Converted by EDGARwiz

The phase 2 test schedule is estimated at 3 months following receipt successful completion of the phase 1 tests. The

test location will be determined by competitive bid. The successful bidder must have the requisite facilities,

equipment, and personnel to perform the tests, which characterize the RadMax™ Diesel Engine. The

characterization consists of performance curves for power, torque, and fuel consumption.

The objective of the new improved diesel engine design is to make significant improvement over all existing engine

designs in use today. The RadMax™ engine reduces weight, number of parts, and complexity, and will use less fuel,

and, therefore, reduce hydrocarbons.

These costs are identified as master design integrator, prototype fabrication, and labour expense, estimated

approximately as US$200,000 each, with planned expenditures over the next 6 months.

The Company was invited and attended the Clinton Global Initiative (“CGI”) Fifth Anniversary Meeting,

established by President Bill Clinton. The RadMax™ Engine Technology was approved for presentation at the CGI

Meeting in New York City from September 22 – 25, 2009. The Company is pleased to be able to support CGI’s

commitment of reducing the effects of global warming by continuing to pursue commercializing the fuel efficient

RadMax™ Engine Technology.

During the nine months ended January 31, 2010 REGI U.S., Inc. retained Belcan Engineering Services of Phoenix,

AZ (www.belcan.com) to review the Fortune 1000 diesel engine design before production of the prototype. This

thorough review will help to ensure a streamlined and timely fabrication process. Immediately following the design

review, REGI will fabricate RadMax™ parts and assemblies, validate assembly operations, and conduct component,

assembly, and system tests. Two technical meetings were held with Belcan Engineering Services. The following

results were accomplished:

•

Familiarization with the RadMax™ Diesel Engine baseline design, including mechanical operation, friction

contributors, and sealing approach.

•

Shared understanding of the vane actuation system.

•

Determination of vane loads in compressor and engine applications

•

Preliminary evaluation of thermodynamics and determination of potential hot spots

•

Evaluation of compression ratio, and recommendations for design modifications

•

Assessment of all bearings – main bearings which control all rotating components, linear bearings which

control the vane actuators, and journal bearings which facilitate wheel operations on the fixed stators.

Belcan’s technical assignment is to optimize the design of the diesel engine application which comprises the vanes,

push rods, and a lift block that interface with a stator. The estimated completion of this assessment is first quarter

of 2010.

The Company announced that Path Technologies Inc. of Painesville, Ohio, has been selected to fabricate the

prototype RadMax™ Diesel Engine. Path Technologies was the most competitive fully responsive bidder following

a process of drawing and manufacturing processes evaluation. This process is a crucial initial step to get the most

qualified supplier on board to produce unique RadMax™ Diesel Engine parts.

Path Technologies recently produced RadMax™ Pump parts for Reg Technologies Inc. That prior experience was

one of the major considerations in the evaluation and selection process.

As the next step, the Company will issue a purchase order to Path Technologies. That event will follow completion

of the engineering reviews and final approval by the Fortune 1000 company. Path Technologies will be responsible

to produce RadMax™ parts. Reg Technologies Inc. will integrate those parts, along with other commercial items

(fuel injection, for example) to produce the prototype engine.

The timetable for the prototype engine remains the same as stated in the Company’s November 13, 2009 press

release. The specific work to be performed includes:

•

Fabricate RadMax unique items from drawings and 3D computer models.

•

Deliver metrology reports for each fabricated unique item.

•

Purchase commercial items for inclusion in the RadMax end-item.

•

Deliver copies of all purchase orders and part certifications.

•

Perform trial fitment of all components, and rework as needed.

•

Purchase test related items in accordance with supplied purchase requisitions.

•

Assemble test related items as needed (table, dc motor, motor controller, etc.).

•

Provide limited test support (non combustion) at their facility.

The Company is confident that this version is very robust. The systems engineering reviews have removed

considerable length (and weight) from the engine.

Highlights Subsequent to the Quarter End

As of March 30, 2010, we are nearing the completion of a significant milestone of the Belcan Engineering review of

the prototype engine design, which was estimated at 6 months.

