----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      20-F**

|                                                     |                                                                                                                                            |
|----------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
| **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 March 31, 2007. |
|                                                     |                                                                                                                                            |
| **OR**                                                   |
|                                                     |                                                                                                                                            |
| **o**                                                    | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934**       |
|                                                     |                                                                                                                                            |
| **OR.**                                                  |
|                                                     |                                                                                                                                            |
| **o**                                                    | **SHELL                COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES                EXCHANGE                ACT OF 1934**    |

**VALCENT      PRODUCTS INC. **

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*(Jurisdiction      of incorporation or organization)*

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*(Address      of principal executive offices)*

|                                 |                                                                      |
|--------------------------------------|---------------------------------------------------------------------------|
| None                                 | None                                                                      |
| *Title                of each class* | *Name                of each exchange on which                registered* |

----

----

|                                            |
|-------------------------------------------------|
| Common                Shares, without par value |
| *(Title                of Class)*               |

|                              |
|-----------------------------------|
| None                              |
| *(Title                of Class)* |

----

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**TABLE      OF CONTENTS**

|                    |   |                                                                                                       |   |                      |
|-------------------------|--------|------------------------------------------------------------------------------------------------------------|--------|---------------------------|
|                    |   |                                                                                                       |   | **Page****Number**        |
| Part                I   |   |                                                                                                       |   | 1                         |
| ITEM                1   |   | Identity                of Directors, Senior                Management and Advisors                        |   | 1                         |
| ITEM                2   |   | Offer                Statistics and Expected                Timetable                                      |   | 2                         |
| ITEM                3   |   | Key                Information                                                                             |   | 2                         |
| ITEM                4   |   | Information                on the                Company                                                   |   | 12                        |
| ITEM                5   |   | Operating                and Financial Review                and Prospects                                 |   | 24                        |
| ITEM                6   |   | Directors,                Senior Management and                Employees                                   |   | 31                        |
| ITEM                7   |   | Major                Shareholders and Related                Party Transactions                            |   | 36                        |
| ITEM                8   |   | Financial                Information                                                                       |   | 41                        |
| ITEM                9   |   | The                Offer and                Listing                                                        |   | 44                        |
| ITEM                10  |   | Additional                Information                                                                      |   | 45                        |
| ITEM                11  |   | Quantitative                and Qualitative                Disclosures About Market Risk                   |   | 58                        |
| ITEM                12  |   | Description                of Securities Other than Equity Securities                                      |   | 58                        |
|                    |   |                                                                                                       |   |                      |
| PART                II  |   |                                                                                                       |   | 59                        |
| ITEM                13  |   | Defaults,                Dividends, Arrearages                and Delinquencies                            |   | 59                        |
| ITEM                14  |   | Material                Modifications to the                Rights of Security Holders and Use of Proceeds |   | 59                        |
| ITEM                15  |   | Control                and                Procedures                                                       |   | 59                        |
| ITEM                16  |   | [Reserved]                                                                                                 |   | 59                        |
| ITEM                16A |   | Audit                Committee Financial                Expert                                             |   | 59                        |
| ITEM                16B |   | Code                of                Ethics                                                               |   | 59                        |
| ITEM                16C |   | Principal                Accountant Fees and                Services                                       |   | 60                        |
| ITEM                16D |   | Exemptions                from the Listing                Standards for Audit Committee                    |   | 60                        |
| ITEM                16E |   | Purchase                of Equity Securities by                the Issuer and Affiliated Purchasers        |   | 60                        |
|                    |   |                                                                                                       |   |                      |
| PART                III |   |                                                                                                       |   | 61                        |
| ITEM                17  |   | Financial                Statements                                                                        |   | F-1                - F-25 |
| ITEM                18  |   | Exhibits                                                                                                   |   | 62                        |

----

----

 **PART      I**

**CAUTIONARY      NOTICE REGARDING FORWARD LOOKING STATEMENTS**

 **ITEM      1. IDENTITY OF DIRECTORS, SENIOR      MANAGEMENT AND ADVISERS**

 **ITEM      2. OFFER STATISTICS AND EXPECTED      TIMETABLE**

 **ITEM      3. KEY      INFORMATION**

**SELECTED      FINANCIAL DATA**

----

**ITEM      3. KEY INFORMATION -**
*continued*

**SELECTED      FINANCIAL DATA -**
*continued*

|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|------------|------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|--------|--------|--------|---------|--------|
|                                                                                                                                                |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| **Valcent                Products                Inc.****Selected                Financial Data****(Expressed                in Canadian Dollars)** |   | **March                31,****2007****12                Months** |       | **March                31,****2006****12                Months** |   | **March                31,****2005****12                Months** |   | **March                31,****2004****12                Months** |   | **March                31,****2003****12                Months** |   |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| Net                Operating Revenues perCanadian                and U.S. GAAP                                                                      |   | $                                                                | 0.00       |                                                             | $      | 0.00                                                             |   | $                                                                | 0.00   |                                                             | $      | 0.00   |   | $      | 0.00    |   |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| Loss                (Income) from operations                                                                                                        |   | $                                                                | 10,855,269 |                                                             | $      | 3,710,644                                                        |   | $                                                                | 45,694 |                                                             | $      | 25,885 |   | $      | (81,637 | )      |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| Loss                (Income) from operationsU.S.                GAAP                                                                                |   | $                                                                | 10,855,269 |                                                             | $      | 3,699,724                                                        |   | $                                                                | 45,694 |                                                             | $      | 25,885 |   | $      | (81,637 | )      |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| Loss                (Income) from continuedoperations                per Canadian GAAP                                                              |   | $                                                                | 10,939,571 |                                                             | $      | 3,734,599                                                        |   | $                                                                | 45,694 |                                                             | $      | 25,885 |   | $      | (82,433 | )      |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| Loss                (Income) from discontinuedoperations                per Canadian GAAP                                                           |   | $                                                                | 0.00       |                                                             | $      | 0.00                                                             |   | $                                                                | 0.00   |                                                             | $      | (2,238 | )      | $      | 0.00    |   |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| Net                (Income) loss per CanadianGAAP                                                                                                   |   | $                                                                | 10,939,571 |                                                             | $      | 3,734,599                                                        |   | $                                                                | 45,694 |                                                             | $      | 23,647 |   | $      | (82,433 | )      |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| Loss                (Income) from continuedoperations                per U.S. GAAP                                                                  |   | $                                                                | 10,855,269 |                                                             | $      | 3,699,724                                                        |   | $                                                                | 45,694 |                                                             | $      | 25,885 |   | $      | (82,433 | )      |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| Loss                (Income) from discontinuedoperations                per U.S. GAAP                                                               |   | $                                                                | 0.00       |                                                             | $      | 0.00                                                             |   | $                                                                | 0.00   |                                                             | $      | (2,238 | )      | $      | 0.00    |   |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| Net                (Income) loss per U.S. GAAP                                                                                                      |   | $                                                                | 10,939,571 |                                                             | $      | 3,699,724                                                        |   | $                                                                | 45,694 |                                                             | $      | 23,647 |   | $      | (82,433 | )      |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| Loss                (Income) per share fromcontinued                operations - basic,Canadian                GAAP                                 |   | $                                                                | 0.57       |                                                             | $      | 0.354                                                            |   | $                                                                | 0.007  |                                                             | $      | 0.01   |   | $      | (0.01   | )      |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| Loss                per share from discontinuedoperations,                Canadian GAAP                                                             |   | $                                                                | 0.00       |                                                             | $      | 0.00                                                             |   | $                                                                | 0.00   |                                                             | $      | 0.00   |   | $      | 0.00    |   |
|                                                                                                                                                |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |
| Loss                (Income) per share after                                                                                                        |   |                                                             |       |                                                             |   |                                                             |   |                                                             |   |                                                             |   |   |   |   |    |   |

----

**ITEM      3. KEY INFORMATION -**
*continued*

**SELECTED      FINANCIAL DATA -**
*continued*

|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| discontinued                operations,Canadian                GAAP                                          |   | $      | 0.57        |   | $      | 0.354      |   | $      | 0.007     |   | $      | 0.01      |   | $      | (0.01     | )      |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Loss                (Income) per share fromcontinued                operations, U.S. GAAP                    |   | $      | 0.57        |   | $      | 0.351      |   | $      | 0.007     |   | $      | 0.01      |   | $      | (0.01     | )      |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Loss                (Income) per share fromdiscontinued                operations, U.S.GAAP                  |   | $      | 0.00        |   | $      | 0.00       |   | $      | 0.00      |   | $      | 0.01      |   | $      | 0.00      |   |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Loss                (Income) per share afterdiscontinued                operations, U.S.GAAP                 |   | $      | 0.00        |   | $      | 0.351      |   | $      | 0.007     |   | $      | 0.01      |   | $      | (0.01     | )      |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Share                capital per Canadian GAAP                                                               |   | $      | 7,836,903   |   | $      | 4,099,870  |   | $      | 2,999,420 |   | $      | 2,999,420 |   | $      | 2,999,420 |   |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Share                capital per U.S. GAAP                                                                   |   | $      | 7,836,903   |   | $      | 4,391,371  |   | $      | 2,999,420 |   | $      | 2,999,420 |   | $      | 3,383,540 |   |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Common                shares issued                                                                          |   |   | 30,666,068  |   |   | 15,787,835 |   |   | 6,435,374 |   |   | 6,435,374 |   |   | 6,435,374 |   |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Weighted                average sharesoutstanding                per Canadian GAAP                           |   |   | 19,261,192  |   |   | 10,548,042 |   |   | 6,435,374 |   |   | 6,435,374 |   |   | 6,435,374 |   |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Weighted                average sharesoutstanding                per U.S. GAAP                               |   |   | 19,261,192  |   |   | 10,548,042 |   |   | 6,435,374 |   |   | 6,435,374 |   |   | 6,435,374 |   |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Total                Assets per Canadian GAAP                                                                |   | $      | 4,071,414   |   | $      | 1,392,801  |   | $      | 936       |   | $      | 2,059     |   | $      | 18,866    |   |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Total                Assets per U.S. GAAP                                                                    |   | $      | 4,071,414   |   | $      | 1,392,801  |   | $      | 936       |   | $      | 2,059     |   | $      | 18,866    |   |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Net                assets (liabilities) per Canadian GAAP                                                    |   | $      | (2,654,114) |   | $      | (441,099   | )      | $      | (237,950  | )      | $      | 192,256   |   | $      | (168,609  | )      |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Net                assets (liabilities) per U.S.GAAP                                                         |   | $      | (2,654,114) |   | $      | (590,697   | )      | $      | (237,950  | )      | $      | 192,256   |   | $      | (168,609  | )      |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Convertible                debentures (currentand                long term portions) per U.S. GAAP)          |   | $      | 5,301,129   |   | $      | 1,565,069  |   | $      | 0.00      |   | $      | 0.00      |   | $      | 0.00      |   |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Cash                Dividends Declared percommon                shares, Canadian andU.S.                GAAP |   | $      | 0.00        |   | $      | 0.00       |   | $      | 0.00      |   | $      | 0.00      |   | $      | 0.00      |   |
|                                                                                                         |   |   |        |   |   |       |   |   |      |   |   |      |   |   |      |   |
| Exchange                Rates (CND to USD)Period                Average                                      |   | $      | 0.8783      |   | $      | 0.8385     |   | $      | 0.7842    |   | $      | 0.7403    |   | $      | 0.6458    |   |
|                                                                                                         |   |

----

**ITEM        3. KEY INFORMATION -**
*continued*

**SELECTED        FINANCIAL DATA -**
*continued*

|                                                                                                       |   |
|------------------------------------------------------------------------------------------------------------|--------|
| **Exchange                Rates (CND to                USD)****for                six most recent months** |   | **Period****High** |   | **Period****Low** |   |   |
|                                                                                                       |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |
| March                2007                                                                                  |   | $ | 0.8694 |   | $ | 0.8455 |   |   |
| April                2007                                                                                  |   | $ | 0.8984 |   | $ | 0.8621 |   |   |
| May                2007                                                                                    |   | $ | 0.9355 |   | $ | 0.8928 |   |   |
| June                2007                                                                                   |   | $ | 0.9557 |   | $ | 0.9294 |   |   |
| July                2007                                                                                   |   | $ | 0.9669 |   | $ | 0.9344 |   |   |
| August                2007                                                                                 |   | $ | 0.9556 |   | $ | 0.9199 |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |
| Exchange                Rate (CND to USD)September                22, 2007                                 |   | $ | 0.9996 |   |   |   |   |   |
|                                                                                                       |

**CAPITALIZATION      AND INDEBTEDNESS**

**REASONS      FOR THE OFFER AND USE OF PROCEEDS**

**RISK      FACTORS**

**GENERAL      BUSINESS RISKS**

***We      are a development stage company and based on our historical operating losses      and      negative cash flows from operating activities there is uncertainty as to our      ability to continue as a going concern.***

***From      inception, we have historically generated minimal revenues while sustaining      substantial operating losses and we anticipate incurring continued operating      losses and negative cash flows in the foreseeable future resulting in      uncertainty of future profitability and limitation on our operations.***

----

**ITEM        3. KEY INFORMATION -**
*continued*

**GENERAL        BUSINESS RISKS -**
*continued*

***Our      accumulated deficit makes it more difficult to borrow      funds.***

***Our      having recently undergone a change in business direction and significant      restructuring coupled with our limited experience as a publicly traded company      with substantial operations in several different industries, may increase our      expenses and place significant demands on our      management.***

**RISKS      ASSOCIATED WITH OUR BUSINESSES AND INDUSTRIES**

***We      face serious competition in our business segments from new market entrants      as      well as a number of established companies with greater resources and existing      customer bases.***

|   |    |                                                                                                                                                                   |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | brand                name recognition;                                                                                                                                 |
|   |    |                                                                                                                                                                   |
|   | • | availability                of financial resources;                                                                                                                    |
|   |    |                                                                                                                                                                   |
|   | • | the                quality of products;                                                                                                                                |
|   |    |                                                                                                                                                                   |
|   | • | reviews                received for products from independent reviewers who publish in magazines,                websites, newspapers and other industry publications; |
|   |    |                                                                                                                                                                   |
|   | • | availability                of access to retail shelf space;                                                                                                           |
|   |    |                                                                                                                                                                   |
|   | • | the                price of each product; and                                                                                                                          |
|   |    |                                                                                                                                                                   |
|   | • | the                number of products then available.                                                                                                                  |

----

**ITEM      3. KEY INFORMATION -**
*continued*

**RISKS      ASSOCIATED WITH OUR BUSINESSES AND      INDUSTRIES - **
*continued*

***Our      intellectual property may not be adequately protected from unauthorized use      by      others, which could increase our litigation costs and adversely affect our      sales.***

***If      our potential products infringe upon proprietary rights of others, lawsuits      may      be brought requiring us to pay large legal expenses and judgments and redesign      or discontinue selling one or more of our potential      products.***

***Should      our Nova Skin Care System be classified as a medical device and should we fail      to obtain and maintain the necessary United States Food and Drug Administration      clearances our business will be adversely affected.***

----

**ITEM      3. KEY INFORMATION -**
*continued*

**RISKS      ASSOCIATED WITH OUR BUSINESSES AND      INDUSTRIES - **
*continued*

***If      we are unable to successfully break into new markets, implement our growth      strategy or manage our business as it does grow, our future operating results      could suffer.***

***Changes      in consumer preferences or discretionary spending may negatively affect our      future operating results.***

|   |    |                                                                                          |
|--------|---------|-----------------------------------------------------------------------------------------------|
|   | • | general                business conditions;                                                   |
|   |    |                                                                                          |
|   | • | interest                rates;                                                                |
|   |    |                                                                                          |
|   | • | inflation;                                                                                    |
|   |    |                                                                                          |
|   | • | consumer                debt levels;                                                          |
|   |    |                                                                                          |
|   | • | the                availability of consumer credit;                                           |
|   |    |                                                                                          |
|   | • | taxation;                                                                                     |
|   |    |                                                                                          |
|   | • | fuel                prices and electrical power rates;                                        |
|   |    |                                                                                          |
|   | • | unemployment                trends;                                                           |
|   |    |                                                                                          |
|   | • | natural                disasters;                                                             |
|   |    |                                                                                          |
|   | • | terrorist                attacks and acts of war; and                                         |
|   |    |                                                                                          |
|   | • | other                matters that influences consumer confidence and                spending. |

***We      may be subject to adverse publicity or claims by consumers arising out of use      of      our potential product lines.***

----

**ITEM      3. KEY INFORMATION -**
*continued*

**RISKS      ASSOCIATED WITH OUR BUSINESSES AND      INDUSTRIES - **
*continued*

***We      face substantial competition in attracting and retaining qualified senior      management and key personnel and may be unable to develop and grow our business      if we cannot attract and retain senior management and key personnel as      necessary, or if we were to lose our existing senior management and key      personnel.***

***There        is no certainty that our key projects will be operationally successful or        profitable.***

**RISKS      ASSOCIATED WITH AN INVESTMENT IN OUR COMMON STOCK**

***We      have incurred and continue to face serious financial penalties for our      continuing failure to meet our registration obligations under the terms of      a      recent series of related private offering      transactions.***

----

**ITEM      3. KEY INFORMATION -**
*continued*

**RISKS      ASSOCIATED WITH AN INVESTMENT IN OUR      COMMON STOCK - **
*continued*

***When      our registration statement on Form F-1 was declared effective by the SEC on      February 28, 2007, up to 11,483,888 shares of our common stock became eligible      for immediate public sale which is likely to have an adverse affect on the      market price of our common stock.***

***Unless      an active trading market develops for our securities, you may not be able to      sell your shares.***

----

**ITEM      3. KEY INFORMATION -**
*continued*

**RISKS      ASSOCIATED WITH AN INVESTMENT IN OUR      COMMON STOCK - **
*continued*

***Under      certain circumstances, some of our outstanding common stock purchase warrants      may be exercised without our receiving any cash.***

