) | – | ||||||||
Contributed Surplus | 850,733 | (894 | ) | (b) | 849,839 | ||||||||
Foreign Currency Translation Adjustments | (74,706 | ) | 714,464 | (c) | 639,758 | ||||||||
Deficit Accumulated During the Development Stage | (12,081,099 | ) | (713,570 | ) | (12,794,669 | ) |
(a) | To reclassify subscriptions received by a subsidiary from equity to accounts payable and accrued liabilities. |
(b) | To adjust for foreign exchange changes. |
(c) | To record foreign currency translation adjustments previously eliminated upon consolidation. |
F-17
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
13. | RESTATEMENT (Continued) |
April 30, 2007 As Previously Reported $ | Adjustment $ | April 30, 2007 As Restated $ | |||||||||||
Consolidated Statement of Operations | |||||||||||||
General and administration | (1,884,471 | ) | 206,515 | (a) | (1,677,956 | ) | |||||||
Research and development | – | (205,103 | ) | (a) | (205,103 | ) | |||||||
Foreign exchange | 23,130 | (19,311 | ) | (a) | 3,819 | ||||||||
Non-controlling interest | 570,401 | (102,443 | ) | (b) | 467,958 | ||||||||
Amortization | – | (1,413 | ) | (a) | (1,413 | ) | |||||||
Net loss for the year | (519,698 | ) | (121,755 | ) | (641,453 | ) | |||||||
Deficit Accumulated During the Development Stage | |||||||||||||
Deficit, beginning of the year | (11,561,401 | ) | (591,815 | ) | (12,153,216 | ) | |||||||
Deficit, end of the year | (12,081,099 | ) | (713,570 | ) | (12,794,669 | ) | |||||||
Loss Per Share – Basic and Diluted | (0.02 | ) | (0.01 | ) | (0.03 | ) |
(a) | To adjust for foreign exchange changes and reclassify research and development and amortization. |
(b) | To adjust non-controlling interest as a result of the above changes. |
April 30, 2006 As Previously Reported $ | Adjustment $ | April 30, 2006 As Restated $ | |||||||||||
Consolidated Statement of Operations | |||||||||||||
General and administration | (1,574,083 | ) | 155,135 | (a) | (1,418,948 | ) | |||||||
Research and development | – | (155,135 | ) | (a) | (155,135 | ) | |||||||
Foreign exchange | (15,609 | ) | (57,251 | ) | (a) | (72,860 | ) | ||||||
Non-controlling interest | 83,420 | 827,055 | (b) | 910,475 | |||||||||
Net loss for the year | (1,033,398 | ) | 769,804 | (263,594 | ) | ||||||||
Deficit Accumulated During the Development Stage | |||||||||||||
Deficit, beginning of the year | (10,528,003 | ) | (1,361,619 | ) | (11,889,622 | ) | |||||||
Deficit, end of the year | (11,561,401 | ) | (591,815 | ) | (12,153,216 | ) | |||||||
Loss Per Share – Basic and Diluted | (0.01 | ) | – | (0.01 | ) |
(a) | To adjust for foreign exchange changes and reclassify research and development. |
(b) | To adjust non-controlling interest as a result of the above changes. |
F-18
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
14. | SUBSEQUENT EVENTS |
a) | On August 1, 2008, the Company granted stock options, subject to regulatory acceptance, to various consultants, employees and directors of the Company to acquire up to 400,000 common shares at $0.40 per share exercisable for a period of five years from the date of granting. |
b) | On July 30, 2008, the Company closed a non-brokered private placement of 1,315,168 common share units (the “Units”) at $0.40 per Unit, for gross proceeds of $526,067. Each Unit consists of one common share and one non-transferable share purchase warrant exercisable in the first year at $0.50 per share or in the second year at $0.60 per share. The Company paid a cash finders’ fee of $23,070. |
15. | RECONCILIATION OF UNITED STATES AND CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“US GAAP” AND “CANADIAN GAAP”) |
These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP). A description of US GAAP and practices prescribed by the US Securities and Exchange Commission (collectively US GAAP) that result in material measurement differences from Canadian GAAP are as follows:
a) | Development stage company |
Pursuant to US GAAP, the Company would be subject to the disclosure requirements applicable to a development stage enterprise as the Company is devoting its efforts to establishing commercially viable products. However, the identification of the Company as such for accounting purposes does not impact the measurement principles applied to these financial statements.
b) | Development costs |
Development costs, under Canadian GAAP, may be deferred, until the processes reach commercial production, at which time they are amortized on a systematic basis by reference to the sale or use of the processes, or until the project is sold or abandoned, at which time the costs are written-off. Under US GAAP, development costs must be expensed as incurred. The Company has written off all development costs capitalized under Canadian GAAP, and accordingly, there is no difference between Canadian GAAP and United States GAAP in the accounting for development costs as at April 30, 2008, 2007 and 2006.
c) | Intangible assets |
Goodwill and the Technology are treated as intangible assets under Canadian GAAP. Under US GAAP, these relate to and thus, are treated as, research and development, which must be charged to operations as incurred. The Company has written off all intangible assets capitalized under Canadian GAAP, and accordingly, there is no difference between Canadian GAAP and United States GAAP in the accounting for intangible assets as at April 30, 2008, 2007 and 2006.
d) | Non-controlling interest |
All development costs and intangible assets defined under Canadian GAAP were written off during 2006. Non-controlling interest was drawn down to zero at April 30, 2005.
e) | Gain on Sale of Shares Issued by Subsidiary |
Under Canadian GAAP, the Company recorded a gain on the issuance of shares by a subsidiary outside the consolidated group. Under US GAAP, these issuances of shares are treated as equity transactions pursuant to SAB Topic 5.H – “Accounting for Sales of Stock by a Subsidiary”.