The actions completed are as follows:

• Retain Belcan as an independent engineering analysis organization to provide independent validation of all

RadMax™ design elements: functions, tolerances, and material selections

• Verify environmental conditions (temperatures, pressures, centrifugal forces, etc.)

Actions that are continuing include:

• Identify components that require detail stress analysis

• Perform complete integration of all components and evaluate their performance and strength under non-

operating and operating conditions.

We have conducted a technical engineering interchange meeting with Belcan for the thermodynamics analysis

portion. A final report has been jointly prepared and submitted to the Fortune 1000 company for review. A mutli-

company thermodynamics review is planned for mid April.

The thermodynamics report includes recommendations for RadMax™ Engine materials, thicknesses, tolerances, and

coatings. One specific recommendation is to fabricate the cam using lighter weight materials to take advantage of

its improved thermal conductivity.

Near-term program milestones include:

• Completion of Belcan Engineering review of mechanical components, bearings, and lubrication – approx.

3 additional months

• Review and Approval by the Fortune 1000 Company – approx. 30 days

• Fabrication of the prototype engine – approx. 3 months

• Initial prototype testing – approx. 3 months

Risks and Uncertainties

The Company is subject to a number of risk factors due to the nature of its business and the present stage of

development. The following risk factors should be considered:

General

The Company is listed on the TSX Venture Exchange and also trades on the OTC BB. We are a development stage

company engaged in the business of developing and building an improved axial vane-type rotary engine known as

the RadMax™ rotary technology (the "Technology" or the “RadMax™ Engine”), used in the design of lightweight

and high efficiency engines, compressors and pumps. Since no marketable product has yet been developed, we have

not received any revenues from operations.

During the year ended April 30, 2009 and the year to date, the Company has received US$439,000, through the sale

of approximately 8% of its interest in REGI U.S., Inc. which will be allocated to administrative operations of the

Company and the development costs of the RadMax™ engine.

The amount of the Company’s research and development and administrative expenditures are related to the level of

financing activities that are being conducted. Consequently, the Company does not conduct work on the RadMax™

Engine on a pre-determined basis and as a result there may not be predictable or observable trends in the Company’s

business activities and comparisons of financial operating results with prior years may not be meaningful.

Trends

The Company’s financial success is dependent upon the successful completion of development of the RadMax™

Engine in order to achieve a commercially feasible design. Such development could take several years to complete

and the resulting income, if any, is difficult to determine at this time, There can be no assurance that we or potential

licensees will be able to achieve and maintain end user acceptance of our engine. Other than as disclosed herein, the

Company is not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to

have a material effect on the Company’s sales or revenues, income from continuing operations, profitability,

liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of

future operating results or financial condition.

Financing

There is no assurance that we will be able to secure the financing necessary to continue our development and

operations. Our expectations as to the amount of funds needed for development and the timing of the need for these

funds is based on our current operating plan, which can change as a result of many factors, and we could require

additional funding sooner than anticipated. Our cash needs may vary materially from those now planned because of

results of development or changes in the focus and direction of our development program, competitive and

technological advances, results of laboratory and field testing, requirements of regulatory agencies and other factors.

We have no credit facility or other committed sources of capital. To the extent capital resources are insufficient to

meet future capital requirements; we will have to raise additional funds to continue our development and operations.

There can be no assurance that such funds will be available on favorable terms, or at all. To the extent that additional

capital is raised through the sale of equity or convertible debt securities, the issuance of such securities could result

in dilution to our shareholders. If adequate funds are not available, we may be required to curtail operations

significantly or to obtain funds on unattractive terms. Our inability to raise capital would have a material adverse

effect on us.

Commercially Feasible Product

We have no assurance at this time that a commercially feasible design will ever be perfected, or if it is, that it will

become profitable. Our profitability and survival will depend upon our ability to develop a technically and

commercially feasible product which will be accepted by end users. The RadMax™ Engine which we are

developing must be technologically superior or at least equal to other engines that competitors offer and must have a

competitive price/performance ratio to adequately penetrate its potential markets. If we are not able to achieve this

condition or if we do not remain technologically competitive, we may be unprofitable and our investors could lose

their entire investment. There can be no assurance that we or potential licensees will be able to achieve and maintain

end user acceptance of our engine.