***Since      our common stock is thinly traded it is more susceptible to extreme rises or      declines in price, and you may not be able to sell your shares at or above      the      price paid.***

|   |    |                                                                                                                                                         |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | the                trading volume of our shares;                                                                                                             |
|   |    |                                                                                                                                                         |
|   | • | the                number of securities analysts, market-makers and brokers following                our                common stock;                        |
|   |    |                                                                                                                                                         |
|   | • | changes                in, or failure to achieve, financial estimates by securities                analysts;                                                 |
|   |    |                                                                                                                                                         |
|   | • | new                products introduced or announced by us or our                competitors;                                                                 |
|   |    |                                                                                                                                                         |
|   | • | announcements                of technological innovations by us or our competitors;                                                                          |
|   |    |                                                                                                                                                         |
|   | • | actual                or anticipated variations in quarterly operating                results;                                                               |
|   |    |                                                                                                                                                         |
|   | • | conditions                or trends in our business industries;                                                                                              |
|   |    |                                                                                                                                                         |
|   | • | announcements                by us of significant acquisitions, strategic partnerships, joint                ventures                or capital commitments; |
|   |    |                                                                                                                                                         |
|   | • | additions                or departures of key personnel;                                                                                                     |
|   |    |                                                                                                                                                         |
|   | • | sales                of our common stock; and                                                                                                                |
|   |    |                                                                                                                                                         |
|   | • | general                stock market price and volume fluctuations of publicly-traded, and                particularly microcap, companies.                   |

----

**ITEM      3. KEY INFORMATION -**
*continued*

**RISKS      ASSOCIATED WITH AN INVESTMENT IN OUR      COMMON STOCK - **
*continued*

***Trading      in our common stock on the OTC Bulletin Board may be limited thereby making      it      more difficult for you to resell any shares you may      own.***

***Our      common stock is subject to the “penny stock” regulations, which are likely to      make it more difficult to sell.***

|   |    |                                                                                                                                                                                                                                                           |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | deliver                to a prospective investor a standardized risk disclosure document                that                provides information about penny stocks and the nature and level                of risks                in the penny stock market; |
|   |    |                                                                                                                                                                                                                                                           |
|   | • | provide                the prospective investor with current bid and ask quotations for                the penny                stock;                                                                                                                         |
|   |    |                                                                                                                                                                                                                                                           |
|   | • | explain                to the prospective investor the compensation of the broker-dealer                and its                salesperson in the transaction;                                                                                                 |
|   |    |                                                                                                                                                                                                                                                           |
|   | • | provide                investors monthly account statements showing the market value of                each                penny stock held in the their account; and                                                                                          |
|   |    |                                                                                                                                                                                                                                                           |
|   | • | make                a special written determination that the penny stock is a suitable                investment for the purchaser and receive the purchaser’s written agreement                to the transaction.                                      |

***As      a foreign private issuer, we are exempt from certain informational requirements      of the Exchange Act to which domestic United States issuers are      subject.***

***As      we are a Canadian company with much of our assets and key personnel located      outside of the United States, you may have difficulty in acquiring United States      jurisdiction or enforcing a United States judgment against us, our key personnel      or our assets.***

----

**ITEM      3. KEY INFORMATION -**
*continued*

**RISKS      ASSOCIATED WITH AN INVESTMENT IN OUR      COMMON STOCK - **
*continued*

***We      do not intend to pay any common stock dividends in the foreseeable      future.***

***Future      issuances of our common stock may depress our stock price and dilute your      interest.***

**ITEM      4. INFORMATION ON OUR COMPANY**

**BUSINESS**

**OUR      CORPORATE HISTORY AND DEVELOPMENT**

**Fundamental      Business**

----

**ITEM 4. INFORMATION ON OUR COMPANY -**
*continued*

**OUR      CORPORATE HISTORY AND DEVELOPMENT -**
*continued*

**Organizational      Structure**

**Corporate      History**

----

**ITEM 4. INFORMATION ON OUR COMPANY -**
*continued*

**OUR      CORPORATE HISTORY AND DEVELOPMENT -**
*continued*

**Current      **
**License Agreements**

|   | (i) | a                master license agreement for a term continuing so long as royalty                payments                continue to be made as required for the exclusive worldwide marketing                and                distribution rights to three unrelated and proprietary potential                consumer                retail products that had previously been developed (the “Pagic Master                License”), certain of which are patent pending by Pagic, including the                Nova Skin Care System, the Dust WolfTM,                and the                Tomorrow Garden                TM Kit (collectively, and together with any improvements                thereon, the “Initial Products”); |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | the                Pagic Master License also includes a license for a term continuing                so long                as royalty payments continue to be made as required for the exclusive                worldwide marketing and distribution rights to any ancillary products                developed and sold for use by consumers in connection with the Initial                Products (the “Initial                Ancillaries”); |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | a                product development agreement pursuant to which we were granted a                right                for an initial period of five years to acquire a license for a term                continuing so long as royalty payments continue to be made as required                for                the exclusive worldwide marketing and distribution rights to any                new                products developed by Pagic (any such products, collectively, the                “Additional Products”, and, the agreement itself, the “Pagic Product                Development Agreement”); |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | the                Pagic Product Development Agreement also includes a license for a                term                continuing so long as royalty payments continue to be made as required                for                the exclusive worldwide marketing and distribution rights to any                ancillary                products developed and sold for use by consumers in connection with                the                Additional Products (the “Additional Ancillaries”);                and |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | a                related services agreement pursuant to which Pagic shall provide                consulting support in connection with the Initial Products, the Initial                Ancillaries, the Additional Products and the Additional Ancillaries                (the                “Pagic Consulting Agreement”), in exchange for the                following: |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1) | 20,000,000                shares of our common stock which have been                issued; |
|--------|----|---------------------------------------------------------------------------------------------|

|   | 2) | a                one-time US$125,000 license fee                (paid); |
|--------|----|-------------------------------------------------------------------------|

|   | 3) | reimbursement                for US$125,000 in development costs associated with each of the Initial                Products since March 17, 2005                (paid); |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4) | consulting                fees of US$156,000 per year, payable monthly in advance, which the                Company                has paid to date; and |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5) | the                greater of the following, payable annually beginning in the second                license                year (beginning April 1, 2007): |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ITEM 4. INFORMATION ON OUR COMPANY      -**
*continued*

**OUR      CORPORATE HISTORY AND DEVELOPMENT      -**
*continued*

|   |   | subject                to a minimum amount of US$37,500 per Initial Product during the second                year of the Pagic Master License, and $50,000 US$ each year thereafter,                continuing royalties payable quarterly at a rate                of: |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ø | US$10.00                US  per Nova Skin Care System unit                sold; |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | Ø | US$2.00                per Dust WolfTM                unit                sold; |
|--------|--------|---------------------------------------------------------------------------------|

|   | Ø | 4.5%                of annual net sales of the Tomorrow GardenTM                Kit;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|  | Ø | 4.5%                  of annual net proceeds realized from the High Density Vertical                  Bio-Reactor                  technology; |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ø | 3%                of annual net sales of Initial                Ancillaries. |
|--------|--------|------------------------------------------------------------------------------|

|   | 6) | a                one-time $50,000 US license fee for each Additional Product licensed                (except for one pre-identified product);                and |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7) | subject                to a minimum amount of US$50,000 per year commencing with the second                year                of each corresponding license, continuing royalties of 4.5% of annual                net                sales and 3% on annual net sales of any Additional                Ancillaries. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Global      Green Joint Venture and License Arrangements**

**PLAN      OF OPERATIONS**

----

**ITEM 4. INFORMATION ON OUR COMPANY -**
*continued*

**PLAN        OF OPERATIONS -**
*continued*

**High      Density Vertical Bio-Reactor and Global Green Joint      Venture**

**Nova      Skin Care System**

----

**ITEM 4. INFORMATION ON OUR COMPANY -**
*continued*

**PLAN      OF OPERATIONS - **
*continued*

**Tomorrow      GardenTM**

**TM**

**TM**

**TM**

**TM**

**TM**

**Dust      WolfTM**

**TM**

**OUR      POTENTIAL MARKETS**

***The      Nova Skin Care System***

***The      Tomorrow GardenTM Kit***

***The      High Density Vertical Bio-Reactor***

----

**ITEM 4. INFORMATION ON OUR COMPANY -**
*continued*

**MARKETING      AND ADVERTISING**

|    |                                                                                                        |
|---------|-------------------------------------------------------------------------------------------------------------|
| • | print                advertising;                                                                           |
|    |                                                                                                        |
| • | infomercials                and home shopping television;                                                   |
|    |                                                                                                        |
| • | celebrity                endorsements;                                                                      |
|    |                                                                                                        |
| • | internet                websites;                                                                           |
|    |                                                                                                        |
| • | product                sampling campaigns;                                                                  |
|    |                                                                                                        |
| • | in-store                promotions, displays and retailer assisted co-operative                advertising; |
|    |                                                                                                        |
| • | publicity                activities; and                                                                    |
|    |                                                                                                        |
| • | trade                shows.                                                                                 |

***Direct-Response      / Online Marketing***

*DMA Statistical Fact Book 2005*

----

**ITEM 4. INFORMATION ON OUR COMPANY -**
*continued*

**PLAN      OF OPERATIONS - **
*continued*

***Retail      Sales***

**MANUFACTURING,      FULFILLMENT AND SUPPLIERS**

**REGULATIONS**

----

**ITEM 4. INFORMATION ON OUR COMPANY -**
*continued*

**REGULATIONS      - **
*continued*

*Food      and Drug Administration*

|    |                                                                                                                                                                                                                                                                                                                                                              |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | the                Food and Drug Administration, other regulatory authorities or an                institutional review board placing a clinical trial on                hold;                                                                                                                                                                                    |
|    |                                                                                                                                                                                                                                                                                                                                                              |
| • | insufficient                patient enrollment, higher than anticipated attrition, non-compliance                with                trial protocols or patient follow-up not occurring at expected                rates;                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                              |
| • | institutional                review boards and third party clinical investigators delaying or                rejecting                our trial protocol;                                                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                              |
| • | third                party clinical investigators declining to participate in a trial                or not                performing a trial on our anticipated schedule or consistent with                the                clinical trial protocol, good clinical practices or other Food and                Drug                Administration requirements; |
|    |                                                                                                                                                                                                                                                                                                                                                              |
| • | third                party organizations not performing data collection and analysis in                a                timely or accurate manner;                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                              |
| • | regulatory                inspections of our clinical trials or manufacturing facilities, among                other things, requiring us to undertake corrective actions or suspend,                terminate or invalidate our clinical trials;                                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                                              |
| • | changes                in governmental regulations or administrative actions;                and                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                              |
| • | the                interim or final results of our clinical trials being inconclusive                or                unfavorable as to safety or                effectiveness.                                                                                                                                                                                  |

**COMPETITION**

|    |                                                                                                                                                                   |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | brand                name recognition;                                                                                                                                 |
|    |                                                                                                                                                                   |
| • | availability                of financial resources;                                                                                                                    |
|    |                                                                                                                                                                   |
| • | the                quality of products;                                                                                                                                |
|    |                                                                                                                                                                   |
| • | reviews                received for products from independent reviewers who publish in magazines,                websites, newspapers and other industry publications; |
|    |                                                                                                                                                                   |
| • | availability                of access to retail shelf space;                                                                                                           |
|    |                                                                                                                                                                   |
| • | the                price of each product; and                                                                                                                          |
|    |                                                                                                                                                                   |
| • | the                number of products then available.                                                                                                                  |

----

**ITEM 4. INFORMATION ON OUR COMPANY -**
*continued*

**COMPETITION        - **
*continued*

***The      Nova Skin Care System***

|    |                                                                                                                   |
|---------|------------------------------------------------------------------------------------------------------------------------|
| • | Neutrogena                – Advanced Solutions At-Home Microdermabrasion System;                                 |
|    |                                                                                                                   |
| • | Homedics                – Facial Cleansing & Microdermabrasion Set;                                          |
|    |                                                                                                                   |
| • | DermaNew                – Microdermabrasion Total Body Experience;                                               |
|    |                                                                                                                   |
| • | H2O                Plus – Skin Renewal Microdermabrasion Kit;                                                    |
|    |                                                                                                                   |
| • | Visage                Naturel – Home Microdermabrasion System;                                                   |
|    |                                                                                                                   |
| • | DermaPower                – Home Microdermabrasion System;                                                       |
|    |                                                                                                                   |
| • | Artemis                Woman – The Healing Gems Microdermabrasion System;                                        |
|    |                                                                                                                   |
| • | Sharper                Image – Microdermabrasion System for Professional Skin                     Rejuvenations; |
|    |                                                                                                                   |
| • | Yuen                Mai Industrial Co., Ltd. – Ultrasonic Massager;                                              |
|    |                                                                                                                   |
| • | Ultrasonic                – Ultrasonic Face & Body Massager;                                                 |
|    |                                                                                                                   |
| • | Wedian                Technology Co. Ltd. – Ultrasonic Beauty Stimulator; and                                    |
|    |                                                                                                                   |
| • | Oxylight                – Dermawand.                                                                             |

----

**ITEM 4. INFORMATION ON OUR COMPANY -**
*continued*

**COMPETITION          - **
*continued*

***The      Tomorrow GardenTM Kit***

|    |                                                                |
|---------|---------------------------------------------------------------------|
| • | HerbKits.com                – Indoor Herb Gardening Kits; and |
|    |                                                                |
| • | New                England Herb Company.                            |

***The      High Density Vertical Bio-Reactor***

**INTELLECTUAL      PROPERTY**

***Overview***

***Patents      Pending***

----

**ITEM 4. INFORMATION ON OUR COMPANY -**
*continued*

**INTELLECTUAL        PROPERTY - **
*continued*

***Trademarks***

***Trade      Secrets***

**SEASONALITY**

**PROPERTY,      PLANT AND EQUIPMENT**

----

**ITEM      5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**

**OPERATING      LEGACY AND ACCUMULATED LOSSES**

|  **Valcent                Products Inc.** [formerly Nettron.Com, Inc.] |
|-----------------------------------------------------------------------------|
| Selected                Financial Data [Annual]                             |
| (Expressed                in Canadian Dollars)                              |
|                                                                        | **12                months ended** |
|                                                                        |   | **2007** | **2006** | **2005** | **2004** |
| Net                Operating Revenues                                       | $ | 0 | 0 | 0 | 0 |
| Loss  from                operations                              | $ | 10,939,571 | 3,734,599 | 45,694 | 24,932 |
| Loss  from                prior operations                        | $ | 0 | 0 | 45,694 | 25,885 |
| Loss                from development stage                                  |  $ |  10,939,571 |  3,710,644 |  0 | 0 |
| Net  loss                per Canadian GAAP                        | $ | 10,939,571 | 3,734,599 | 45,694 | 23,647 |
| Loss                per share                                               | $ | 0.57 | 0.35 | 0.01 | 0.01 |
|                                                                        |   |   |   |   |   |
| Share                capital                                                | $ | 7,836,903 | 4,099,870 | 2,999,420 | 2,999,420 |
| Common                shares issued                                         |   | 30,666,068 | 15,787,835 | 6,435,374 | 6,435,374 |
| Weighted                average shares outstanding                          |   | 19,261,192 | 10,548,042 | 6,435,374 | 6,435,374 |
| Total                Assets                                                 | $ | 4,071,414 | 1,392,801 | 936 | 2,059 |
| Total                Liabilities                                            | $ | (6,725,528) | (1,833,900) | (238,886) | (194,315) |
|                                                                        |   |   |   |   |   |
| Cash                Dividends Declared per Common Shares                    |  $ |  0 | 0 |  0 |  0 |
|                                                                        |   |   |   |   |   |
| Exchange                Rates (CDN $ to US $)yearly                average  |  $ |  0.8783 |  0.8385 |  0.7842 |  0.7403 |

**COMPARED      WITH YEAR ENDED MARCH 31, 2006**

*Operating      Results*

----

**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS      -**
*continued*

**OPERATING        LEGACY AND ACCUMULATED LOSSES -**
*continued*

**Revenues**

**Operating      Expenses**

----

**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS        -**
*continued*

**OPERATING          LEGACY AND ACCUMULATED LOSSES -**
*continued*

**Net      Loss**

*Liquidity      and Capital Resources*

| **Convertible                Note Continuity:** |       |                                        |      |       |
|-------------------------------------------------|------------|---------------------------------------------|--------------------------|------------|
|              | ** ** |
| ** **                                      | ** ** | **U.S.                $   ** | ** **               | ** ** | **CND                  $** | ** ** |
| ** **                                      | ** ** | ** **                                  | ** **               | ** ** | ** ** | ** ** | ** ** | **Balance** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Balance** | ** ** | ** ** | **Balance** | ** ** |
| ** **                                      | ** ** | **Issued**                                  | ** **               | ** ** | **Interest                /** | ** ** | ** ** | **March                31,** | ** ** | ** ** | **Issued** | ** ** | ** ** | **Interest                /** | ** ** | ** ** | **2007** | ** ** | ** ** | **March                31,** | ** ** | ** ** | **March                31,** | ** ** |
| **Date                of Issue**                | ** ** | **Principal**                               | ** **               | ** ** | **Penalty** | ** ** | ** ** | **2006** | ** ** | ** ** | **Principal** | ** ** | ** ** | **Penalty** | ** ** | ** ** | **Conversions** | ** ** | ** ** | **2007** | ** ** | ** ** | **2007** |   |
|                                            |       |                                        |                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| July/August                2005                 |       | $                                           | 1,277,200                |       |   | $ | 151,904 |   |   | $ | 1,429,104 |   |   | $ | - |   |   | $ | 119,875 |   |   | $ | (1,232,022 | ) |   | $ | 316,957 |   |   | $ | 365,958 |   |
| April                2006                       |       |                                        | -                        |       |   |   | - |   |   |   | - |   |   |   | 551,666 |   |   |   | 193,087 |   |   |   | (235,112 | ) |   |   | 509,641 |   |   |   | 588,431 |   |
| April                2006                       |       |                                        | -                        |       |   |   | - |   |   |   | - |   |   |   | 82,200 |   |   |   | 23,332 |   |   |   | (24,363 | ) |   |   | 81,169 |   |   |   | 93,718 |   |
| December                2006                    |       |                                        | -                        |       |   |   | - |   |   |   | - |   |   |   | 1,500,000 |   |   |   | 39,229 |   |   |   | - |   |   |   | 1,539,229 |   |   |   | 1,777,194 |   |
| January                2007                     |       |                                        | -                        |       |   |   | - |   |   |   | - |   |   |   | 2,000,000 |   |   |   | 144,316 |   |   |   | - |   |   |   | 2,144,316 |   |   |   | 2,475,828 |   |
|                                            |       | $                                           | 1,277,200                |       |   | $ | 151,904 |   |   | $ | 1,429,104 |   |   | $ | 4,133,866 |   |   | $ | 519,839 |   |   | $ | (1,491,497 | ) |   | $ | 4,591,312 |   |   | $ | 5,301,129 |   |