F-19
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
15. | RECONCILIATION OF UNITED STATES AND CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“US GAAP” AND “CANADIAN GAAP”) (Continued ) |
f) | Stock-based compensation |
Under Canadian GAAP, stock-based compensation is recorded using the fair value method (see Note 2[m]). Under U.S. GAAP, Statements of Financial Accounting Standards No. 123R, “Accounting for Stock-based Compensation” (“SFAS 123R”), beginning the first interim or annual reporting period after December 15, 2005, companies are required to record stock-based compensation using the fair value method. Accordingly, there is no difference between Canadian GAAP and United States GAAP in the accounting for stock-based compensation for the years ended April 30, 2008, 2007 and 2006.
g) | Income taxes |
Under Canadian GAAP, future tax assets and liabilities may be recorded at substantively enacted tax rates. Under US GAAP, deferred tax assets and liabilities are recorded at enacted tax rates. There were no significant differences between enacted and substantively enacted tax rates.
h) | Donated Capital |
Under US GAAP, the Company recognizes the value of services provided by management at no charge to the Company as donated capital. Under Canadian GAAP, no amount is recognized.
i) | Recent accounting pronouncements |
The Financial Accounting Standards Board (“FASB”) has issued Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value under other accounting pronouncements that permit or require measurements, changes the methods used to measure fair value and expands disclosures about fair value measurements. In particular, disclosures are required to provide information on the extent to which fair value is used to measure assets and liabilities; the inputs used to develop measurements; and the effect of certain of the measurements on earnings (or changes in net assets). SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the potential impact, if any, that the adoption of SFAS 157 will have on its consolidated financial statements.
In February 2007, FASB issued FASB Statement No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities". FASB 159 is effective for fiscal years beginning after November 15, 2007. FASB 159 allows entities to choose, at specified election dates, to measure eligible financial assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an eligible item, changes in that item's fair value in subsequent reporting periods must be recognized in current earnings. FASB 159 also establishes presentation and disclosure requirements designed to draw comparison between entities that elect different measurement attributes for similar assets and liabilities. The Company is currently evaluating the impact of the provisions of FASB 159.
In December 2007, FASB issued FASB statement No. 160 “Non-controlling Interests in Consolidated Financial Statements – an amendment of ARB No.51”. This statement establishes accounting and reporting standards for the non-controlling interest in a subsidiary. The guidance is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating the impact of the provisions of FASB 160.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment to FASB Statement No. 133”. SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance and cash flows. Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s
F-20
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
15. | RECONCILIATION OF UNITED STATES AND CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“US GAAP” AND “CANADIAN GAAP”) (Continued) |
i) | Recent accounting pronouncements (continued) |
financial position, financial performance and cash flows. It is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged. The Company is currently evaluating the impact of SFAS No. 161 on its consolidated financial statements, and the adoption of this statement is not expected to have a material effect on the Company’s consolidated financial statements.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of non-governmental entities that are presented in conformity with GAAP in the United States. It is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
j) | The net loss for the years ended April 30, 2008, 2007 and 2006 and deficit accumulated during the development stage as determined under U.S. GAAP is as follows: |
2008 $ | 2007 $ | 2006 $ | ||||||||||
(Restated – Note13) | (Restated – Note 13) | |||||||||||
Net income (loss), as determined under | ||||||||||||
Canadian GAAP | (480,145 | ) | (641,453 | ) | (263,594 | ) | ||||||
Gain due to ownership of new assets resulting from subsidiary shares issued | (228,934 | ) | (147,414 | ) | (331,949 | ) | ||||||
Donated services | (153,440 | ) | (170,700 | ) | (178,080 | ) | ||||||
Net loss, as determined under U.S. GAAP | (862,519 | ) | (959,567 | ) | (773,623 | ) | ||||||
Deficit accumulated during the development stage, as determined under U.S. GAAP | ||||||||||||