Market Acceptance

Our profitability and survival will depend upon our ability to develop a technically and commercially feasible

product which will be accepted by end users. The RadMax™ Engine which we are developing must be

technologically superior or at least equal to other engines which our competitors offer and must have a competitive

price/performance ratio to adequately penetrate our potential markets. A number of rotary engines have been

designed over the past 80 years but only one, the Wankel, has been able to achieve mechanical practicality and any

significant market acceptance. If we are not able to achieve this condition or if we do not remain technologically

competitive, we may be unprofitable and our investors could lose their entire investment. There can be no assurance

that we or our potential licensees will be able to achieve and maintain end user acceptance of our engine.

Our future success may be dependent on the success of our products and services. The success of our business

depends on a variety of factors, including:

• the quality and reliability of our products and services; 

• our ability to develop new products and services superior to that of our competitors;

• our ability to establish licensing relationships and other strategic alliances; 

• our pricing policies and the pricing policies of our competitors; 

• our ability to introduce new products and services before our competitors; 

• our ability to successfully advertise our products and services; and

• general economic trends.

Management and Directors

The Company is dependent on a relatively small number of directors and officers. The loss of certain members of

our management and engineering staff, could adversely affect our business and the successful development of the

engine. Our present officers and directors have other full-time positions or part-time employment unrelated to our

business. Some officers and directors will be available to participate in management decisions on a part-time or as-

needed basis only. Our management may devote time to other companies or projects which may compete directly or

indirectly with us. We do not have "key man" life insurance on such officers and currently have no plans to obtain

such insurance.

Conflicts of Interest

Several of the Company’s directors and officers are also directors, officers or shareholders of other companies.

Some of our directors and officers are engaged and will continue to be engaged in the search for additional business

opportunities on behalf of other corporations, and situations may arise where these directors and officers will be in

direct competition with the Company. Such associations may give rise to conflicts of interest from time to time The

Company’s directors are required by law to act honestly and in good faith with a view to the best interests of the

Company and to disclose any interest which they many have in any project or opportunity in respect of which the

Company is proposing to enter into a transaction.

Consultants and Outside Manufacturing Facilities

Since our present plans do not provide for a significant technical staff or the establishment of manufacturing

facilities, we will be primarily dependent on others to perform these functions and to provide the requisite expertise

and quality control. There is no assurance that such persons or institutions will be available when needed at

affordable prices. It will likely cost more to have independent companies do research and manufacturing than for us

to handle these resources.

Intellectual Property

Our business depends on the protection of our intellectual property and may suffer if we are unable to adequately

protect our intellectual property. The success of our business depends on our ability to patent our engine. Currently,

we have been granted several U.S. Patents. We cannot provide assurance that our patents will not be invalidated,

circumvented or challenged, that the rights granted under the patents will give us competitive advantages or that our

patent applications will be granted.

New Technology

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

Our success depends in part upon its ability to anticipate changes in technology and industry standards and to

successfully develop and introduce new and improved engines on a timely basis. There is no assurance that we will

be able to do so.

Competitive Conditions

While not a highly competitive business in terms of numbers of competitors, the business of developing engines of a

new design and attempting to either license or produce them is nonetheless difficult because most existing engine

producers are large, well financed companies which are very concerned about maintaining their market position.

These companies possess greater technical resources and market recognition than us, and have management,

financial and other resources not yet available to us. Existing engines are likely to be perceived by many customers

as superior as or more reliable than any new product until it has been in the marketplace for a period of time. There

is no assurance that we will be able to compete effectively with these companies.

Limited Operating History: Losses

The Company has experienced losses in all years of its operations. There can be no assurance that the Company will

operate profitably in the future, if at all. As at January 31, 2010 the Company’s deficit was $14,128,583.

Price Fluctuations: Share Price Volatility

In recent years, the securities markets in the United States and Canada have experienced a high level of price and

volume volatility, and the market price of securities of many development stage companies have experienced wide

fluctuations in price which have not necessarily been related to the operating performance, underlying asset values

or prospects of such companies. There can be no assurance that continual fluctuations in price will not occur.

Results of Operations

The following analysis of the Company's operating results in the most recently completed nine month period ended

January 31, 2010 includes a comparison against the same period in previously completed financial period ended

January 31, 2009.