----

**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS        -**
*continued*

**OPERATING          LEGACY AND ACCUMULATED LOSSES -**
*continued*

----

**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS        -**
*continued*

**OPERATING          LEGACY AND ACCUMULATED LOSSES -**
*continued*

**SUBSEQUENT      EVENTS TO MARCH 31, 2007**

| a) | payment                of US$15,000 (paid); |
|----|---------------------------------------------|

| b) | US$3,000                in compensation per month payable quarterly (first quarter                paid); |
|----|----------------------------------------------------------------------------------------------------------|

| c) | a                further US$2,000 payable monthly in common                shares; |
|----|------------------------------------------------------------------------------------|

| d) | share                options to purchase 500,000 shares at US$0.60 exercise price that                vest                quarterly over a two year period;                and |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e) | the                issuance of 12,500 common shares at a deemed price of US$0.80 per                share                (issued April 24, 2007). |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS        -**
*continued*

**OPERATING          LEGACY AND ACCUMULATED LOSSES -**
*continued*

***Fluctuations      in Operating Results***

|   |    |                                                                                                                                                                                               |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | The                availability of adequate financing;                                                                                                                                             |
|   |    |                                                                                                                                                                                               |
|   | • | Our                ability to develop an organizational infrastructure and effective                management systems;                                                                            |
|   |    |                                                                                                                                                                                               |
|   | • | The                success of our advertising and marketing plans;                                                                                                                                 |
|   |    |                                                                                                                                                                                               |
|   | • | Market                acceptance and general consumer demand for our                products;                                                                                                      |
|   |    |                                                                                                                                                                                               |
|   | • | The                performance of our products;                                                                                                                                                    |
|   |    |                                                                                                                                                                                               |
|   | • | Our                ability to effectively distribute our products;                                                                                                                                 |
|   |    |                                                                                                                                                                                               |
|   | • | The                introduction of products that compete with our own;                                                                                                                             |
|   |    |                                                                                                                                                                                               |
|   | • | The                adoption of new disclosure and/or corporate governance requirements                associated with the maintenance of our status as a publicly reporting                issuer; |
|   |    |                                                                                                                                                                                               |
|   | • | Potential                lawsuits involving our products or other matters; and                                                                                                                     |
|   |    |                                                                                                                                                                                               |
|   | • | General                business and economic conditions;                                                                                                                                           |
|   |    |                                                                                                                                                                                               |
|   | • | Currency                valuation fluctuations                                                                                                                                                     |

***Impact      of Inflation***

**OFF-BALANCE      SHEET ARRANGEMENTS**

----

**ITEM      5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS      -**
*continued*

**CONTRACTUAL      OBLIGATIONS**

|                                                                                                                                                                                                                                                   |   | **2007** |          |   | **2006** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|---------------|--------|----------|--------|
| Prime                plus 0.25% (2007 - 8.50%) bank loan repayable in monthly instalments                of US                $2,336 including interest, due September 28, 2011, secured by a first                charge on land and $117,327 of cash |   | $        |  209,114 |   |     | $      |                  - |   |
| Less:  Current                portion                                                                                                                                                                                                        |   |     | 13,451        |   |     | $      | - |   |
|                                                                                                                                                                                                                                                   |   |     |          |   |     |   |   |   |
|                                                                                                                                                                                                                                                   |   | $        | 195,663       |   |     | $      | - |   |

|   |    |
|--------|---------|
| 2008   | $13,451 |
| 2009   | 15,838  |
| 2010   | 17,258  |
| 2011   | 18,806  |
| 2012   | 143,761 |

| **Convertible                Note Continuity:     ** | ** ** |
|-------------------------------------------------------------------------------|------------|
| **       **                                | ** ** |
| ** **                                                                    | ** ** | **U.S.                $** | ** ** | ** ** | **CND                $** | ** ** |
| ** **                                                                    | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Balance** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Balance** | ** ** | ** ** | **Balance** | ** ** |
| ** **                                                                    | ** ** | **Issued** | ** ** | ** ** | **Interest                /** | ** ** | ** ** | **March                31,** | ** ** | ** ** | **Issued** | ** ** | ** ** | **Interest                /** | ** ** | ** ** | **2007** | ** ** | ** ** | **March                31,** | ** ** | ** ** | **March                31,** | ** ** |
| **Date                of Issue**                                              | ** ** | **Principal** | ** ** | ** ** | **Penalty** | ** ** | ** ** | **2006** | ** ** | ** ** | **Principal** | ** ** | ** ** | **Penalty** | ** ** | ** ** | **Conversions** | ** ** | ** ** | **2007** | ** ** | ** ** | **2007** |   |
|                                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| July/August                2005                                               |       | $ | 1,277,200 |   |   | $ | 151,904 |   |   | $ | 1,429,104 |   |   | $ | - |   |   | $ | 119,875 |   |   | $ | (1,232,022 | ) |   | $ | 316,957 |   |   | $ | 365,958 |   |
| April                2006                                                     |       |   | - |   |   |   | - |   |   |   | - |   |   |   | 551,666 |   |   |   | 193,087 |   |   |   | (235,112 | ) |   |   | 509,641 |   |   |   | 588,431 |   |
| April                2006                                                     |       |   | - |   |   |   | - |   |   |   | - |   |   |   | 82,200 |   |   |   | 23,332 |   |   |   | (24,363 | ) |   |   | 81,169 |   |   |   | 93,718 |   |
| December                2006                                                  |       |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,500,000 |   |   |   | 39,229 |   |   |   | - |   |   |   | 1,539,229 |   |   |   | 1,777,194 |   |
| January                2007                                                   |       |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,000,000 |   |   |   | 144,316 |   |   |   | - |   |   |   | 2,144,316 |   |   |   | 2,475,828 |   |
|                                                                          |       | $ | 1,277,200 |   |   | $ | 151,904 |   |   | $ | 1,429,104 |   |   | $ | 4,133,866 |   |   | $ | 519,839 |   |   | $ | (1,491,497 | ) |   | $ | 4,591,312 |   |   | $ | 5,301,129 |   |

----

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

**DIRECTORS      AND SENIOR MANAGEMENT**

|                                |   |    |   |                                                                                                        |
|-------------------------------------|--------|---------|--------|-------------------------------------------------------------------------------------------------------------|
|                                |
| **Name**                            |   | **Age** |   | **Position**                                                                                                |
|                                |   |
| M.                Glen Kertz (1)    |   | 54      |   | Chief                Executive Officer, acting President, Chairman of the Board and                Director |
|                                |   |    |   |                                                                                                        |
| F.                George Orr (2)(3) |   | 45      |   | Chief                Financial Officer, Secretary and Director,                                             |
|                                |   |    |   |                                                                                                        |
| Robert                Wingo         |   | 61      |   | Director                                                                                                    |
|                                |   |    |   |                                                                                                        |
| Douglas                E. Ford      |   | 43      |   | Director                (resigned September 28, 2007)                                                       |
|                                |   |    |   |                                                                                                        |
| Naveen                Aggarwal      |   | 49      |   | Director                                                                                                    |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)    | Appointed                acting President, Chairman of the Board and a director by resolution                of                the board of directors, in accordance with Section 111 of the Business                Corporations Act (Alberta), following the resignation of Douglas                E. Ford                as acting President and Secretary, on July 31, 2005. Appointed Chief                Executive Officer by resolution of the board of directors in accordance                with Section 121 of the Business Corporations Act (Alberta), and                Section 6                of our bylaws on November 30, 2005. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (2)    | Appointed                director by resolution of the board of directors, in accordance with                Section 111 of the Business Corporations Act (Alberta), following                the                resignation of Larry F. Robb and Malcolm E. Rogers Jr., on July 23,                2005.                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (3)    | Appointed                Secretary by resolution of the board of directors, in accordance                with                Section 111 of the Business Corporations Act (Alberta), following                the                resignation of Douglas E. Ford as acting President and Secretary,                on July                31, 2005. Appointed Chief Financial Officer by resolution of the                board of                directors in accordance with Section 121 of the Business Corporations                Act                (Alberta), and Section 6 of our bylaws on November 30,                2005.                |

**          M.      Glen Kertz — Chief Executive Officer, acting President, Chairman of the Board      and Director**

**          F.      George Orr, C.A. — Chief Financial Officer, Secretary and      Director**

**         Robert      V. Wingo - Director**

**              Douglas E. Ford — Director **

----

**ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND      EMPLOYEES** - *continued*

**DIRECTORS      AND SENIOR MANAGEMENT**
 -*continued*

**        Naveen      Aggarwal - Director**
**  **

**COMPENSATION**

|                                                              |                                               |   |                                   |    |   |                                      |   |    |                                        |   |   |                                                            |   |
|-------------------------------------------------------------------|----------------------------------------------------|--------|----------------------------------------|---------|--------|-------------------------------------------|--------|---------|---------------------------------------------|--------|--------|-----------------------------------------------------------------|--------|
|                                                              |                                               |   |                                   |    |   |                                      |   |    |                                        |   |   |                                                            |   |
|                                                              |                                               |   | **Annual                Compensation** |    |   | **Long                Term Compensation** |   |
|                                                              |                                               |   |                                   |    |   |                                      |   |
| **Name                and Principal Position**                    | **Year****Ended****March                31, 2007** |   | **Salary**                             |    |   | **Bonus/Fees**                            |   |    | **Awards****Restricted****Stock****Awards** |   |   | **Securities****Underlying****Options/SARs                (#)** |   |
|                                                              |                                               |   |                                   |    |   |                                      |   |    |                                        |   |   |                                                            |   |
|                                                              |                                               |   |                                   |    |   |                                      |   |    |                                        |   |   |                                                            |   |
| M.                Glen KertzPresident                and Director |                                               |   |                                   | — |   |                                      | $      | 269,455 |                                        |   |   | —                                                         |   |   |   | — |   |
|                                                              |                                               |   |                                   |    |   |                                      |   |    |                                        |   |   |                                                            |   |   |   |   |   |
| Douglas                E. Ford (1)Director                        |                                               |   |                                   | — |   |                                      |   | 1,687   |                                        |   |   | —                                                         |   |   |   | — |   |
|                                                              |                                               |   |                                   |    |   |                                      |   |    |                                        |   |   |                                                            |   |   |   |   |   |
| Naveen                Aggarwal (2)Director                        |                                               |   |                                   | — |   |                                      |   | — |                                        |   |   | 300,000                                                         |   |   |   | 300,000 |   |
|                                                              |                                               |   |                                   |    |   |                                      |   |    |                                        |   |   |                                                            |   |   |   |   |   |
| F.                George Orr (3)CFO                and Director   |                                               |   |                                   | — |   |                                      |   | 33,000  |                                        |   |   | —                                                         |   |   |   | — |   |
|                                                              |                                               |   |                                   |    |   |                                      |   |    |                                        |   |   |                                                            |   |   |   |   |   |
| Robert                Wingo (4)Director                           |                                               |   |                                   | — |   |                                      |   | — |                                        |   |   | 300,000                                                         |   |   |   | 300,000 |   |
|                                                              |                                               |   |                                   |    |   |                                      |   |    |                                        |   |   |                                                            |   |   |   |   |   |
| Carlton                Parfitt (5)Director                        |                                               |   |                                   |    |   |                                      |   |    |                                        |   |   | 100,000                                                         |   |   |   |   |   |
|                                                              |                                               |   |                                   |    |   |                                      |   |    |                                        |   |   |                                                            |   |   |   |   |   |

|   |                                                                                                                                                                                                                                                                                                                                                                         |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)    | During                the year ended March 31, 2006 and 2005, Dockside Capital Group Inc.,                a                private company of which Douglas E. Ford is a directors and officer,                was                paid a total of $1,687 consulting fees and expenses. No formal agreements                are in place for the provision of these services. |
|   |                                                                                                                                                                                                                                                                                                                                                                         |
| (2)    | Under                our 2006 Stock Option Plan, Mr. Aggarwal was granted, and which are                now                fully vested, 300,000 stock options. The exercise price of these                options                is US$0.55 and such options expire December 11, 2011.                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                         |
| (3)    | Mr.                F. George Orr was appointed Secretary and a director of the Board,                and, in                November of 2005, he was appointed Chief Financial Officer of Valcent                Products Inc. He performs these duties as an independent                consultant.                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                         |
| (4)    | Under                our 2006 Stock Option Plan, Mr. Wingo was granted, and which are                now fully                vested, 300,000 stock options. The exercise price of these options                is                US$0.55 and such options expire December 11, 2011.                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                         |
| (5)    | Resigned,                effective December 14, 2006. Comprised of 100,000 restricted common                shares                awarded as compensation for services                rendered.                                                                                                                                                                              |

----

**ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND        EMPLOYEES** -*continued*

**BOARD        PRACTICES **

***Board      of Director Committees***

**EMPLOYEES**

***Full-Time      Employees***

***Consultants***

**     **

----

**ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND      EMPLOYEES** -*continued*

**SHARE      OWNERSHIP**

|                                                                           |   |                                                                |   |                                 |   |
|--------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                           |   |                                                                |   |                                 |   |
| **Name**                                                                       |   | **Amount                and****Nature                of Ownership** |   | **Percent                of Class*** |   |
|                                                                           |   |                                                                |   |                                 |   |
|                                                                           |   |                                                                |   |                                 |   |
| M.                Glen Kertz (1)                                               |   | 4,000,000                                                           |   | 13.04                                | %      |
|                                                                           |   |                                                                |   |                                 |   |
| Douglas                E. Ford (2)                                             |   | 894,261                                                             |   | 2.92                                 | %      |
|                                                                           |   |                                                                |   |                                 |   |
| F.                George Orr (3)                                               |   | 2,324,350                                                           |   | 7.58                                 | %      |
|                                                                           |   |                                                                |   |                                 |   |
| Naveen                Aggarwal (4)                                             |   | 1,000,000                                                           |   | 3.26                                 | %      |
|                                                                           |   |                                                                |   |                                 |   |
| Carlton                Parfitt (5)                                             |   | 100,000                                                             |   | **                                   | %      |
|                                                                           |   |                                                                |   |                                 |   |
| Robert                Wingo (6)                                                |   | 300,000                                                             |   | **                                   | %      |
|                                                                           |   |                                                                |   |                                 |   |
| All                officers and directorsas                a group (6 persons) |   | 8,618,611                                                           |   | 28.10                                | %      |
|                                                                           |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *      | No                director or executive officer has different voting rights from any                other                holder of our common stock. Based on 30,666,068 shares issued and                outstanding at March 31, 2007.                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **     | Beneficially                owns less than one percent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (1)    | Consists                of 4,000,000 shares of common stock beneficially owned through Pagic                LP,                previously MK Enterprises LLC. Voting and/or investment power over                all of                these securities is held by M. Glen Kertz.                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (2)    | Consists                of 32,993 shares of common stock directly owned, 561,268 shares of                common                stock beneficially owned through Dockside Capital Group Inc. Voting                and/or                investment power over all of these securities is held by Douglas                E. Ford                and Edward D. Ford in equal portions, and 300,000 fully vested stock                options with exercise price of US$0.50 and an expiration date of                2/21/2011                under our 2006 Stock Option Plan. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (3)    | Consists                of 1,546,145 unregistered shares of common stock directly owned and                778,205 unregistered shares of common stock beneficially owned through                a                spouse.                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (4)    | Consists                of Consists of 300,000 fully vested stock options with exercise price                of                US$0.55 and an expiration date of 12/13/2011 under our 2006 Stock                Option                Plan directly owned, and 700,000 unregistered shares of common stock                beneficially owned through a spouse.                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (5)    | Resigned,                effective December 14, 2006. Comprised of 100,000 restricted common                shares                awarded as compensation for services rendered.                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (6)    | Consists                of Consists of 300,000 fully vested stock options with exercise price                of                US$0.55 and an expiration date of 12/13/2011 under our 2006 Stock                Option                Plan directly owned.                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