- Beginning of year | (20,809,490 | ) | (19,849,923 | ) | (19,076,300 | ) | ||||||
- End of year | (21,672,009 | ) | (20,809,490 | ) | (19,849,923 | ) | ||||||
Loss per share, weighted average basis (excluding escrowed shares) | (0.04 | ) | (0.04 | ) | (0.03 | ) | ||||||
F-21
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
15. | RECONCILIATION OF UNITED STATES AND CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“US GAAP” AND “CANADIAN GAAP”) (Continued ) |
k) | Material effects of the different generally accepted accounting principles on the Company's balance sheet as at April 30, 2008 and 2007 are as follows: |
2008 $ | 2007 $ | |||||||
(Restated – Note 13) | ||||||||
Donated capital, as determined in Canada | – | – | ||||||
Donated services | 1,259,960 | 1,106,520 | ||||||
Increase to donated capital, as determined in the U.S. | 1,259,960 | 1,106,520 | ||||||
Contributed surplus, as determined in Canada | 2,024,832 | 849,839 | ||||||
Gain due to ownership of net assets resulting from subsidiary shares issued | 7,137,235 | 6,908,301 | ||||||
Increase to contributed surplus, as determined in the U.S. | 9,162,067 | 7,758,140 | ||||||
Deficit, ending balance, as determined in Canada | 13,274,814 | 12,794,669 | ||||||
Deficit, as determined in the U.S. | 21,672,009 | 20,809,490 | ||||||
Net increase to deficit, as determined in the U.S. | 8,397,195 | 8,014,821 |
l) | The Company has reclassified gains recorded on the issuance of shares by a subsidiary outside the consolidated group to contributed surplus. Prior Period information has been retroactively revised as follows: |
April 30, 2008 As Previously Reported $ | Reclassification $ | April 30, 2008 $ | ||||||||||
Consolidated Balance Sheet | ||||||||||||
Shareholders’ Equity | ||||||||||||
Contributed Surplus | 2,024,832 | 7,137,235 | 9,162,067 | |||||||||
Deficit Accumulated During the Development Stage, as determined in the U.S. | (14,534,774 | ) | (7,137,235 | ) | (21,672,009 | ) |
April 30, 2007 As Previously Reported $ | Reclassification $ | April 30, 2007 $ | ||||||||||
Consolidated Balance Sheet | ||||||||||||
Shareholders’ Equity | ||||||||||||
Contributed Surplus | 849,839 | 6,908,301 | 7,758,140 | |||||||||
Deficit Accumulated During the Development Stage, as determined in the U.S. | (13,901,189 | ) | (6,908,301 | ) | (20,809,490 | ) |
F-22
Reg Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
Years Ended April 30, 2008 and 2007
(Expressed in Canadian dollars)
15. | RECONCILIATION OF UNITED STATES AND CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“US GAAP” AND “CANADIAN GAAP”) (Continued) |
April 30, 2008 As Previously Reported $ | Reclassification $ | April 30, 2008 $ | ||||||||||
Consolidated Statement of Operations | ||||||||||||
Gain on issue by subsidiary of its own shares outside the consolidated group | 228,934 | (228,934 | ) | – | ||||||||
Net loss for the year | (633,585 | ) | (228,934 | ) | (862,519 | ) | ||||||
Deficit Accumulated During the Development Stage, as determined in the U.S. | ||||||||||||
Deficit, beginning of the year | (20,580,556 | ) | (228,934 | ) | (20,809,490 | ) | ||||||
Deficit, end of the year | (21,443,075 | ) | (228,934 | ) | (21,672,009 | ) | ||||||
Loss Per Share – Basic and Diluted | (0.03 | ) | (0.01 | ) | (0.04 | ) |
April 30, 2007 As Previously Reported $ | Reclassification $ | April 30, 2007 $ | ||||||||||
Consolidated Statement of Operations | ||||||||||||
Gain on issue by subsidiary of its own shares outside the consolidated group | 147,414 | (147,414 | ) | – | ||||||||
Net loss for the year | (812,153 | ) | (147,414 | ) | (959,567 | ) | ||||||
Deficit Accumulated During the Development Stage, as determined in the U.S. | ||||||||||||
Deficit, beginning of the year | (19,702,509 | ) | (147,414 | ) | (19,849,923 | ) | ||||||
Deficit, end of the year | (20,662,076 | ) | (147,414 | ) | (20,809,490 | ) | ||||||
Loss Per Share – Basic and Diluted | (0.03 | ) | (0.01 | ) | (0.04 | ) |
April 30, 2006 As Previously Reported $ | Reclassification $ | April 30, 2006 $ | ||||||||||
Consolidated Statement of Operations | ||||||||||||
Gain on issue by subsidiary of its own shares outside the consolidated group | 331,949 | (331,949 | ) | – | ||||||||
Net loss for the year | (441,674 | ) | (331,949 | ) | (773,623 | ) | ||||||
Deficit Accumulated During the Development Stage, as determined in the U.S. | ||||||||||||
Deficit, beginning of the year | (18,744,351 | ) | (331,949 | ) | (19,076,300 | ) | ||||||
Deficit, end of the year | (19,517,974 | ) | (331,949 | ) | (19,849,923 | ) | ||||||
Loss Per Share – Basic and Diluted | (0.02 | ) | (0.01 | ) | (0.03 | ) |
F-23
The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. |
REG TECHNOLOGIES INC. |
REGISTRANT |
Dated: | March 24, 2009 | By: | /s/ John G. Robertson |
John G. Robertson |
President/Secretary/Director |
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