Revenue

The Company had no revenue from operations; currently all efforts are focused on the

completion of the development, research, design, analysis and testing of the RadMax™ products.

Expenses

Nine Months Ended

January 31,

Variances

2010

2009

Amortization

2,935

3,016

(0.03)

Advertising and promotion

10,358

96,793

(0.89)

Consulting fees

13,965

25,126

(0.44)

Foreign exchange loss (gain)

40,556

(56,992)

(1.71)

Investor relations

51,844

9,578

4.41

Management and director fees

39,150

44,700

(0.12)

Miscellaneous office expenses

44,051

43,516

0.01

Professional fees

80,347

131,198

(0.39)

Public relations

12,263

27,250

(0.55)

Research and development

98,200

99,037

(0.01)

Rent and utilities

27,562

24,554

0.12

Stock-based compensation

31,987

31,241

0.02

Transfer agent and filing fees

15,889

33,133

(0.52)

Travel and promotion

13,516

14,573

(0.07)

Wages and benefits

21,616

23,030

(0.06)

Mineral property maintenance

8,060

costs

512,299

557,813

(64)

Results of Operations for the nine months ended January 31, 2010 (“2010”) as compared to the nine months

ended January 31, 2009 (“2009”)

For the nine months ended January 31, 2010, the Company realized a net loss of $341,495 or $0.013 per share, as

compared to net loss of $447,203 or $0.018 per share for 2009. Operating expenses decreased by $45,514 to

$512,299 for 2010 compared to $557,813 in 2009.

A concentrated effort has been undertaken to reduce costs in response to the downturn in the investor market.

Advertising and promotion expenditures decreased by $86,435 to $10,358 in 2010 versus $96,793 in 2009.

Consulting fees decreased by $11,161 to $13,965 in 2010 compared to $25,126 in 2009. Public relations costs

decreased by $14,987 to $12,263 in 2010 versus $27,250 in 2009. Professional fees decreased by $50,851 from

$131,198 in 2009 to $80,347 in 2010. Wages and benefits decreased by $1,414 to $21,616 in 2010 from $23,030 in

2009. There was also a significant decrease in transfer agent and filing fees of $17,244 to $15,889 in 2010 versus

$33,133 due to lower level of equity transactions in the current period. Travel expenses for promotion purposes

decreased by $1,057 from $14,573 in 2009 to $13,516 in 2010. Management and director fees decreased by $5,500

from $44,700 in 2009 to $39,150 in 2010.

The savings achieved through cost-saving measures have been offset by some increases. Investor relations

increased from $9,578 in 2009 to $51,844 in 2010 as a result of promotional costs related to the Company’s

attendance at the CGI meeting in September and increased efforts to promote the Company. Rent and utilities

increased by $3,008 from $24,554 in 2009 to $27,562 in 2010 as a result of increased rent at our research facility.

There was little change to expenses such as office and general administration, an increase of $535 from $43,516 in

2009, as the activities remained at the same level. Amortization expense decreased by $81 to $2,935 in 2010,

because no capital assets were purchased in 2010, while the net book value of the fixed assets is insignificant.

Research and development decreased by $837 from 99,037 in 2009 to $98,200 in 2010, as we have maintained at the

similar activity level to last year. This research is performed by Rand Energy Group Inc. (“Rand”), a subsidiary of

the Company. Rand and REGI U.S., Inc. have a project cost sharing agreement whereby these companies each fund

50% of the development of the technology. Stock-based compensation expense increased by $746 from $31,241 in

2009 to $31,987 in 2010 due to the periodic vesting requirements of the Company’s outstanding stock options.

Other Income items for 2010 and 2009 include gain on sale of REGI’s shares, which was decreased by $73,108 from

$92,324 in 2009 to $26,689 in 2010 due to the decease in both number of shares sold and price of shares sold at. In

2009 we settled debts and had a gain on forgiven debt of $10,813 while we did no have such gain in 2010. However,

we had unrealized gain on warrants sold for option to purchase REGI shares. Because these warrants were valued

with Black Scholes model, the values significantly reduced when majority of the warrants were nearing their

expiration dates.