----

**ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND        EMPLOYEES** -*continued*

**SHARE        OWNERSHIP** -*continued*

| **Name**                                        |   | **Title                of shares** |   | **Number                of Securities Underlying Options Granted** |   | **Exercise                Price (USD)** |   | **Expiration                Date** |
|-------------------------------------------------|--------|------------------------------------|--------|--------------------------------------------------------------------|--------|-----------------------------------------|--------|------------------------------------|
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Douglas                  E. Ford                |   | Common                  Stock      |   | 300,000                  (1)                                       |   | $                                       | 0.57   |                               | 02/21/2011 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Eric                  T. Enciso                 |   | Common                  Stock      |   | 150,000                  (1)                                       |   | $                                       | 0.60   |                               | 11/10/2009 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Jack                  Potts                     |   | Common                  Stock      |   | 350,000                  (2)                                       |   | $                                       | 0.60   |                               | (2) |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Edmund                  Forrest Ely             |   | Common                  Stock      |   | 350,000                  (3)                                       |   | $                                       | 0.60   |                               | (3) |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Stacy                  Anderson                 |   | Common                  Stock      |   | 50,000                  (1)                                        |   | $                                       | 0.80   |                               | 04/09/2010 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Sanders\Wingo                  Advertising Inc. |   | Common                  Stock      |   | 75,000                  (1)                                        |   | $                                       | 1.00   |                               | 3/1/2010 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Jesus                  Perez                    |   | Common                  Stock      |   | 60,000                  (1)                                        |   | $                                       | 0.60   |                               | 06/30/2010 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| David                  Lucey                    |   | Common                  Stock      |   | 100,000                  (1)                                       |   | $                                       | 0.60   |                               | 06/30/2010 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Gaye                  Davis                     |   | Common                  Stock      |   | 100,000                  (1)                                       |   | $                                       | 0.60   |                               | 06/30/2010 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| David                  Rose                     |   | Common                  Stock      |   | 100,000                  (1)                                       |   | $                                  | 0.55   |                               | 12/13/2011 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Mike                  Berry                     |   | Common                  Stock      |   | 400,000                  (1)                                       |   | $                                  | 0.55   |                               | 12/13/2011 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Bob                  Wingo                      |   | Common                  Stock      |   | 300,000                  (1)                                       |   | $                                  | 0.55   |                               | 12/13/2011 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Naveen                  Aggarwal                |   | Common                  Stock      |   | 300,000                  (1)                                       |   | $                                  | 0.55   |                               | 12/13/2011 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Grant                  Atkins                   |   | Common                  Stock      |   | 400,000                  (1)                                       |   | $                                  | 0.55   |                               | 12/13/2011 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Agnieszka                  Pinowska             |   | Common                  Stock      |   | 250,000                  (4)                                       |   | $                                  | (4)    |                               | 12/13/2011 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Kristyn                  Rose                   |   | Common                  Stock      |   | 50,000                  (1)                                        |   | $                                  | 0.60   |                               | 3/21/2012 |
|                                            |   |                               |   |                                                               |   |                                    |   |                               |   |
| Tom                  Murdoch                    |   | Common                  Stock      |   | 500,000                  (5)                                       |   | $                                  | 0.60   |                               | 3/22/2009 |
| Subtotal                                        |   |                               |   | 3,835,000                                                          |   |                                    |   |                               |   |

| (1)    | All                options are fully vested.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (2)    | Consists                of (i) a fully vested option to purchase 50,000 shares of our common                stock, expiring November 10, 2009; (ii) an option to purchase 25,000                shares of our common stock vesting January 10, 2007 and expiring                November                10, 2009; (iii) an option to purchase 75,000 shares of our common                stock                vesting May 10, 2007 and expiring November 10, 2009; (iv) an option                to                purchase 100,000 shares of our common stock vesting upon our attainment                of                positive cash flow and expiring three years from the date thereof;                and (v)                an option to purchase 100,000 shares of our common stock fully vested                expiring March 21, 2012. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (3)    | Consists                of (i) a fully vested option to purchase 50,000 shares of our common                stock, expiring March 10, 2009; (ii) an option to purchase 25,000                shares                of our common stock vesting January 10, 2007 and expiring January                10,                2010; (iii) an option to purchase 75,000 shares of our common stock                vesting May 10, 2007 and expiring May 10, 2010; and (iv) an option                to                purchase 100,000 shares of our common stock vesting upon our attainment                of                positive cash flow and expiring three years from the date thereof;                and (v)                an option to purchase 100,000 shares of our common stock fully vested                expiring March 21, 2012.      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (4)    | Consists                of (i) fully vested options to purchase 150,000 shares of our common                stock, expiring December 13, 2011 at $0.55 per share; and (ii) fully                vested options to purchase 100,000 shares of our common stock expiring                March 21, 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (5)    | Consists                of options vesting as to 75,000 share options quarterly beginning                April 1,                2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

----

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

**MAJOR      SHAREHOLDERS**

|                                                                |   |                                         |       |   |        |   |
|---------------------------------------------------------------------|--------|----------------------------------------------|------------|--------|-------------|--------|
|                                                                |   |                                         |       |
|                                                                |   | **Shares                Beneficially Owned** |       |
|                                                                |   |                                         |       |
| **Major                Shareholders**                               |   | **Number**                                   |       |   | **Percent** |   |
|                                                                |   |                                         |       |   |        |   |
| Pagic                LP (1)                                         |   |                                         | 4,000,000  |   |        |   | 12.10 | % |
|                                                                |   |                                         |       |   |        |   |   |   |
| West                Peak Ventures of Canada Ltd. (2)                |   |                                         | 2,725,002  |   |        |   | 8.12 | % |
|                                                                |   |                                         |       |   |        |   |   |   |
| Steve                McGuire (8)                                    |   |                                         | 2,000,000  |   |        |   | 6.05 | % |
|                                                                |   |                                         |       |   |        |   |   |   |
| F.                George Orr (3)                                    |   |                                         | 2,324,350  |   |        |   | 7.03 | % |
|                                                                |   |                                         |       |   |        |   |   |   |
| Pinetree                Income Partnership (4) (8)                  |   |                                         | 3,333,331  |   |        |   | 9.72 | % |
|                                                                |   |                                         |       |   |        |   |   |   |
| Agosto                Corporation Limited (5) (6) (8)               |   |                                         | 7,039,459  |   |        |   | 19.37 | % |
|                                                                |   |                                         |       |   |        |   |   |   |
| Woodburn                Holdings Ltd. (7) (6) (8)                   |   |                                         | 4,488,811  |   |        |   | 12.3 | % |
|                                                                |   |                                         |       |   |        |   |   |   |
| **Total**                                                           |   |                                         | 25,910,953 |   |        |   | 74.69 | % |
|                                                                |   |                                         |       |   |        |   |   |   |
|  Total                Shares outstanding at September 14, 2007 |   |                                         | 33,067,870 |   |        |   | 100.0 | % |
|                                                                |   |                                         |       |   |        |   |   |   |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)    | Includes                4,000,000 unregistered shares of common stock issued as of August                11,                2005, pursuant to the private offering exemption of Section 4(2)                of the                Securities Act and/or the private offering safe harbor provision                of Rule                506 of Regulation D promulgated thereunder, in partial consideration                of a                license agreement for the exclusive worldwide marketing and distribution                rights to three unrelated and proprietary potential consumer retail                products. Voting and/or investment power over these common shares                is held                by M. Glen Kertz of Pagic LP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (2)    | Includes                2,225,001 unregistered shares of common stock directly owned, 10,000                warrants to purchase common shares at US$0.50 per share until August                5,                2008, 5,000 warrants to purchase common shares at US$0.50 per share                until                July 25, 2008, 8,334 warrants to purchase common shares at US$0.75                per                share until July 25, 2008, and 16,667 warrants to purchase common                shares                at US$0.75 per share until August 5, 2008 and a US$115,000 convertible                note convertible at $US0.50 per unit into 230,000 common shares and                230,000 warrants to purchase common shares at US$0.70 per share until                December 11, 2008. Voting and/or investment power over these common                shares                is held by Timothy Brock of West Peak Ventures of Canada                Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (3)    | Consists                of 1,546,145 unregistered shares of common stock directly owned and                778,205 unregistered shares of common stock beneficially owned through                a                spouse.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (4)    | Consists                of 2,083,332 unregistered shares of common stock directly owned and                833,333 warrants to purchase common shares at US$0.75 per share until                April 24, 2009, and 416,666 warrants to purchase common shares at                US$0.80                per share until May 15, 2008.  Voting and/or investment power                over these common shares is held jointly by Larry Goldberg, Chief                Financial Officer to Pinetree Income Partnership and Sheldon Inwentash,                Chairman and Chief Executive Officer to Pinetree Income                Partnership.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (5)    | Consists                of convertible debentures for stated values as follows with conversion                figures (if applicable) based on a weighted average price of US$0.55                per                share:  (i) US$235,000 6% convertible note convertible at                $US0.50 per unit into 470,000 common shares and 470,000 warrants                to                purchase common shares at US$0.70 per share until December 11, 2008;                (ii)                US$850,000 8% convertible note convertible at the lesser of US$0.55                per                share and 70% of the average five lowest closing bid prices for the                ten                trading days preceding conversion (assume US$0.55 for purposes herein)                resulting in 2,023,809 potential common shares on conversion, and                includes                1,333,333 Class A warrants convertible into common shares at US$0.50                per                share until December 1, 2009 and 1,333,333 Class B warrants convertible                into common shares at US$1.00 per share until December 1, 2009; (iii)                $650,000 6% convertible term note convertible into units at the US$0.60                per unit, resulting in 1,083,333 common shares and 541,667 share                purchase                warrants exercisable at US$0.75 for a 3 year term from the date of                conversion.  Voting and/or investment power over these common                shares is held by Dr. J. Gordon Murphy, a resident of                Barbados. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

----

**ITEM        7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**
*continued*

**MAJOR        SHAREHOLDERS - **
*continued*

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (6)    | This                shareholder has contractually agreed with the Company to not convert                any                portion of this note that would provide this shareholder with an                equity                interest in the Company of more than 9.99% of the Company’s issued and                outstanding capital at any date while this convertible note is                outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (7)    | Consists                of 1,067,166 unregistered shares of common stock directly, and a                convertible debenture with a conversion figure based on a weighted                average                price of US$0.55 per share:  US$650,000 8% convertible note                convertible at the lesser of US$0.55 per share and 70% of the average                five                lowest closing bid prices for the ten trading days preceding conversion                (assume US$0.55 for purposes herein) resulting in 1,688,312 potential                common shares on conversion, and includes 866,667 Class A warrants                convertible into common shares at US$0.50 per share until December                1, 2009                and 866,667 Class B warrants convertible into common shares at US$1.00                per                share until December 1, 2009.  Voting and/or investment power                over these common shares is held by Robert Baker of Vancouver, British                Columbia. |
|   |

| (8) | Represents                  a greater than 5% increase over previous year’s issued and outstanding                  common share percentages. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------|

**RELATED      PARTY TRANSACTIONS**

**MANAGEMENT      FEES**

----

**ITEM        7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**
*continued*

**MANAGEMENT        FEES - **
*continued*

**OFFICE      LEASE AND RENT**

**LOANS**

***From      Directors***

***From      Shareholders***

**PROFESSIONAL      FEES**

----

**ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY      TRANSACTIONS**
*continued*

**BONUS**

**PAGIC      LP LICENSE AND RELATED TRANSACTIONS**

|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |                                           |                                                                                                                                                                                                                                                   |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (i)    | a                master license agreement for a term continuing so long as royalty                payments                continue to be made as required, for the exclusive worldwide marketing                and                distribution rights to three unrelated and proprietary potential                consumer                retail products that had previously been developed (the “Pagic Master                License”), certain of which are patent pending, including the Nova Skin                Care System, the Dust WolfTM, and the Tomorrow GardenTM Kit (collectively,                and together with any improvements thereon, the “Initial Products”) each                of which are described in fuller detail elsewhere in this annual                report.                See “Business—Potential Products” and “Business—Intellectual                Property”; |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | (vi)   | the                Pagic Master License also includes a license for a term continuing                so long                as royalty payments continue to be made as required, for the exclusive                worldwide marketing and distribution rights to any ancillary products                developed and sold for use by consumers in connection with the Initial                Products (the “Initial Ancillaries”);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | (vii)  | a                product development agreement pursuant to which we were granted a                right                for an initial period of five years to acquire a license for a term                continuing so long as royalty payments continue to be made as required,                for the exclusive worldwide marketing and distribution rights to                any new                products developed by Pagic (any such products, collectively, the                “Additional Products”, and, the agreement itself, the “Pagic Product                Development Agreement”);                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | (viii) | the                Pagic Product Development Agreement also includes a license for a                term                continuing so long as royalty payments continue to be made as required,                for the exclusive worldwide marketing and distribution rights to                any                ancillary products developed and sold for use by consumers in connection                with the Additional Products (the “Additional Ancillaries”);                and                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | (ix)   | a                related services agreement pursuant to which Pagic shall provide                consulting support in connection with the Initial Products, the Initial                Ancillaries, the Additional Products and the Additional Ancillaries                (the                “Pagic Consulting Agreement”), in exchange for the                following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | • | 20,000,000                shares of our common stock;                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | • | a                one-time US$125,000 license fee;                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | • | reimbursement                for US$125,000 in development costs associated with each of the Initial                Products since March 17, 2005; |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | • | consulting                fees of US$156,000 per year, payable monthly in advance;                and                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | • | the                greater of the following, payable annually beginning in the second                license                year:                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    | (i)                                                                                                                                                | US$400,000;                or                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    | (ii)                                                                                                                                               | the                aggregate of the following: |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               | •                                        | subject                to a minimum amount of US$37,500 per Initial Product during the second                year of the Pagic Master License, and US$50,000 each year thereafter,                continuing royalties payable quarterly at a rate of: |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |                                           |                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |                                           | :                US$10.00 per Nova Skin Care System unit sold;                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |                                           |                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |                                           | :                US$2.00 per Dust WolfTM unit sold;                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |                                           |                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |                                           | :                4.5% of annual net sales of the Tomorrow GardenTM Kit;                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                                                                                               |                                           |                                                                                                                                                                                                                                                   |

----

**ITEM      7. MAJOR SHAREHOLDERS AND RELATED PARTY      TRANSACTIONS**
*continued*

**PAGIC      LP LICENSE AND RELATED TRANSACTIONS -**
*continued*

|   |   |   |   |   |    |                                                                                                                                                                                                                                                                                                                  |
|--------|--------|--------|--------|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |   |   | and     |                                                                                                                                                                                                                                                                                                                  |
|   |   |   |   |   |    |                                                                                                                                                                                                                                                                                                                  |
|   |   |   |   |   |    | :                3% of annual net sales of Initial Ancillaries.                                                                                                                                                                                                                                                       |
|   |   |   |   |   |    |                                                                                                                                                                                                                                                                                                                  |
|   |   |   |   |   | • | a                one-time US$50,000 license fee for each Additional Product licensed                (except for one pre-identified product); and                                                                                                                                                                      |
|   |   |   |   |   |    |                                                                                                                                                                                                                                                                                                                  |
|   |   |   |   |   | • | subject                to a minimum amount of US$50,000 per year commencing with the second                year                of each corresponding license, continuing royalties of 4.5% of annual                net                sales and 3% on annual net sales of any Additional                Ancillaries. |

**GLOBAL      GREEN JOINT VENTURE**

----

**ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY      TRANSACTIONS**
*continued*

**FINDER’S      FEES**

|   |    |                                                                                                                                             |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | US$127,720                in cash, representing 10% of the gross proceeds                realized;                                               |
|   |    |                                                                                                                                             |
|   | • | 425,735                shares of our common stock;                                                                                               |
|   |    |                                                                                                                                             |
|   | • | Three-year                warrants to purchase up to 255,440 shares of our common stock at                a price                of US$0.50; and |
|   |    |                                                                                                                                             |
|   | • | Three-year                warrants to purchase up to 425,733 shares of our common stock at                a price                of US$0.75.     |

**INTERESTS      OF EXPERTS AND COUNSEL**

**ITEM      8. FINANCIAL INFORMATION**

**CONSOLIDATED      STATEMENTS AND OTHER FINANCIAL INFORMATION**

***Legal      proceedings***

***Dividend      Policy***

**SIGNIFICANT      CHANGES**

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | To                retire certain short-term obligations and existing liabilities and                to                provide additional general corporate and working capital to pursue                our                business plan, on April 6, 2006, we consummated a follow-on private                offering transaction with and among a syndicated group of institutional                investors pursuant to which we issued, in the aggregate, US$551,666                in 8%                per annum convertible notes and three-year warrants to acquire (i)                up to                735,544 shares of our common stock at a price per share of US$0.40,                and                (ii) up to an additional 735,544 shares of our common stock at a                price per                share of US$0.90. Subject to certain limitations, the principal amount                of                the notes, together with any accrued interest may be converted into                shares                of our common stock at the lesser of (i) 70% of the average of the                five                lowest closing bid prices for our common stock for the ten trading                days                prior to conversion, or (ii) US$0.55. The convertible notes carry                a                redemption feature which allows us to retire them, in whole or in                part,                for an amount equal to 130% of that portion of the face amount being                redeemed, but only in the event that our common shares have a closing                price of US$1.50 per share for at least twenty consecutive trading                days                and there has otherwise been no default. The common stock purchase                warrants carry a “net cashless” exercise feature allowing the holder                thereof, under certain limited circumstances, to exercise the warrants                without payment of the stated exercise price, but rather solely in                exchange for the cancellation of that number of common shares into                which                such warrants are exercisable.                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| • | Also                in connection with the follow-on private offering transaction, we                issued                183,886 shares of our common stock and three-year warrants to purchase                up                to an additional 110,320 shares of our common stock at a price per                share                of US$0.50 and up to an additional 183,867 shares of our common stock                at a                price of US$0.75 as partial compensation in the form of a finder’s                fee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| • | Our                registration statement on Form F-1 was originally filed with the                SEC on                April 27, 2006, which delay resulted in a reduction in the exercise                price                of the Class A and Class B warrants issued as part of the July 25,                2005                through August 5, 2005 and April 6, 2006 transactions from US$0.50                and                US$1.00 to US$0.40 and US$0.90, respectively. Moreover, as of the                date of                this annual report we are accruing penalties at a rate of 2% per                thirty                day period for having failed to have our registration statement declared                effective by June 5, 2006. As of September 13, 2006, we have accrued                up to                approximately US$123,094 in penalties under the terms of the registration                provisions of each of the July 25, 2005 through August 5, 2005 and                April                6, 2006 transactions, exclusive of those penalties previously converted                into convertible penalty notes and warrants. The penalties which                we have                accumulated to date, and any penalties which we may accumulate for                future                delays, will negatively affect our business, our financial condition                and                our results of operations, leading to a corresponding reduction in                our net                income and the likelihood of a net loss for                the year in which they are incurred. The delays in meeting our                registration obligations are a consequence, among other reasons,                of                ongoing delays resulting from our having recently undergone a significant                restructuring and change in business direction, and the unavailability                of                certain information necessary for preparing the filing. Our management                is                hopeful that we will cause our registration statement to be declared                effective in the near                future. |

----

**ITEM 8. FINANCIAL INFORMATION -**
*continued*

**SIGNIFICANT      CHANGES -**
*continued*

| • | In                connection with the July 25, 2005 through August 5, 2005 transactions,                on                April 6, 2006 we reached a verbal agreement with the syndicated group                of                institutional and other investors, to convert accruing penalties                associated with delays in our filing of a registration statement                under the                terms of the transactions, an aggregate of US$82,200, into convertible                penalty notes carrying terms similar to those notes issued in the                original                series of private offering transactions, and in addition to issue                each                investor one three-year penalty warrant for each US$0.75 of penalties                owed                to purchase, in the aggregate, up to an additional 109,600 shares                of                common stock at a price per share of US$0.75. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| • | Pursuant                to an Investor Relations Consulting Agreement with a third party                for                services provided to Valcent, SmallCap Partners Ltd. received 120,000                shares of common stock at US$0.41 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| • | On                May 31, 2006, the Company issued 786,700 shares pursuant to the license                agreement. As of June 30, 2006, 7,601,325 common shares remained                to be                issued pursuant to the license agreement and are reflected in share                subscription.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| • | On                May 15, 2006, the Company completed a private placement of units                whereby                it issued a total of 1,104,165 units at US $0.60 per unit whereby                each                unit consisted of one common share and one share purchase warrant                to                purchase an additional common share at US $0.80. Of the warrants                issued,                833,332 expire on May 15, 2008 and 270,833 on June 7, 2008. The Company                also paid consultants fees consisting of $58,860 plus 66,666 warrants                to                purchase that number of common shares at US$0.80 until May 15, 2008                and                21,666 warrants to purchase that number of common shares at US$0.80                until                June 7, 2008.·                                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| • | On                August 18, 2006, the Company completed a private placement of units                whereby it issued a total of 430,000 units at US$0.60 per unit for                a total                of US$258,000 whereby each unit consisted of one common share and                one                share purchase warrant to purchase an additional common share at                US$0.80.                The warrants issued will expire on August 18, 2008. The Company paid                consultants fees consisting of $58,860 plus 24,800 warrants to purchase                that number of common shares at US$0.80 until August 18,                2008.                                                                                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| • | We                entered into a manufacturing agreement with Solid Integrations, LLC,                for                the manufacture and assembly of our Nova Skin Care System. Under                this                agreement we will provide and make available to Solid Integrations,                LLC,                and its subcontractor(s), the raw materials, machinery, equipment,                tooling                and molds necessary for Solid Integrations, LLC, and its subcontractor(s),                to manufacture and assemble the Nova Skin Care System at a manufacturing                facility located in Mexico.                                                                                                                                                                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| • | During                the year ended March 31, 2007, $1,491,497 of the convertible note                principal and interest were converted into 3,967,157 common                shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | During                the quarter ended December 31, 2006, pursuant to Regulation S of the                Securities Act, the Company received subscriptions of US$1,500,000                from a                group of non-US accredited investors towards a private placement                of 8% per                annum convertible notes and three year warrants to acquire (i) up                to                2,000,000 shares of our common stock at a price per share of US$0.50,                and                (ii) up to an additional 2,000,000 shares of our common stock at                a price                per share of US$1.00. Subject to certain limitations, the principal                amount                of the notes, together with any accrued interest may be converted                into                shares of our common stock at the lesser of (i) seventy percent (70%)                of                the average of the five lowest closing bid prices for our common                stock for                the ten trading days prior to conversion, or (ii) US$0.55. The convertible                notes carry a redemption feature which allows us to retire them,                in whole                or in part, for an amount equal to 130% of that portion of the face                amount                being redeemed, but only in the event that our common shares have                a                closing price of US$1.50 per share for at least twenty consecutive                trading                days and there has otherwise been no default. The common stock purchase                warrants carry a “net cashless” exercise feature allowing the holder                thereof, under certain limited circumstances, to exercise the warrants                without payment of the stated exercise price, but rather solely in                exchange for the cancellation of that number of common shares into                which                such warrants are exercisable. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| • | On                January 12, 2007, pursuant to an Investor Relations Consulting Agreement                with a third party for services provided to the Company, SmallCap                Corporate Partners Inc. received a total of 160,000 shares of common                stock                at US$0.45 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| • | On                January 12, 2007, pursuant to a Public Relations Agreement with a                third                party for services provided to Valcent, Vorticom Inc. received a                total of                25,000 shares of restricted common stock and will receive 25,000                shares of                stock quarterly for the the twelve month term following the date                of the                agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| • | On                January 12, 2007, the Board of Directors authorized a bonus of 100,000                restricted common shares to a retiring director of the                Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| • | On                January 19, 2007, pursuant to a Consulting Services Agreement with                a third                party for services provided to the Company, PowerOne Capital Markets                Limited received a total of 400,000 shares of common                stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| • | On                January 29, 2007, the Company completed a private placement comprised                of                $2,000,000 convertible promissory notes with a group of non-US accredited                investors, pursuant to Regulation S of the Securities Act. The                convertible notes will mature on December 11, 2008 and carry interest                at                six percent (6%) per annum. The Notes are convertible into “Units” at the                Note Holder’s discretion at a conversion price of US$0.50 per Unit. Each                “Unit” consists of one Valcent common share and one purchase warrant to                purchase an additional common share at US$0.70 per share until December                11, 2008. The Notes and any accrued interest are callable by the                Company                at any time after December 11, 2007 by providing thirty days written                notice to the Note Holders. Interest on the Notes will be compounded                annually and be cumulative until the earlier of either the date that                the                Company’s achieves pre-tax earnings or the end of the term. Pre-tax                earnings are to be determined in accordance with Valcent’s quarterly and                annual financial statements as filed with regulatory agencies and                will be                payable thirty days after filing with such regulatory agencies. At                the                discretion of the Note Holder, interest on the Notes is payable in                either                cash or Units at US$0.50 per Unit. The Company is obligated to file                a                resale registration statement on the underlying securities within                four                months of closing.                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| • | In                connection with finders fees payable under our January 2007 $2,000,000                private placement financing of convertible promissory notes, US$108,000                in                cash was paid to PowerOne Capital Markets Limited along with 135,000                warrants issued exercisable at US$0.50 per unit, with each unit consisting                of one common share and one share purchase warrant to purchase a                further                common share at US$0.70 per share until December 11,                2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

----

**ITEM 8. FINANCIAL INFORMATION -**
*continued*

**SIGNIFICANT        CHANGES - **
*continued*

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Global                Green Joint VentureOn                October 2, 2006, the Company entered into a letter agreement with                Pagic,                West Peak Ventures of Canada Limited (“West Peak”) and Global Green                whereby Global Green agreed to fund the next phase of the development                of                our High Density Vertical Bio-Reactor technology (the “GGS Agreement”).                Pursuant to the GGS Agreement, the Company and Global Green established                a                commercial joint venture named “Vertigro”, in which Global Green has                agreed to provide up to US$3,000,000 in funding to continue the research                and development of the Bio-Reactor technology, construct a working                prototype of the Bio-Reactor and develop the technology for commercial                uses. The Company is obligated to provide product support, research                and                development, and the non-exclusive use of the Company’s warehouse and land                near El Paso, Texas, as necessary for which Global Green has agreed                to                reimburse the Company as part of its US$3,000,000 commitment. Until                such                time as the joint venture has fully repaid the US$3,000,000, Global                Green                will have an 80% joint venture interest, leaving the Company with                a 20%                carried joint venture interest, both subject to an aggregate product                license royalty of 0.9% to Pagic and West Peak. Once the joint venture                has                repaid Global Green the US$3,000,000, Global Green’s interest will be                reduced to 70% and the Company will retain a 30% non-carried interest,                both subject to an aggregate product license royalty of 4.5% to Pagic                and                West Peak. As                at March 31, 2007, Global Green had incurred a total of US$2,023,379                in                costs related to the GGS Agreement.  Of the costs incurred to                March 31, 2007, Global Green had paid US$1,653,981 and owed the Company                $426,507 (US$369,398), which is included in accounts receivable and                has                been subsequently collected. On                July 9, 2007, the parties to the GGS Agreement entered into the Vertigro                Algae Stakeholders Letter of Agreement (the “Global Green Joint Venture”),                which replaced the GGS Agreement.  Pursuant to the new                agreement, each of Global Green and the Company will hold a 50% interest                in the Global Green Joint Venture, subject to an aggregate 4.5% royalty                to                Pagic and West Peak.  The Global Green Joint Venture covers the                Bio-Reactor and any subsequent related technologies for the commercial                scale products of algae based biomass for all industrial commercial                and                retail applications including but not limited to bio-fuel, food,                health,                pharmaceutical, animal and agricultural feeds. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| • | During                the year ended March 31, 2007, the Company entered into a ten year                commercial real estate note totaling US$190,000 to fund the acquisition                of                land.  The loan is secured by the land and a US$50,000 term deposit                which is included in the prepaid expenses.  Borrowings under the                Agreement accrue interest equal to the Wall Street Journal prime                rate plus                0.25 percent adjusted annually.  The current interest rate is 8% per                annum and the current portion of the loan is $14,041.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| • | During                the year ended March 31, 2007, the Company issued 8,388,025 restricted                common shares as the remaining shares owed in conjunction with the                Licensing Agreement with Pagic LP (formerly MK Enterprises                LLC).  The Company on July 29, 2005, agreed to issue Pagic and                its assigns 20 million common shares at a deemed cost of $1,306,075,                based                on the historical cost of the license, of which 11,611,975 shares                were                issued during the year ended March 31, 2006 and the balance during                the                year ended March 31, 2007. Included in the 20 million shares issued                for                the license were 9,428,205 shares that were issued to parties that                became                related parties to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| • | Between                April 1, 2007 and July 11, 2007, the Company has issued 2,218,332                common                shares and 1,109,166 common share purchase warrants relating to                US$1,331,000 in private placement for US$0.60 units. Each warrant                allows                the holder to purchase an additional common at US$0.75 per share                for a 24                month term.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| • | On                April 1, 2007, the Company entered into an agreement with a third                party to                provide investor relations and financial services for an eight month                term                from April 1, 2007 through December 31, 2007.  The agreement                provides for the following:a)                payment of US$15,000;b)                US$3,000 in compensation per month payable quarterly;c)                a further US$2,000 payable monthly in common shares;d)                share options to purchase 500,000 shares at US$.60 exercise price                that                vest quarterly over a two year period; ande)                the issuance of 12,500 common shares at a deemed price of US$0.80                per                share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| • | On                August 10, 2007, the Company issued a convertible term promissory                note in                the amount of $650,000 to a third party.  The convertible notes                is due November 15, 2007 with interest at the rate of 6% with both                interest and principal convertible at the option of the lender at                the end                of term into units at the US$0.60 per unit, with each unit convertible                into one common share and one half share purchase warrant with each                whole                share purchase warrant exercisable at US$0.75 to purchase an additional                common shares.  The Company is required to register for trading                the securities underlying the conversion features of this convertible                note                by February 10, 2008 on a best efforts basis without                penalty.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

----

**ITEM      9. THE OFFER AND LISTING**

**OFFERING      AND LISTING DETAILS**

| **Period**                                     |   | **OTC                Bulletin Board****(USD)** |   | **TSX                Venture Exchange****(CND)** |   |
|------------------------------------------------|--------|------------------------------------------------|--------|--------------------------------------------------|--------|
|                                           |   | **High**                                       |   | **Low**                                          |   | **High** |   | **Low** |   |
|                                           |   |                                           |   |                                             |   |   |   |   |   |
| **Fiscal                year ended March 31,** |   |                                           |   |                                             |   |   |   |   |   |   |   |   |   |
| 2003                                           |   | $                                              | 0.300  |                                             | $      | 0.009 |   | $ | 1.17 |   | $ | 0.030 |   |
| 2004                                           |   | $                                              | 0.075  |                                             | $      | 0.0144 |   | $ | 0.090 |   | $ | 0.030 |   |
| 2005*                                          |   | $                                              | 0.600  |                                             | $      | 0.030 |   | $ | 0.555 |   | $ | — |   |
| 2006                                           |   | $                                              | 0.950  |                                             | $      | 0.250 |   | $ | — |   | $ | — |   |
| 2007                                           |   | $                                              | 0.840  |                                             | $      | 0.400 |   | $ | — |   | $ | — |   |
|                                           |   |                                           |   |                                             |   |   |   |   |   |   |   |   |   |
| **Quarter                ended**               |   |                                           |   |                                             |   |   |   |   |   |   |   |   |   |
| June                30, 2005                   |   | $                                              | 0.650  |                                             | $      | 0.360 |   | $ | — |   | $ | — |   |
| September                30, 2005              |   | $                                              | 0.570  |                                             | $      | 0.400 |   | $ | — |   | $ | — |   |
| December                31, 2005               |   | $                                              | 0.750  |                                             | $      | 0.410 |   | $ | — |   | $ | — |   |
| March                31, 2006                  |   | $                                              | 0.600  |                                             | $      | 0.330 |   | $ | — |   | $ | — |   |
| June                30, 2006                   |   | $                                              | 0.840  |                                             | $      | 0.700 |   | $ | — |   | $ | — |   |
| September                30, 2006              |   | $                                              | 0.750  |                                             | $      | 0.520 |   | $ | — |   | $ | — |   |
| December                31, 2006               |   | $                                              | 0.700  |                                             | $      | 0.470 |   | $ | — |   | $ | — |   |
| March                31, 2007                  |   | $                                              | 0.740  |                                             | $      | 0.600 |   | $ | — |   | $ | — |   |
| June                30, 2007                   |   | $                                              | 0.600  |                                             | $      | 0.5100 |   | $ | — |   | $ | — |   |
|                                           |   |                                           |   |                                             |   |   |   |   |   |   |   |   |   |
| **Month                ended**                 |   |                                           |   |                                             |   |   |   |   |   |   |   |   |   |
| March                31, 2007                  |   | $                                              | 0.740  |                                             | $      | 0.550 |   | $ | — |   | $ | — |   |
| April                30, 2007                  |   | $                                              | 0.670  |                                             | $      | 0.550 |   | $ | — |   | $ | — |   |
| May                31, 2007                    |   | $                                              | 0.650  |                                             | $      | 0.510 |   | $ | — |   | $ | — |   |
| June                30, 2007                   |   | $                                              | 0.660  |                                             | $      | 0.550 |   | $ | — |   | $ | — |   |
| July                31, 2007                   |   | $                                              | 0.730  |                                             | $      | 0.510 |   | $ | — |   | $ | — |   |
| August                31, 2007                 |   | $                                              | 0.650  |                                             | $      | 0.500 |   | $ | — |   | $ | — |   |

| * | Historical                price information for shares of our common stock traded on the TSX                Venture                Exchange between September 2004 and May 2005 could not reasonably                be                obtained. We voluntarily delisted from the TSX Venture Exchange on                May 3,                2005. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ITEM      9. THE OFFER AND LISTING -**
*continued*

**MARKETS**

 **ITEM      10. ADDITIONAL      INFORMATION**

**SHARE      CAPITAL**

**MEMORANDUM      AND ARTICLES OF ASSOCIATION**

***Organization,      Object and Purpose***

***Directors***

**Voting      Powers**

**Borrowing      Powers**

**Indemnification      of Directors and Officers and Limitation of Liability**

----

 **ITEM        10. ADDITIONAL        INFORMATION**
*continued*

**MEMORANDUM        AND ARTICLES OF ASSOCIATION - **
*continued*

**Qualifications**

***Common      Shares***

**Dividends**

**Voting      Rights**

**Liquidation      Rights**

***Preferred      Shares***

**Dividends**

----

 **ITEM        10. ADDITIONAL        INFORMATION**
*continued*

**MEMORANDUM        AND ARTICLES OF ASSOCIATION - **
*continued*

**Voting      Rights**

**Liquidation      Rights**

***Shareholder      Action***

***Shareholders      Meetings***

**Annual      Meetings**

**Special      Meetings**

***Share      Ownership***

----

 **ITEM        10. ADDITIONAL        INFORMATION**
*continued*

**MEMORANDUM        AND ARTICLES OF ASSOCIATION - **
*continued*

**Investment      Canada Act**

**Competition      Act**

----

 **ITEM        10. ADDITIONAL        INFORMATION**
*continued*

**MEMORANDUM        AND ARTICLES OF ASSOCIATION - **
*continued*

***Change      in Control***

**MATERIAL      CONTRACTS**

----

 **ITEM        10. ADDITIONAL        INFORMATION**
*continued*

**MATERIAL          CONTRACTS - **
*continued*

***APRIL      2006 PRIVATE OFFERING TRANSACTION***

|    |                                                                                                                                             |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------|
| • | US$55,166                in cash, representing 10% of the gross proceeds                realized;                                                |
|    |                                                                                                                                             |
| • | 183,886                shares of our common stock;                                                                                               |
|    |                                                                                                                                             |
| • | three-year                warrants to purchase up to 110,320 shares of our common stock at                a price                of US$0.50; and |
|    |                                                                                                                                             |
| • | three-year                warrants to purchase up to 183,867 shares of our common stock at                a price                of US$0.75.     |

----

 **ITEM        10. ADDITIONAL        INFORMATION**
*continued*

**MATERIAL          CONTRACTS - **
*continued*

***US      $82,200 April 2006 penalty Convertible Note***

***MAY/AUGUST      2006***

***Nova      Skin Care System – Solid Integrations, LLC Manufacturing      Agreement***

***Global      Green Joint Venture***

----

** ITEM        10. ADDITIONAL        INFORMATION**
** - **
*continued*

**MATERIAL          CONTRACTS - **
*continued*

***US$1,500,000      DECEMBER 2006 CONVERTIBLE      NOTE***

***US$2,000,000      JANUARY 2007 CONVERTIBLE NOTE***

***Long      Term Debt***

***SPRING      2007 PRIVATE PLACEMENT***

| a) | payment                of US$15,000; |
|----|--------------------------------------|

| b) | US$3,000                in compensation per month payable                quarterly; |
|----|-------------------------------------------------------------------------------------|

| c) | a                further US$2,000 payable monthly in common                shares; |
|----|------------------------------------------------------------------------------------|

| d) | share                options to purchase 500,000 shares at US$0.60 exercise price that                vest                quarterly over a two year period;                and |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e) | the                issuance of 12,500 common shares at a deemed price of US$0.80 per                share. |
|----|------------------------------------------------------------------------------------------------------------|