Results of Operations for the three months ended January 31, 2010 (“2010”) as compared to the three months

ended January 31, 2009 (“2009”)

For the three months ended January 31, 2010, the Company realized a net loss of $105,852 or $0.004 per share, as

compared to net loss of $121,958 or $0.005 per share in 2009. Operating expenses increased by $44,837 to $185,081

for 2010 compared to $140,244 in 2009. It is mainly due to the increase of foreign exchange loss of $38,600 on

US$676,733 owed to us by REGI.

A concentrated effort has been undertaken to reduce costs in response to the downturn in the investor market.

Management and director fees were reduced by $8,750 from $21,800 in 2009 to $13,050 in 2010. Public relations

expenses were reduced by $4,087 from $8,175 to $4,088, and travel for promotion were reduced by $4,315 from

$8,856 in 2009 to $4,541 in 2010.

However, the reductions in costs were offset by increases in other expenses. Increases of consulting fees by $4,025

from $5,538 to $9,563 and investor relation/shareholder communication costs by $14,158 from $9,578 to $23,736

resulted from our increased effort to communicate with our shareholders and potential shareholders. Office and

general expenses were increased in 2010 by $7,455 from $9,151 in 2009, because we were more active in 2010

during the holiday season than in 2009. Professional fees increased by $3,186 from $10,557 in 2009 to $13,743 in

2010, because our accountants worked on during the current period.

The decrease in net loss from 2009 resulted from the significant unrealized gain of $79,229, when significant portion

of our privately sold warrants to purchase REGI shares were nearing their expiration date. In 2009 there was no such

unrealized gain. This gain was partially offset by gain on sale of REGI shares of $7,473 in 2009 and gain on debt

forgiven of $10,813 in 2009, both are $nil in 2010.

Significant Projects without Operating Revenue

The Company is developing for commercialization an improved axial vane type rotary engine known as the

RadMax™ rotary technology (the "Technology" or the RadMax™ Engine”), used in the design of lightweight and

high efficiency engines, compressors and pumps. The RadMax™ engine has only two moving parts, the vanes (up

to 12) and the rotor, compared to the 40 moving parts in a simple four-cylinder piston engine. This design makes it

possible to produce up to 24 continuous power impulses per one rotation that is vibration-free and extremely quiet.

The RadMax™ engine also has multi-fuel capabilities allowing it to operate on fuels including gasoline, natural gas,

hydrogen, propane and diesel. REGI U.S., Inc. and Reg Technologies Inc., are currently designing and testing

prototype RadMax™ Diesel Engines, compressors and pumps intended for aviation, automotive, industrial

processes and military applications.

The world-wide marketing and intellectual rights, other than the U.S., are held by Reg Technologies Inc. REGI U.S.,

Inc. owns the U.S. marketing and intellectual rights and has a project cost sharing agreement, whereby it will fund

50% of the further development of RadMax™ Engine and Reg Technologies Inc. will fund 50%.

To date, several prototypes of the RadMax™ Engine have been tested and additional development and testing work

is continuing. We believe that such development and testing will continue until a commercially feasible design is

perfected. There is no assurance at this time, however, that such a commercially feasible design will ever be

perfected, or if it is, that it will become profitable. If a commercially feasible design is perfected, we do, however,

expect to derive revenues from licensing the Technology relating to the RadMax™ Engine regardless of whether

actual commercial production is ever achieved. There is no assurance at this time, however, that revenues will ever

be received from licensing the Technology even if it does prove to be commercially feasible.

We believe that a large market would exist for a practical rotary engine which could be produced at a competitive

price and which could provide a good combination of fuel efficiency, power density and exhaust emissions.

Based on the market potential, we believe the RadMax™ Engine is well suited for application to internal

combustion engines, pumps, compressors and expansion engines. The mechanism can be scaled to match virtually

any size requirement. This flexibility opens the door to large markets being developed.

We have tested the RadMax™ technology for interested customers who want a license agreement. To date we have

granted an option for a license for certain applications for a Fortune 1000 company who are evaluating the

RadMax™ design and are currently assisting in the development at no cost to the Company.

During the nine months ended January 31, 2010, the Company’s efforts have been focused on the research,

development and design of the RadMax™ rotary technology (see also Section Period Highlights above).