----

** ITEM            10. ADDITIONAL            INFORMATION**
** - **
*continued*

**MATERIAL              CONTRACTS - **
*continued*

***TERM      LOAN***

**TAXATION**

**MATERIAL      UNITED STATES FEDERAL INCOME TAX CONSEQUENCES**

|    |                                                                                                                                                                                                                                                                                                                                      |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | an                individual citizen or resident of the United States;                                                                                                                                                                                                                                                                    |
|    |                                                                                                                                                                                                                                                                                                                                      |
| • | a                corporation, or entity taxable as a corporation, that is created                or                organized under the laws of the United States or of any political                subdivision thereof or the District of Columbia;                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                      |
| • | an                estate whose income is taxable in the United States irrespective                of                source; or                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                      |
| • | a                trust if, (i) a court within the United States is able to exercise                primary                supervision over the administration of the trust, and (ii) one or                more                United States persons have the authority to control all substantial                decisions of the trust. |

----

**ITEM      10. ADDITIONAL INFORMATION - **
*continued*

**TAXATION      -**
*continued*

***Dividends***

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | to                the extent such distributions are paid out of our current or accumulated                earnings and profits, as determined for United States federal income                tax                purposes, subject to any applicable foreign tax credit, and without                a                reduction for any Canadian income tax withheld from such distributions,                such holders would generally be required to include, in their gross                income                for United States federal income tax purposes, an amount equal to                the                United States Dollar value of such distributions on the date of receipt                (based on the exchange rate on such date).          |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • | to                the extent such dividend distributions exceed our current or accumulated                earnings and profits, as determined for United States federal income                tax                purposes, the amount of any distribution so received will (i) first                be                applied to reduce a U.S. Holder’s adjusted basis in our common shares,                and, as a return of basis, will not be subject to United States federal                income tax, and (ii) thereafter, any residual amount of such distribution                will be treated as a gain from the sale or exchange of our common                shares,                which amount is taxable as a capital                gain. |

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | we                are a qualified foreign corporation—one eligible for the benefits of a                comprehensive income tax treaty with the United States, which the                United                States Treasury Department has determined to be satisfactory for                this                purpose and which includes an exchange of information program—for which                purposes the Canada-US Income Tax Convention (1980)                qualifies; |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • | we                are not a passive foreign investment company for the taxable year                during                which the dividend is paid or the immediately preceding taxable year                (which we do not believe we are, have been or anticipate that we                will                be);                                                                                                                                                                               |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • | the                Individual Holder has held the common shares for more than 60 days                during                the 121-day period beginning 60 days prior to the date on which the                common                shares become ex-dividend; and                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • | the                Individual Holder is not obligated to make related payments with                respect                to positions in substantially similar or related                property.                                                                                                                                                                                                                                                                                                 |

***Foreign      Tax Credit***

----

**ITEM        10. ADDITIONAL INFORMATION - **
*continued*

**TAXATION        -**
*continued*

***Sale,      Exchange or other Disposition of Common Shares***

***Special      Rules***

**Passive      Foreign Investment**
**Company**

**Controlled      Foreign Corporation**

----

**ITEM        10. ADDITIONAL INFORMATION - **
*continued*

**TAXATION        -**
*continued*

***United      States Federal Income Taxation of Non-U.S. Holders***

**Distributions      on our Common Shares**

**Sale,      Exchange or other Disposition of Common Shares**

**Information      Reporting and Backup Withholding Tax**

----

**ITEM        10. ADDITIONAL INFORMATION - **
*continued*

**TAXATION        -**
*continued*

**MATERIAL CANADIAN FEDERAL INCOME TAX      CONSEQUENCES**

|    |                                                                                                                                       |   |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------|--------|
| • | a                non-resident of Canada;                                                                                                   |   |
|    |                                                                                                                                       |   |   |
| • | holds                our common shares as capital property;                                                                                |   |
|    |                                                                                                                                       |   |   |
| • | deals                with us at arm’s length; and                                                                                    |   |
|    |                                                                                                                                       |   |   |
| • | does                not use or hold our common shares in or in the course of carrying                on                business in Canada. |   |

***Dividends***

|    |                                                                                                                                                                            |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | to                the extent such holder beneficially owns at least 10% of our voting                stock,                5% of the gross amount of such distribution paid; or |
|    |                                                                                                                                                                            |
| • | to                the extent such holder beneficially owns less than 10% of our voting                stock, 15% of the gross amount of such distribution                paid.  |

***Sale,      Exchange or other Disposition of Common Shares***

----

**ITEM        10. ADDITIONAL INFORMATION - **
*continued*

**TAXATION        -**
*continued*

**DOCUMENTS      ON DISPLAY**

 **ITEM      11. QUANTITATIVE AND QUALITATIVE      DISCLOSURES ABOUT MARKET RISK**

 **ITEM      12. DESCRIPTION OF SECURITIES OTHER      THAN EQUITY SECURITIES**

----

**PART      II**

 **ITEM      13. DEFAULTS, DIVIDEND ARREARAGES AND      DELINQUENCIES**

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

 **ITEM      15. CONTROLS AND      PROCEDURES**

**DISCLOSURE      CONTROLS AND PROCEDURES**

**CHANGES      IN INTERNAL CONTROL OVER FINANCIAL REPORTING**

**ITEM      16A. AUDIT COMMITTEE FINANCIAL EXPERT**

 **ITEM      16B. CODE OF      ETHICS**

----

**ITEM      16C. PRINCIPAL ACCOUNTING FEES AND      SERVICES**

**AUDIT      FEES**

**AUDIT      COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES**

**TAX      FEES**

**ALL        OTHER FEES**

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

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

----

**PART      III**

**ITEM      17. FINANCIAL STATEMENTS**

**Valcent      Products Inc.**

**(A        Development Stage Company)**

**Consolidated        Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 and 2006**

|  **Index **                                                          | **Page**  |
|--------------------------------------------------------------------------------|-----------|
|                                                                           |      |
|  Report                  of Independent Registered Public Accounting Firm |  F-1 |
|                                                                           |      |
|  Consolidated                  Financial Statements                       |      |
|                                                                           |      |
|  Consolidated                  Balance Sheets                             |  F-2 |
|                                                                           |      |
|  Consolidated                  Statements of Operations and Deficit       |  F-3 |
|                                                                           |      |
|  Consolidated                  Statements of Cash Flows                   |  F-4 |
|                                                                           |      |
|  Notes                  to Consolidated Financial Statements    |  F-5 |
|                                                                           |      |

----

**REPORT        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**TO        THE SHAREHOLDERS OF VALCENT PRODUCTS INC.**

**COMMENTS        BY AUDITORS FOR US READERS**

----

**Valcent        Products Inc.**

**(A        Development Stage Company)**

**Consolidated        Balance Sheets**

**(Expressed        in Canadian Dollars) **

----

|                                                                                                                                                                                                                                                                                          |   | **March                      31** |          |   | **March                      31** |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------------|--------|-----------------------------------|------------|
|                                                                                                                                                                                                                                                                                          |   | **2007**                          |          |   | **2006**                          |       |
| **Assets**                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                          |   |                              |          |   |                              |       |
| **Current**                                                                                                                                                                                                                                                                                   |   |                              |          |   |                              |       |
|    Cash                      and cash equivalents                                                                                                                                                                                                                              |   | $                                 | 314,972       |   |                              | $          | 12,773 |   |
|    Accounts                      receivable (Note 7)                                                                                                                                                                                                                           |   |                              | 462,055       |   |                              |       | 10,626 |   |
|    Prepaid                      expenses (Note 6)                                                                                                                                                                                                                              |   |                              | 285,690       |   |                              |       | - |   |
|    Inventories  (Note                      8)                                                                                                                                                                                                                        |   |                              | 1,236,808     |   |                              |       | - |   |
|                                                                                                                                                                                                                                                                                          |   |                              | 2,299,525     |   |                              |       | 23,399 |   |
| Restricted                      cash (Note 12)                                                                                                                                                                                                                                                |   |                              | 117,327       |   |                              |       | - |   |
| Property                      and equipment (Note 4)                                                                                                                                                                                                                                          |   |                              | 348,487       |   |                              |       | 63,327 |   |
| Product                      license (Note 5)                                                                                                                                                                                                                                                 |   |                              | 1,306,075     |   |                              |       | 1,306,075 |   |
|                                                                                                                                                                                                                                                                                          |   |                              |          |   |                              |       |   |   |
|                                                                                                                                                                                                                                                                                          |   | **$**                             | **4,071,414** |   |                              | **$**      | **1,392,801** |   |
|                                                                                                                                                                                                                                                                                          |   |                              |          |   |                              |       |   |   |
| **Liabilities                      and Shareholders' Deficiency**                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                          |   |                              |          |   |                              |       |   |   |
| **Current**                                                                                                                                                                                                                                                                                   |   |                              |          |   |                              |       |   |   |
|    Accounts                      payable and accrued liabilities                                                                                                                                                                                                               |   | $                                 | 169,650       |   |                              | $          | 199,558 |   |
|    Current                      portion of long-term debt (Note 12)                                                                                                                                                                                                            |   |                              | 13,451        |   |                              |       | - |   |
|    Promissory                      note payable                                                                                                                                                                                                                                |   |                              | 115,460       |   |                              |       | - |   |
|    Due                      to related parties (Note 10)                                                                                                                                                                                                                       |   |                              | 930,175       |   |                              |       | 69,273 |   |
|    Convertible                      notes (Note 9)                                                                                                                                                                                                                             |   |                              | 5,301,129     |   |                              |       | 1,565,069 |   |
|                                                                                                                                                                                                                                                                                          |   |                              | 6,529,865     |   |                              |       | 1,833,900 |   |
|                                                                                                                                                                                                                                                                                          |   |                              |          |   |                              |       |   |   |
|    Long-term                      debt (Note 12)                                                                                                                                                                                                                               |   |                              | 195,663       |   |                              |       | - |   |
|                                                                                                                                                                                                                                                                                          |   | ** **                        | **6,725,528** |   |                              | ** ** | **1,833,900** |   |
|                                                                                                                                                                                                                                                                                          |   |                              |          |   |                              |       |   |   |
| **Shareholders'                      Deficiency**                                                                                                                                                                                                                                             |   |                              |          |   |                              |       |   |   |
|    Share                      capital (Note 13)                                                                                                                                                                                                                                |   |                              | 7,836,903     |   |                              |       | 4,099,870 |   |
|    Contributed                      surplus (Note 13(e))                                                                                                                                                                                                                       |   |                              | 3,253,333     |   |                              |       | 1,663,067 |   |
|    Conversion                      component of convertible notes (Note 9)                                                                                                                                                                                                     |   |                              | 4,167,190     |   |                              |       | 348,532 |   |
|    Obligation                      to issue shares (Notes 5 and 13)                                                                                                                                                                                                            |   |                              | -             |   |                              |       | 419,401 |   |
|    Accumulated                      deficit from prior operations                                                                                                                                                                                                              |   |                              | (3,237,370    | )      |                              |       | (3,237,370 | ) |
|    Accumulated                      deficit during the development stage                                                                                                                                                                                                       |   |                              | (14,674,170   | )      |                              |       | (3,734,599 | ) |
|                                                                                                                                                                                                                                                                                          |   |                              | (2,654,114    | )      |                              |       | (441,099 | ) |
|                                                                                                                                                                                                                                                                                          |   | **$**                             | **4,071,414** |   |                              | **$**      | **1,392,801** |   |
|                                                                                                                                                                                                                                                                                          |   |                              |          |   |                              |       |   |   |
| Going                      concern (Note 1) and commitments (Notes 5,7,9,11 and 12)                                                                                                                                                                                                           |   |                              |          |   |                              |
|                                                                                                                                                                                                                                                                                          |   |                              |          |   |                              |       |   |   |
| On                      behalf of the board                                                                                                                                                                                                                                                   |   |                              |          |   |                              |       |   |   |
|          "Glen                      Kertz" Director                        "F.                      George Orr" Director |   |                              |          |   |                              |
|                                                                                                                                                                                                                                                                                          |   |                              |          |   |                              |       |   |   |
| See                      Notes to the Consolidated Financial Statements                                                                                                                                                                                                                       |   |                              |          |   |                              |       |   |   |
|                                                                                                                                                                                                                                                                                          |   |                              |          |   |                              |       |   |   |

----

**Valcent        Products Inc.**

**(A        Development Stage Company)**

**Consolidated        Statements of Operations and Deficit**

**(Expressed        in Canadian Dollars) **

----

|                                                                                       |   | **For                      the year ended March 31,** |           |
|--------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|----------------|
|                                                                                       |   | **2007**                                              |           |   | **2006** |   |
| **   Expenses**                                                             |   |                                                  |           |   |   |   |
|       Non-cash                      financing expense        |   | $                                                     | 4,246,203      |   |   | $ | 1,328,337 |   |
|       Product                      development               |   |                                                  | 1,562,421      |   |   |   | 689,432 |   |
|       Stock                      based compensation          |   |                                                  | 1,127,141      |   |   |   | 533,664 |   |
|       Advertising                      and media development |   |                                                  | 1,092,917      |   |   |   | - |   |
|       Professional                      fees                 |   |                                                  | 712,458        |   |   |   | 175,833 |   |
|       Interest                                               |   |                                                  | 587,309        |   |   |   | 193,987 |   |
|       Convertible                      note issuance costs   |   |                                                  | 512,573        |   |   |   | 570,226 |   |
|       Investor                      relations                |   |                                                  | 287,834        |   |   |   | 19,037 |   |
|       Office                      and miscellaneous          |   |                                                  | 281,696        |   |   |   | 38,125 |   |
|       Travel                                                 |   |                                                  | 156,498        |   |   |   | 69,600 |   |
|       Insurance                                              |   |                                                  | 149,855        |   |   |   | - |   |
|       Rent                                                   |   |                                                  | 65,693         |   |   |   | 56,771 |   |
|       Filing                      and transfer agent         |   |                                                  | 38,883         |   |   |   | 26,250 |   |
|       Depreciation                      and amortization     |   |                                                  | 25,288         |   |   |   | 9,382 |   |
|       Interest                      on long-term debt        |   |                                                  | 8,500          |   |   |   | - |   |
| **Loss                      from Operations**                                              |   | ** **                                            | **10,855,269** |   |   | ** ** | **3,710,644** |   |
| ** Other                      (Income) and expense**                                  |   |                                                  |           |   |   |   |   |   |
|       Interest                      income                   |   |                                                  | (25,704        | ) |   |   | - |   |
|       Foreign                      exchange loss             |   |                                                  | 110,006        |   |   |   | 23,955 |   |
| **Net                      loss**                                                          |   | ** **                                            | **10,939,571** |   |   | ** ** | **3,734,599** |   |
| Deficit                      during the development stage, beginning                       |   |                                                  | 3,734,599      |   |   |   | - |   |
| Deficit                      during the development stage, ending                          |   | **$**                                                 | **14,674,170** |   |   | **$** | **3,734,599** |   |
|                                                                                       |   |                                                  |           |   |   |   |   |   |
| **Loss                      per share - basic**                                            |   | **$**                                                 | **0.57**       |   |   | **$** | **0.35** |   |
| **Weighted                      average number of common**                                 |   |                                                  |           |   |   |   |   |   |
| **shares                      outstanding**                                                |   |                                                  | 19,261,192     |   |   |   | 10,548,042 |   |
|                                                                                       |   |                                                  |           |   |   |   |   |   |
| See                      Notes to the Consolidated Financial Statements                    |   |                                                  |           |   |   |
|                                                                                       |   |                                                  |           |   |   |   |   |   |

----

**Valcent        Products Inc.**

**(A        Development Stage Company)**

**Consolidated        Statements of Cash Flows**

**(Expressed        in Canadian Dollars)**

----

|                                                                                                              |   | **For                    the year ended March 31,** |        |
|-------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|-------------|
|                                                                                                              |   | **2007**                                            |        |   | **2006** |   |
| **Cash                    provided by (used in)**                                                                 |   |                                                |        |   |   |   |
| **Operating                    activities**                                                                       |   |                                                |        |   |   |   |
|   Net                    loss for year                                                                  |   | $                                                   | (10,939,571 | ) |   | $ | (3,734,599 | ) |
|   Items                    not involving cash                                                           |   |                                                |        |   |   |   |   |   |
|       Non-cash                    financing expense                                 |   |                                                | 4,246,203   |   |   |   | 1,328,337 |   |
|       Convertible                    note issuance costs                            |   |                                                | 107,681     |   |   |   | 285,242 |   |
|       Stock                    based compensation                                   |   |                                                | 1,127,141   |   |   |   | 533,664 |   |
|       Consulting                                                                    |   |                                                | 52,708      |   |   |   | - |   |
|       Investor                    relations                                         |   |                                                | 174,924     |   |   |   | - |   |
|       Interest                                                                      |   |                                                | 587,309     |   |   |   | 191,339 |   |
|       Depreciation                    and amortization                              |   |                                                | 25,288      |   |   |   | 9,382 |   |
|   Changes                    in non-cash working                                                        |   |                                                |        |   |   |   |   |   |
|   capital                    items                                                                      |   |                                                | (1,682,565  | ) |   |   | 104,109 |   |
|                                                                                                              |   |                                                | (6,300,882  | ) |   |   | (1,282,526 | ) |
| **Investing                    activities**                                                                       |   |                                                |        |   |   |   |   |   |
|   Product                    license                                                                    |   |                                                | -           |   |   |   | (306,075 | ) |
|   Property                    and equipment                                                             |   |                                                | (218,661    | ) |   |   | (72,709 | ) |
|                                                                                                              |   |                                                | (218,661    | ) |   |   | (378,784 | ) |
| **Financing                    activities**                                                                       |   |                                                |        |   |   |   |   |   |
|    Advances                    from (repayments to) related parties                                |   |                                                | 860,902     |   |   |   | (84,076 | ) |
|    Proceeds                    from issuance of common shares                                      |   |                                                | 1,028,266   |   |   |   | - |   |
|    Promissory                    note payable                                                      |   |                                                | 115,460     |   |   |   | - |   |
|    Proceeds                    from issuance of convertible notes                                  |   |                                                | 4,817,114   |   |   |   | 1,523,328 |   |
|    Shares                    issued for settlement of debt                                         |   |                                                | -           |   |   |   | 234,609 |   |
|                                                                                                              |   |                                                | 6,821,742   |   |   |   | 1,673,861 |   |
| Increase                    in cash and cash equivalents during year                                              |   |                                                | 302,199     |   |   |   | 12,551 |   |
| **Cash                    and cash equivalents**                                                                  |   |                                                |        |   |   |   |   |   |
| **  Beginning                    of year**                                                              |   |                                                | 12,773      |   |   |   | 222 |   |
| **  End                    of year**                                                                    |   | $                                                   | 314,972     |   |   | $ | 12,773 |   |
| **Supplemental                    Cash Flow Information**                                                         |   |                                                |        |   |   |   |   |   |
| **    **Property                    acquired for long-term debt                               |   | $                                                   | 91,787      |   |   | $ | - |   |
|    Shares                    issued as finders fee                                                 |   | $                                                   | -           |   |   | $ | 285,242 |   |
|    Shares                    issued for product license (Note 13)                                  |   | $                                                   | 419,401     |   |   | $ | 580,599 |   |
|    Shares                    issued for investor relations / public                                |   |                                                |        |   |   |   |   |   |
|            relations                    services (Note 13) |   | $                                                   | 460,614     |   |   | $ | - |   |
|    Shares                    issued as bonus to director (Note 13)                                 |   | $                                                   | 52,708      |   |   | $ | - |   |
|    Shares                    issued for financial consulting services                              |   |                                                |        |   |   |   |   |   |
|            (Note                    13)                    |   | $                                                   | 107,681     |   |   | $ | - |   |
|    Shares                    issued on conversion of convertible debt                              |   |                                                | 1,668,363   |   |   | $ | - |   |
|            (Note                    13)                    |   |                                                |        |   |   |   |   |   |
|                                                                                                              |   |                                                |        |   |   |   |   |   |
| See                    Notes to the Consolidated Financial Statements                                             |   |                                                |        |   |   |   |   |   |
|                                                                                                              |   |                                                |        |   |   |   |   |   |

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **1.** | **Nature                  of Business and Ability to Continue as a Going                  Concern** |
|--------|-----------------------------------------------------------------------------------------------------|

| **2.** | **Significant                  Accounting Policies** |
|--------|------------------------------------------------------|

|   | a) | Principles                  of consolidation |
|--------|----|----------------------------------------------|

|   | b) | Product                  development costs |
|--------|----|--------------------------------------------|

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **2.** | **Significant                  Accounting Policies                  (continued)** |
|--------|-----------------------------------------------------------------------------------|

|   | c) | Cash                  and cash equivalents |
|--------|----|--------------------------------------------|

|   | d) | Inventories |
|--------|----|-------------|

|   | e) | Property                  and equipment |
|--------|----|-----------------------------------------|

|   | f) | Foreign                  currency transactions and                  translation |
|--------|----|---------------------------------------------------------------------------------|

|   | i. | Monetary                  assets and liabilities, at the year end exchange                  rates; |
|--------|----|----------------------------------------------------------------------------------------------------|

|   | ii. | Non-monetary                  assets and liabilities, at exchange rates approximating those prevailing                  on the dates of the transactions;                  and |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iii. | Revenue                  and expense items, at the average rate of exchange by                  quarter. |
|--------|------|----------------------------------------------------------------------------------------------------------|

|   | g) | Use                  of estimates |
|--------|----|-----------------------------------|

|   | h) | Loss                  per share |
|--------|----|---------------------------------|

|   | i) | Stock                  based compensation |
|--------|----|-------------------------------------------|

----

**  Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **2.** | **Significant                  Accounting Policies                  (continued)** |
|--------|-----------------------------------------------------------------------------------|

|   | j) | Income                  taxes |
|--------|----|-------------------------------|

|   | k) | Non-monetary                      consideration |
|--------|----|-------------------------------------------------|

| **3.** | **Financial                  Instruments** |
|--------|--------------------------------------------|

|   | a) | Fair                    value |
|--------|----|-------------------------------|

|   | b) | Interest                      rate risk |
|--------|----|-----------------------------------------|

|   | (i) | 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. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | 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. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **3.** | **Financial                  Instruments* *(continued)** |
|--------|---------------------------------------------------------------|

|   | c) | Credit                        risk |
|--------|----|------------------------------------|

| **4.** | **Property                  and Equipment** |
|--------|---------------------------------------------|

|                                      |   |                              |    |   | Accumulated                       |                              |   |                                  |                            |
|-------------------------------------------|--------|-----------------------------------|---------|--------|-----------------------------------|-----------------------------------|--------|---------------------------------------|---------------------------------|
|                                      |   |                              |    |   | Depreciation                    / |                              |   | **Net                    Book**       |                            |
|                                      |   | Cost                              |    |   | Amortization                      |                              |   | **Value**                             |                            |
|                                      |   | March                    31, 2007 |    |   | March                    31, 2007 |                              |   | **March                    31, 2007** |                            |
|                                      |   |                              |    |   |                              |                              |   |                                  |                            |
| Leasehold                    improvements |   | $                                 | 20,991  |   |                              | $                                 | 11,180 |                                  |                            | **$** | **9,811** |   |
| Computer                    equipment     |   |                              | 34,985  |   |                              |                              | 13,798 |                                  |                            | ** ** | **21,187** |   |
| Furniture                    and fixtures |   |                              | 51,941  |   |                              |                              | 9,692  |                                  |                            | ** ** | **42,249** |   |
| Land                                      |   |                              | 275,240 |   |                              |                              | -      |                                  |                            | ** ** | **275,240** |   |
|                                      |   | $                                 | 383,157 |   |                              | $                                 | 34,670 |                                  |                            | **$** | **348,487** |   |
|                                      |   |                              |    |   |                              |                              |   |                                  |                            |   |   |   |
|                                      |   |                              |    |   |                              | Accumulated                       |   |                                  |                            |   |   |
|                                      |   |                              |    |   |                              | Depreciation                    / |   |                                  | **Net                    Book** |   |
|                                      |   | Cost                              |    |   | Amortization                      |                              |   | **Value**                             |                            |
|                                      |   | March                    31, 2006 |    |   | March                    31, 2006 |                              |   | **March                    31, 2006** |                            |
|                                      |   |                              |    |   |                              |                              |   |                                  |                            |   |   |   |
| Leasehold                    improvements |   | $                                 | 20,876  |   |                              | $                                 | 2,783  |                                  |                            | **$** | **18,093** |   |
| Computer                    equipment     |   |                              | 28,321  |   |                              |                              | 4,248  |                                  |                            | ** ** | **24,073** |   |
| Furniture                    and fixtures |   |                              | 23,512  |   |                              |                              | 2,351  |                                  |                            | ** ** | **21,161** |   |
|                                      |   | $                                 | 72,709  |   |                              | $                                 | 9,382  |                                  |                            | **$** | **63,327** |   |
|                                      |   |                              |    |   |                              |                              |   |                                  |                            |   |   |   |

| **5.** | **Product                  License** |
|--------|--------------------------------------|

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **5.** | **Product                    License (continued)** |
|--------|----------------------------------------------------|

| **6.** | **Prepaid                  Expenses** |
|--------|---------------------------------------|

| **7.** | **Global                  Green Joint Venture** |
|--------|-------------------------------------------------|

| **8.** | **Inventories** |
|--------|-----------------|

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **9.** | **Convertible                  Notes** |
|--------|----------------------------------------|

|                                                       |   | **2007** | ** ** | ** ** | **2006** |   |
|------------------------------------------------------------|--------|----------|------------|------------|----------|--------|
|                                                       |   |     |       |       |     |   |
| Opening                  balance, March 31,                |   | $        | 1,565,069  |       |     | $      | - |   |
| Issued                                                     |   |     | 4,772,962  |       |     |   | 1,714,667 |   |
| Interest                  and penalties                    |   |     | 600,206    |       |     |   | - |   |
| Conversion                  component of convertible notes |   |     | (4,167,190 | )          |     |   | (348,532 | ) |
| Debt                  discount                             |   |     | 2,530,082  |       |     |   | 198,934 |   |
| Ending                  balance, March 31,                 |   | $        | 5,301,129  |       |     | $      | 1,565,069 |   |
|                                                       |   |     |       |       |     |   |   |   |

| ** Convertible                  Note Continuity:** | ** ** | ** ** | ** **          | ** **                         | ** ** | ** ** | ** **                              | ** ** | ** ** | ** ** | ** **                             | ** ** | ** ** | ** ** | ** **          | ** ** | ** ** | ** ** | ** **                              | ** ** | ** ** | ** ** | ** **            | ** ** | ** ** | ** ** | ** **                             | ** ** | ** ** | ** ** | ** **                             | ** ** |
|---------------------------------------------------------|------------|------------|---------------------|------------------------------------|------------|------------|-----------------------------------------|------------|------------|------------|----------------------------------------|------------|------------|------------|---------------------|------------|------------|------------|-----------------------------------------|------------|------------|------------|-----------------------|------------|------------|------------|----------------------------------------|------------|------------|------------|----------------------------------------|------------|
| ** **                                              | ** ** | ** ** | ** **          | ** **                         | ** ** | ** ** | ** **                              | ** ** | ** ** | ** ** | ** **                             | ** ** | ** ** | ** ** | ** **          | ** ** | ** ** | ** ** | ** **                              | ** ** | ** ** | ** ** | ** **            | ** ** | ** ** | ** ** | ** **                             | ** ** | ** ** | ** ** | ** **                             | ** ** |
| ** U.S.                    $**                     | ** ** | ** ** | ** **          | **CND                    $ ** | ** ** |
| ** **                                              | ** ** | ** ** | ** **          | ** **                         | ** ** | ** ** | ** **                              | ** ** | ** ** | ** ** | **Balance **                      | ** ** | ** ** | ** ** | ** **          | ** ** | ** ** | ** ** | ** **                              | ** ** | ** ** | ** ** | ** **            | ** ** | ** ** | ** ** | **Balance **                      | ** ** | ** ** | ** ** | **Balance **                      | ** ** |
| ** **                                              | ** ** | ** ** | **Issued **    | ** **                         | ** ** | ** ** | **Interest                    / ** | ** ** | ** ** | ** ** | **March                    31, ** | ** ** | ** ** | ** ** | **Issued **    | ** ** | ** ** | ** ** | **Interest                    / ** | ** ** | ** ** | ** ** | **2007 **        | ** ** | ** ** | ** ** | **March                    31, ** | ** ** | ** ** | ** ** | **March                    31, ** | ** ** |
| ** Date                    of Issue**              | ** ** | ** ** | **Principal ** | ** **                         | ** ** | ** ** | **Penalty **                       | ** ** | ** ** | ** ** | **2006 **                         | ** ** | ** ** | ** ** | **Principal ** | ** ** | ** ** | ** ** | **Penalty **                       | ** ** | ** ** | ** ** | **Conversions ** | ** ** | ** ** | ** ** | **2007 **                         | ** ** | ** ** | ** ** | **2007**                          |       |
|                                                    |       |       |                |                               |       |       |                                    |       |       |       |                                   |       |       |       |                |       |       |       |                                    |       |       |       |                  |       |       |       |                                   |       |       |       |                                   |       |
| July/August                    2005 (Note 9a)      |       | $          | 1,277,200           |                               |       | $          | 151,904                                 |       |       | $          | 1,429,104                              |       |       | $          | -                   |       |       | $          | 119,875                                 |       |       | $          | (1,232,022            | )          |       | $          | 316,957                                |       |       | $          | 365,958                                |       |
| April                    2006 (Note 9b)            |       |       | -                   |                               |       |       | -                                       |       |       |       | -                                      |       |       |       | 551,666             |       |       |       | 193,087                                 |       |       |       | (235,112              | )          |       |       | 509,641                                |       |       |       | 588,431                                |       |
| April                    2006 (Note 9c)            |       |       | -                   |                               |       |       | -                                       |       |       |       | -                                      |       |       |       | 82,200              |       |       |       | 23,332                                  |       |       |       | (24,363               | )          |       |       | 81,169                                 |       |       |       | 93,718                                 |       |
| December                    2006 (Note 9d)         |       |       | -                   |                               |       |       | -                                       |       |       |       | -                                      |       |       |       | 1,500,000           |       |       |       | 39,229                                  |       |       |       | -                     |       |       |       | 1,539,229                              |       |       |       | 1,777,194                              |       |
| January                    2007 (Note 9e)          |       |       | -                   |                               |       |       | -                                       |       |       |       | -                                      |       |       |       | 2,000,000           |       |       |       | 144,316                                 |       |       |       | -                     |       |       |       | 2,144,316                              |       |       |       | 2,475,828                              |       |
|                                                    |       | $          | 1,277,200           |                               |       | $          | 151,904                                 |       |       | $          | 1,429,104                              |       |       | $          | 4,133,866           |       |       | $          | 519,839                                 |       |       | $          | (1,491,497            | )          |       | $          | 4,591,312                              |       |       | $          | 5,301,129                              |       |

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **9.** | **Convertible                  Notes (continued)** |
|--------|----------------------------------------------------|

|  | **A.** | **US$1,277,200                  July – August 2005 Convertible                  Note** |
|--|--------|----------------------------------------------------------------------------------------------|

|  | **B.** | **US$551,666                  April 2006 Convertible                  Note** |
|--|--------|------------------------------------------------------------------------------|

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **9.** | **Convertible                  Notes (continued)** |
|--------|----------------------------------------------------|

|  | **C.** | **US                  $82,200 April 2006 penalty Convertible                  Note** |
|--|--------|--------------------------------------------------------------------------------------|

|  | **D.** | **US$1,500,000                  December 2006 Convertible                  Note** |
|--|--------|-----------------------------------------------------------------------------------|

|  | **E.** | **US$2,000,000                  January 2007 Convertible                  Note** |
|--|--------|----------------------------------------------------------------------------------|

|  | **F.** | **Warrant                  Exercise Price Reduction and Registration Penalty                  Interest** |
|--|--------|----------------------------------------------------------------------------------------------------------|

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **10.** | **Related                  Party Transactions** |
|---------|-------------------------------------------------|

| **11.** | **Commitments** |
|---------|-----------------|

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **12.** | **Long-Term                  Debt** |
|---------|-------------------------------------|

|                                                                                                                                                                                                                                                                           |   | **2007** |          |   | **2006** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|---------------|--------|----------|--------|
| Prime                  plus 0.25% (2007 -8.50%) bank loan repayable in monthly instalments                  of US                  $2,336 including interest, due September 28, 2011, secured by a                  first                  charge on land and $117,327 of cash |   | $        |  209,114 |   |     | $      |                    - |   |
| Less:  Current                  portion                                                                                                                                                                                                                              |   |     | 13,451        |   |     | $      | - |   |
|                                                                                                                                                                                                                                                                           |   |     |          |   |     |   |   |   |
|                                                                                                                                                                                                                                                                           |   | $        | 195,663       |   |     | $      | - |   |

|   |    |
|--------|---------|
| 2008   | $13,451 |
| 2009   | 15,838  |
| 2010   | 17,258  |
| 2011   | 18,806  |
| 2012   | 143,761 |

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **13.** | **Share                  Capital** |
|---------|------------------------------------|

|  | (a) | Authorized: |
|--|-----|-------------|

|  | (b) | Issued                  and outstanding: |
|--|-----|------------------------------------------|

|                                                                          |   | **Number                    of** |       |   |       |   |
|-------------------------------------------------------------------------------|--------|----------------------------------|------------|--------|------------|--------|
|                                                                          |   | **Shares**                       |       |   | **Amount** |   |
| **Balance                    at March 31, 2005**                              |   |                             | 6,435,374  |   |       | $      | 2,999,420 |   |
| Consolidation:                    1 new share for 3 old shares                |   |                             | (4,290,249 | )      |       |   | - |   |
| Debt                    settlement                                            |   |                             | 1,605,000  |   |       |   | 234,609 |   |
| Product                    license purchase agreement                         |   |                             | 11,611,975 |   |       |   | 580,599 |   |
| Shares                    issued for financial consulting fees                |   |                             | 425,735    |   |       |   | 285,242 |   |
| **Balance                    at March 31, 2006**                              |   |                             | 15,787,835 |   |       |   | 4,099,870 |   |
| Product                    license purchase agreement                         |   |                             | 8,388,025  |   |       |   | 419,401 |   |
| Consulting                    agreement with investor/public relations firms  |   |                             | 705,000    |   |       |   | 460,614 |   |
| Bonus                    to director                                          |   |                             | 100,000    |   |       |   | 52,708 |   |
| Private                    placement                                          |   |                             | 1,534,165  |   |       |   | 1,028,266 |   |
| Shares                    issued for financial consulting fees                |   |                             | 183,886    |   |       |   | 107,681 |   |
| Convertible                    debenture conversion of principle and interest |   |                             | 3,967,157  |   |       |   | 1,668,363 |   |
| **Balance                    as of March 31, 2007**                           |   |                             | 30,666,068 |   |       | $      | 7,836,903 |   |
|                                                                          |   |                             |       |   |       |   |   |   |

|   | i) | Consolidated                  its common shares three for one; |
|--------|----|----------------------------------------------------------------|

|   | ii) | Issued                  1,605,000 post-consolidated common shares, for the settlement of                  $234,609                  of debt; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | iii) | Issued                  11,611,975 common shares pursuant to the License Agreement (Note                  5); |
|--------|------|---------------------------------------------------------------------------------------------------------------|

|   | iv) | Issued                  425,735 common shares to finders pursuant to the issuance of convertible                  notes (Note 9 (a)). |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------|