Summary of Quarterly Results

The following is a summary of the Company’s financial results for each of the Company’s eight most recently

completed quarters:

Quarter Ending

Revenue

Net Earnings (Loss)

Per Share

Diluted per share

January 31, 2010

$nil

(105,852)

(0.00)

October 31, 2009

$nil

(157,669)

(0.00)

July 31, 2009

$nil

(77,974)

(0.00)

April 30, 2009

$nil

(8,887)

(0.00)

January 31, 2009

$nil

(121,958)

(0.00)

October 31, 2008

$nil

(166,446)

(0.01)

July 31, 2008

$nil

(158,799)

(0.01)

April 30, 2008

$nil

172,004

0.01

Over the past eight quarters, the Company’s expenses and net loss have varied from period to period dependant upon

the Company’s activities at the time. The most recent three quarters have remained relatively consistent due to a

focus on testing and development of the RadMax™ engine. The quarter ended April 30, 2008 shows net earnings,

however, these earnings were the result of the de-consolidation of a subsidiary. Expenses and net loss during the

second and third quarters of fiscal 2009, and the last quarter of fiscal 2008 were significantly higher than those in

2010. A decrease in expenses during fiscal 2009 relates to a concerted effort to reduce administration overhead

during the downturn in the investment market. During fiscal 2010, investor relations and advertising contracts were

not renewed, wages were reduced, and promotional travel was curtailed. The decrease in the losses for the 2010

quarters in comparison to those of 2009 also results from fact that the results of REGI U.S. Inc. were consolidated

up to April 30, 2008.

Liquidity

During the nine month period ended January 31, 2010, we financed our operations and received $298,761:

•

$26,689 from investing activities through the sale of our investee’s shares and warrants in the open market;

•

repayments of advances by the investee of $7,007;

•

advances from relate parties of $140,856; and

•

net proceeds from sale of private placements of $98,331 and subscriptions of $12,000

The Company’s cash position decreased to bank indebtedness of $13,878 at January 31, 2010 as compared to cash

balance of $1,107 at April 30, 2009.

The Company owns approximately 3.0 million (directly or indirectly) shares of REGI U.S., Inc. (“REGI”) (a U.S.

public company), and formerly controlled the Company by way of a voting trust arrangement, which was cancelled

on April 30, 2008.

Rand Energy Group Inc., a subsidiary of the Company, and REGI U.S., Inc. have a project cost sharing agreement

whereby these companies each fund 50% of the development of the technology.

As at January 31, 2010, Rand Energy Group Inc. owes Reg Technologies $1,974,121 (April 30, 2009 -$1,676,840)

which will be fully repaid prior to royalty obligations due, and prior to dividends being paid to the owners of Rand

Energy Group Inc.

During the nine month period ended January 31, 2010, the Company’s received US$26,689 through the sale of

approximately 1% of its interest in REGI which will be allocated to administrative operations of the Company and

the development costs of the RadMax™ engine.

The costs the Company has identified for the RadMax™ engine are the master design integrator, prototype

fabrication, and labour expense, estimated approximately at US$200,000 each, with planned expenditures over the

next 6 months.

Capital Resources

As at January 31, 2010, the Company had working capital of $138,845 as compared to working capital of $290,087

at April 30, 2009. Of the $138,845, $529,431 is due from REGI U.S., Inc. (“REGI”). This receivable relates mainly

to project costs as REGI owns the U.S. marketing and intellectual rights and has a project cost sharing agreement,

whereby it will fund 50% of the further development of RadMax™ Engine and Reg Technologies Inc. will fund

50%. REGI only had cash of US$583 and a US$1,303,246 working capital deficiency at its January 31, 2010 period

end.

During the nine month period ended January 31, 2010, we used cash in the amount of $299,868 on operating

activities as compared to $493,118 for the same period last year for a decrease of $193,250. This is a result of the

Company incurring less operating expenses during 2010 in comparison to 2009 as well as increased balance of

accounts payable and accrued liabilities by $160,581.

During the nine months ended January 31, 2010, the Company completed a private placement, whereby it issued

1,012,596 units at $0.15 per unit for proceeds of $151,889, of which $45,000 was received on February 3, 2010

from the shareholder’s RRSP trust account. Each private placement unit consisted of one common share and share

purchase warrant. Each warrant entitles the holder to purchase one additional share of common stock at a price of

$0.20 per share for one year. Finders’ fees of $7,050 were paid in connection with the private placement.

During the nine months ended January 31, 2010, the Company also received $12,000 for subscriptions for shares

issued subsequent to the period in March, 2010.

During the prior year ended April 30, 2009, the Company completed a private placement, whereby it issued

1,315,168 units at $0.40 per unit for proceeds of $526,067. Each unit consisted of one common share and one non-

transferable share purchase warrant, entitling the holder to acquire one additional common share for a period of one

year at $0.50 per share and at $0.60 per share in the second year. The Company incurred finders’ fees of $22,212 in

connection with the above private placement, which are included in share issuance costs.

In the past, we have derived most of our development and operating capital primarily from the issuance of our

capital stock and our former subsidiary REGI U.S., Inc. We have also caused our subsidiary, Rand Energy Group

Inc. to sell shares it owned in REGI U.S., Inc. The Company also indirectly and directly owns approximately 4.4

million shares of REGI U.S., Inc. with a carrying value of US $Nil as the Company’s share of past losses exceeded

the carrying value of the investment in REGI US.

The Company’s direct investment in REGI U.S. Inc., together with its 51% ownership in Rand Energy Group Inc.,

gives it control over approximately 3.0 million shares of REGI U.S. Inc., which shares had a carrying value of

approximately US $Nil as of January 31, 2010. The Company can sell, through a registered broker, up to 44,000,

shares of REGI U.S., Inc., being 1% of the issued shares, during any 90-day period. During the nine month period

ended January 31, 2010 Rand sold approximately 2.7% of its interest in REGI U.S. Inc. for US$26,689.

At January 31, 2010, the market value of the REGI shares was US$962,172.

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going

concern in order to pursue the development of its RadMax™ Diesel Engine and mineral properties and to maintain a

flexible capital structure for its projects for the benefit of its stakeholders. As the Company is in the development

stage, its principal source of funds is from the issuance of common shares.

The Company has been successful in the past in acquiring capital through the issuance of shares of our Common

Stock, and through advances from related parties. Although we intend to continue utilizing these sources, there has

been no assurance in the past that these sources and methods would continue to be available in the future. In the

event that no other sources of capital were available to us in the future, on a reasonable financial basis, we would

face the same obstacles as many small, undercapitalized companies do, and, in the worst case, we could be forced to

reorganize or liquidate, either of which consequence would likely have an adverse financial effect upon our

shareholders.

In the management of capital, the Company includes the components of shareholders’ equity as well as cash,

receivables, related party receivables, advances to equity accounted investee, and short term investments balances.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions

and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may

attempt to issue new shares, acquire or dispose of assets or adjust the amount of cash and short-term investments.

The Company expects its capital resources, which include a share offering, will be sufficient to carry its research

and development plans and operations through its current operating period. The funds are raised through REGI

U.S., Inc. equity financings and through the sale of REGI U.S., Inc. shares on the open market.

Transactions with Related Parties

Pursuant to a management agreement dated May 1, 1996, the Company engaged SMR Investments Ltd. to provide

services to the Company. SMR is a private company which is controlled by Susanne Robertson, a director of the

Company and the spouse of the Company’s president. The Company’s President is also a director and officer of

SMR. SMR provides management services to the Company in consideration of a monthly fee of $2,500 plus

applicable taxes. These services include providing general management services and ongoing operations. The

agreement may be terminated by the mutual consent of the parties. During the nine month periods ended January 31,

2010 and 2009, the Company paid or accrued to SMR the sum of $22,500 in each period.

The Company shares office space, staff and service providers with a number of private and public companies with

several directors in common. On June 15, 2006, the Company entered into a lease agreement with Linux Gold Corp.

a company with common officers and directors, to lease office premises for the period of three years and the option

to renew the lease for an additional three-year term, in consideration for $16,994 per year. The Company’s current

agreement to lease office premise expired on June 30, 2009. On June 11, 2009, the Company entered into a new

lease agreement for one additional year for a total of $13,185.

During the nine month period ended January 31, 2010 rent of $11,379 (2009 -$10,890) was incurred with a company

having common officers and directors.

During the nine months ended January 31, 2010, administrative and management fees, included in miscellaneous

office expenses, of $20,250 (2009 - $21,048) and directors’ fees of $9,000 (2009 - $6,500) were paid to officers,

directors and companies controlled by officers and directors for services rendered.

These related party transactions are carried out in the normal course of operations and are measured at the exchange

amount of consideration established and agreed to by all the related parties. Amounts due from related parties are

unsecured, non-interest bearing and due on demand.

At January 31, 2010, the Company is owed an aggregate of $26,820 (April 30, 2009 - $19,537) 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.

Recent Accounting Pronouncements Not Yet Adopted

International Financial Reporting Standards

In 2006, the Canadian Accounting Standards Board (“AcSB”) published a new strategic plan that will significantly

affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence

of Canadian GAAP with IFRS over an expected five year transitional period.

In February 2008 the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS,

replacing Canadian GAAP. This date is for interim and annual financial statements relating to fiscal years beginning

on or after January 1, 2011. The Company’s transition date of May 1, 2010 will require the restatement for

comparative purposes of amounts reported by the Company for the year ended April 30, 2011. In July 2008 AcSB

announced that early adoption will be allowed in 2009 subject to seeking exemptive relief. The Company is

currently assessing the financial reporting impact of the transition to IFRS and the changeover date.

Other accounting pronouncements issued with future effective dates are either not applicable or are not expected to

be significant to the consolidated financial statements of the Company.

Fair Value of Financial Instruments

Financial instruments carrying value and fair value

The Company’s financial instruments consist of cash, receivables, related party receivables, advances to equity

accounted investee, accounts payable and a derivative financial instrument liability.

Cash and the derivative financial instrument liability are designated as “held-for-trading” and measured at fair value.

Receivables, related party receivables, and advances to equity accounted investee are designated as “loans and

receivables”. Short term investments are designated as “available for sale”. Accounts payable is designated as

“other financial liabilities”.

The carrying value of receivables, related party receivables, advances to equity accounted investee, and accounts

payable approximate their fair values due to their immediate or short-term maturity. The derivative financial

instrument liability is recorded at fair value calculations using the Black-Scholes option pricing model.

Interest rate and credit risk

The Company has minimal cash balances and no interest-bearing debt. The Company has no significant

concentrations of credit risk arising from operations. The Company's current policy is to invest any significant

excess cash in investment-grade short-term deposit certificates issued by reputable financial institutions with

which it keeps its bank accounts and management believes the risk of loss to be remote. The Company

periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.

Receivables consist of goods and services tax due from the Federal Government. Management believes that the

credit risk concentration with respect to receivables is remote.

Foreign exchange risk

The Company is primarily exposed to currency fluctuations relative to the Canadian dollar through expenditures

that are denominated in US dollars. Also, the Company is exposed to the impact of currency fluctuations on its

monetary assets and liabilities.

The operating results and the financial position of the Company are reported in Canadian dollars. Fluctuations

in exchange rates will, consequently, have an impact upon the reported operations of the Company and may

affect the value of the Company’s assets and liabilities.

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

The Company is exposed to foreign currency risk through the following financial assets and liabilities that are

denominated in United States dollars:

Related Party

January 31, 2010

Bank Debt

Receivables

Accounts payable

4,925

13,919

11,827

At January 31, 2010 with other variables unchanged, a +/-10% change in exchange rates would

increase/decrease pre-tax loss by approximately +/- $702.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The

Company manages liquidity risk through the management of its capital structure and financial leverage as

outlined in Note 11.

Other MD&A Requirements

Additional Disclosure for Venture Issuers without Significant Revenue

Additional disclosures concerning the Company’s research and development costs, deferred development costs and

general and administrative expenses are provided as follows:

During the nine month period ended January 31, 2010, the Company incurred the $98,200 in research and

development compared to $99,037 for the nine month period ended January 31, 2009.

Disclosure of Outstanding Share Data:

Authorized

50,000,000 Common shares without par value