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **13.** | **Share                    Capital                    (continued*)*** |
|---------|-----------------------------------------------------------------------|

|   | i) | Issued                  8,388,025 shares pursuant to the License Agreement (Note                  5). |
|--------|----|-------------------------------------------------------------------------------------------------------|

|   | ii) | Completed                  a private placement of units whereby a total of 1,534,165 units                  were                  issued at US$0.60 per unit. Each unit consists of one common share                  and one                  common share purchase warrant to purchase an additional common                  share at                  US$0.80. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iii) | In                  conjunction with the April 6, 2006 convertible note offering the                  Company                  paid finders fees of US$55,166 cash, representing 10% of the gross                  proceeds realized, issued 183,886 common shares, issued 183,867                  three year                  Finders B Warrants to purchase up to 183,867 common shares at a                  price per                  share of US$0.75 and 110,320 three year Finders A Warrants to purchase                  up                  to 110,320 common shares at a price per share of                  US$0.50. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iv) | Issued                  120,000 common shares at US$0.45 per common share for investor                  relations                  services provided to the Company. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | v) | Issued                  400,000 common shares at US$0.64 per common share pursuant to a                  contract                  whereby a Company is to provide investor relations services to                  the Company                  for a term of one year (Note 6). |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | vi) | Issued                  160,000 common shares at US$0.45 per common share pursuant to a                  contract                  whereby a Company is to provide investor relations services to                  the Company                  for a term of one year (Note 6). |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | vii) | Issued                  25,000 common shares at US$0.45 per common share pursuant to a                  contract                  whereby a Company is to provide public relations services to the                  Company                  for a term of one year (Note 11). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | viii) | Issued                  100,000 common shares at US$0.45 per common share to a retiring                  director                  of the Company in recognition of services rendered;                  and |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ix) | Issued                  3,967,157 common shares upon receiving conversion notices to convert                  US$1,491,497 in principal and interest from holders of convertible                  notes. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **13.** | **Share                  Capital (continued)** |
|---------|------------------------------------------------|

|  | (c) | Stock                  options |
|--|-----|--------------------------------|

|                                                 |       |                            | ** ** | ** ** | **Weighted** | ** ** |
|------------------------------------------------------|------------|---------------------------------|------------|------------|--------------|------------|
| ** **                                           | ** ** | ** **                      | ** ** | ** ** | **Average**  | ** ** |
| ** **                                           | ** ** | **Number**                      | ** ** | ** ** | **Exercise** | ** ** |
| ** **                                           | ** ** | **of                  Options** | ** ** | ** ** | **Price**    |       |
|                                                 |       |                            |       |       |         |       |
| Options,                  March 31, 2005             |       |                            | -          |       |         |       | - |   |
| Granted                                              |       |                            | 1,425,000  |       |         | US$0.67    |   |
| Options                  Outstanding, March 31, 2006 |       |                            | 1,425,000  |       |         | US$0.67    |   |
| Granted                                              |       |                            | 3,010,000  |       |         | US$0.59    |   |
| Expired                  or Forfeited                |       |                            | (600,000   | )          |         | US$0.61    |   |
| Options                  Outstanding, March 31, 2007 |       |                            | 3,835,000  |       |         | US$0.58    |   |
| Options                  Exercisable, March 31, 2007 |       |                            | 2,660,000  |       |         | US$0.58    |   |

|                               | **US                  $**                                         | ** **                                 | ** **                            |
|------------------------------------|-------------------------------------------------------------------|--------------------------------------------|---------------------------------------|
| ** **                         | **Exercise**                                                      | **Number                  of Shares**      | **Number                  of Shares** |
| **Expiry                  Date**   | **Price**                                                         | **2007**                                   | **2006**                              |
|                               |                                                              |                                       |                                  |
| October                  17, 2006  | $         0.50       | -                                          | 200,000                               |
| October                  17, 2006  | $         0.45       | -                                          | 100,000                               |
| March                  22, 2009    |  $         0.60 |      500,000      | -                                     |
| November                  10, 2009 |  $         0.60 |      650,000      | 750,000                               |
| March                  1, 2010     |  $         1.00 |       75,000 | 75,000                                |
| April                  9, 2010     |  $         0.80 |       50,000 | -                                     |
| June                  30, 2010     |  $         0.60 |      260,000      | -                                     |
| February                  21, 2011 |  $         0.57 |      300,000      | 300,000                               |
| December                  13, 2011 |  $         0.55 |      1,550,000    | -                                     |
| December                  13, 2011 |  $         0.60 |      100,000      | -                                     |
| March                  21, 2012    |  $         0.60 |      350,000      | -                                     |
|                               |                                                              | **3,835,000**                              | **1,425,000**                         |

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **13.** | **Share                  Capital                  (continued*)*** |
|---------|-------------------------------------------------------------------|

|  | (c) | Stock                  options (continued) |
|--|-----|--------------------------------------------|

|   | i) | Granted                  employees a total of 750,000 options exercisable at US$0.60 per                  share                  until November 10, 2009 of which 300,000 options had vested to                  March 31,                  2007 and 100,000 options were                  forfeited; |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ii) | Granted                  a consultant 75,000 options exercisable at US$1.00 per share until                  March                  1, 2010 of which all had vested to March 31,                  2007; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iii) | Granted                  a director 300,000 options exercisable at US$0.50 per share until                  February                  21, 2011 of which all had vested to March 31,                  2007; |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iv) | Granted                  200,000 options exercisable at US$0.50 to two consultants of the                  Company                  of which all had expired as at March 31, 2007;                  and |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | v) | Granted                  100,000 options exercisable at $0.45 to a director of the Company                  which                  subsequently expired upon the directors’                  retirement. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **13.** | **Share                    Capital                    (continued*)*** |
|---------|-----------------------------------------------------------------------|

|  | (c) | Stock                    options (continued) |
|--|-----|----------------------------------------------|

|   | i) | Granted                  a consultant and a director/consultant, 700,000 share options exercisable                  at US$0.55 per share until December 13, 2011 under the non-qualified                  2006                  Plan, of which 475,000 have vested; |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ii) | Granted                  employees and consultants 260,000 options exercisable at US$0.60                  per share                  until June 30, 2010 of which all have                  vested; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iii) | Granted                  an employee 250,000 options exercisable at US$0.80 per share until                  April                  9, 2010 of which 200,000 were forfeited and 50,000 have                  vested; |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iv) | Granted                  employees, directors and consultants a total of 950,000 options                  exercisable at US$0.55 to US$0.60 per share until December 13,                  2011 of                  which 850,000 have vested; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | v) | Granted                  employees and consultants a total of 350,000 options exercisable                  at                  US$0.60 per share until March 21, 2012 of which all have vested;                  and |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | vi) | Granted                  a consultant a total of 500,000 options exercisable at US$0.60                  per share                  until March 22, 2009 of which 75,000 will vest quarterly beginning                  on                  April 1, 2007. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                   | **            2007**               | **             2006**               |
|----------------------------------------|------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------|
|                                   |                                                                                           |                                                                                                 |
| Expected                  life (years) |             2                  - 4 |             1                  – 5 |
| Interest                  rate         | 4.64%                                                                                          |              4.19%                  |
| Volatility                             | 111.90%                                                                                        |          105.49%                                        |
| Dividend                  yield        | 0.00%                                                                                          |               0.00%            |

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **13.** | **Share                      Capital                      (continued*)*** |
|---------|---------------------------------------------------------------------------|

|  | (d) | Warrants |
|--|-----|----------|

|                                          | ** ** | ** **                     | ** ** | ** ** | **Weighted** | ** ** |
|-----------------------------------------------|------------|--------------------------------|------------|------------|--------------|------------|
| ** **                                    | ** ** | **Number**                     | ** ** | ** ** | **Average**  | ** ** |
| ** **                                    | ** ** | **of                  Shares** | ** ** | ** ** | **Price**    |       |
| Warrants                  outstanding         |       |                           |       |       |         |       |
|   and                  exercisable, |       |                           |       |       |         |       |
|   March                  31, 2005   |       |                           | -          |       |         |       | - |   |
| Granted                                       |       |                           | 4,087,021  |       |         | US$0.69    |   |
| Warrants                  outstanding         |       |                           |       |       |         |       |   |   |
|   and                  exercisable, |       |                           |       |       |         |       |   |   |
| March                  31, 2006               |       |                           | 4,087,021  |       |         | US$0.69    |   |
| Granted                                       |       |                           | 7,666,795  |       |         | US$0.74    |   |
| Warrants                  outstanding         |       |                           |       |       |         |       |   |   |
|   and                  exercisable, |       |                           |       |       |         |       |   |   |
| March                  31, 2007               |       |                           | 11,753,816 |       |         | US$0.73    |   |

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **13.** | **Share                    Capital                    (continued*)*** |
|---------|-----------------------------------------------------------------------|

|  | (d) | Warrants |
|--|-----|----------|

| Expiry                  Date                    | Exercise                  Price | Number                  of Warrants |
|-------------------------------------------------|---------------------------------|-------------------------------------|
|                                            |                            |                                |   |
|                                            |                            |                                |   |
| July                  25, 2008 Class A          | US$0.50                         | 526,660                             |   |
| July                  25, 2008 Class A          | US$0.40                         | 913,332                             |   |
| July                  25, 2008 Class B          | US$1.00                         | 526,660                             |   |
| July                  25, 2008 Class B          | US$0.90                         | 913,332                             |   |
| July                  25, 2008 Finders A        | US$0.50                         | 216,000                             |   |
| July                  25, 2008 Finders B        | US$0.75                         | 360,001                             |   |
| August                  5, 2008 Class A         | US$0.50                         | 262,932                             |   |
| August                  5, 2008 Class B         | US$0.75                         | 262,932                             |   |
| August                  5, 2008 Finders A       | US$0.50                         | 39,440                              |   |
| August                  5, 2008 Finders B       | US$0.75                         | 65,733                              |   |
| April                  6, 2009 Penalty Warrants | US$0.65                         | 109,600                             |   |
| April,                  2009 Class A            | US$0.40                         | 735,555                             |   |
| April,                  2009 Class B            | US$0.90                         | 735,555                             |   |
| April,                  2009 Finders A          | US$0.50                         | 110,320                             |   |
| April,                  2009 Finders B          | US$0.75                         | 183,867                             |   |
| May                  15, 2008 Class A           | US$0.80                         | 833,332                             |   |
| June                  7, 2008 Class A           | US$0.80                         | 270,833                             |   |
| August                  18, 2008 Class A        | US$0.80                         | 430,000                             |   |
| May                  15, 2008 Finders A         | US$0.80                         | 66,666                              |   |
| June                  7, 2008 Finders A         | US$0.80                         | 21,666                              |   |
| August                  18, 2008 Finders A      | US$0.80                         | 34,400                              |   |
| December                  11, 2008 Finders Unit | US$0.50                         | 135,000                             |   |
| December                  1, 2009 Class A       | US$0.50                         | 2,000,000                           |   |
| December                  1, 2009 Class B       | US$1.00                         | 2,000,000                           |   |
| Total                                           |                            | 11,753,816                          |   |

| Expiry                  Date              | Exercise                  Price | Number                  of Warrants |
|-------------------------------------------|---------------------------------|-------------------------------------|
|                                      |                            |                                |   |
|                                      |                            |                                |   |
| July                  25, 2008 Class A    | US$0.50                         | 1,439,992                           |   |
| July                  25, 2008 Class B    | US$1.00                         | 1,439,992                           |   |
| July                  25, 2008 Finders A  | US$0.50                         | 216,000                             |   |
| July                  25, 2008 Finders B  | US$0.75                         | 360,000                             |   |
| August                  5, 2008 Class A   | US$0.50                         | 262,932                             |   |
| August                  5, 2008 Class B   | US$0.75                         | 262,932                             |   |
| August                  5, 2008 Finders A | US$0.50                         | 39,440                              |   |
| August                  5, 2005 Finders B | US$0.75                         | 65,733                              |   |
| Total                                     |                            | 4,087,021                           |   |

----

**Valcent**
**Products        Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **13.** | **Share                        Capital                        (continued*)*** |
|---------|-------------------------------------------------------------------------------|

|  | (e) | Contributed                        surplus |
|--|-----|--------------------------------------------|

|                                                    |   | **2007** |      |   | **2006** |   |
|---------------------------------------------------------|--------|----------|-----------|--------|----------|--------|
|                                                    |   |     |      |   |     |   |
| Contributed                  surplus, beginning of year |   | $        | 1,663,067 |   |     | $      | - |   |
| Non-cash                  financing expense             |   |     | 463,125   |   |     |   | 1,129,403 |   |
| Stock                  based compensation               |   |     | 1,127,141 |   |     |   | 533,664 |   |
|                                                    |   |     |      |   |     |   |   |   |
| Contributed                  surplus, end of year       |   | $        | 3,253,333 |   |     | $      | 1,663,067 |   |

| **14.** | **Income                    taxes** |
|---------|-------------------------------------|

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **14.** | **Income                      taxes                      (continued)** |
|---------|------------------------------------------------------------------------|

|                                                                     |   | **2007** |       |   | **2006** |   |
|--------------------------------------------------------------------------|--------|----------|------------|--------|----------|--------|
|                                                                     |   |     |       |   |     |   |
|                                                                     |   |     | 34.10      | %      |     |   | 34.12 | % |
|                                                                     |   |     |       |   |     |   |   |   |
| Income                  tax benefit computed at Canadian statutory rates |   | $        | 3,730,394  |   |     | $      | 886,962 |   |
| Convertible                  note issuance costs                         |   |     | 174,787    |   |     |   | 194,561 |   |
| Deductible                  convertible note issuance costs              |   |     | (34,957    | )      |     |   | (38,912 | ) |
| Penalties                  accrued                                       |   |     | -          |   |     |   | (42,043 | ) |
| Non-cash                  expenses                                       |   |     | (211,762   | )      |     |   | 0 |   |
| Stock                  based compensation                                |   |     | (384,355   | )      |     |   | (182,086 | ) |
| Financing                  expense                                       |   |     | (1,447,955 | )      |     |   | (453,299 | ) |
| Unrecognized                  tax losses                                 |   |     | (1,038,547 | )      |     |   | (365,183 | ) |
|                                                                     |   |     |       |   |     |   |   |   |
|                                                                     |   | $        | -          |   |     | $      | - |   |

** **

| **15.** | **Subsequent                      Events** |
|---------|--------------------------------------------|

----

**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

----

| **16.** | **Differences                  between Canadian and United States Generally Accepted Accounting                  Principles** |
|---------|-------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | Recent                  US accounting pronouncements |
|--------|-----|------------------------------------------------------|

|   | i) | In                  February 2007, the Financial Accounting Standards Board (FASB)                  issued SFAS                  No. 159, *“The Fair Value Option for Financial Assets and Financial                  Liabilities – Including an Amendment of FASB Statement No. 115”.* This                  statement permits entities to choose to measure many financial                  instruments                  and certain other items at fair value. Most of the provisions of                  SFAS No.                  159 apply only to entities that elect the fair value option. However,                  the                  amendment to SFAS No. 115, *“Accounting for Certain Investments in Debt                  and Equity Securities*”, applies to all entities with                  available-for-sale and trading securities. SFAS No. 159 is effective                  as of                  the beginning of an entity’s first fiscal year that begins after November                  15, 2007. Early adoption is permitted as of the beginning of a                  fiscal year                  that begins on or before November 15, 2007, provided the entity                  also                  elects to apply the provision of SFAS No. 157, *“Fair Value                  Measurements”.* The adoption of this statement is not expected to have                  a material effect on the Company's financial                  statements. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ii) | In                  September 2006, the Securities and Exchange Commission issued Staff                  Accounting Bulletin (“SAB”) No. 108, *“Considering the                  Effects of Prior Year Misstatements when Quantifying Misstatements                  in                  Current Year Financial Statements.”* SAB No. 108 addresses how                  the effects of prior year uncorrected misstatements should be considered                  when quantifying misstatements in current year financial statements.                  SAB                  No. 108 requires companies to quantify misstatements using a balance                  sheet and income statement approach and to evaluate whether either                  approach results in quantifying an error that is material in light                  of                  relevant quantitative and qualitative factors. SAB No. 108 is effective                  for fiscal years ending after November 15, 2006. The adoption of SAB                  No. 108 did not have a material effect on its financial                  statements. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iii) | In                  September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for                  Defined Benefit Pension and Other Postretirement Plans – an amendment of                  FASB Statements No. 87, 88, 106, and 132(R)”. This statement requires                  employers to recognize the over-funded or under-funded status of                  a defined                  benefit postretirement plan (other than a multiemployer plan) as                  an asset                  or liability in its statement of financial position and to recognize                  changes in that funded status in the year in which the changes                  occur                  through comprehensive income of a business entity or changes in                  unrestricted net assets of a not-for-profit organization. This                  statement                  also requires an employer to measure the funded status of a plan                  as of the                  date of its year-end statement of cash flows, with limited exceptions.                  The                  provisions of SFAS No. 158 are effective for employers with publicly                  traded equity securities as of the end of the fiscal year ending                  after                  December 15, 2006. The adoption of this statement did not have                  a material                  effect on the Company's future reported financial position or results                  of                  operations. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iv) | In                  September 2006, the FASB issued SFAS No. 157, “*Fair Value                  Measurements*”. The objective of SFAS No. 157 is to increase                  consistency and comparability in fair value measurements and to                  expand                  disclosures about fair value measurements. SFAS No. 157 defines                  fair                  value, establishes a framework for measuring fair value in generally                  accepted accounting principles, and expands disclosures about fair                  value                  measurements. SFAS No. 157 applies under other accounting pronouncements                  that require or permit fair value measurements and does not require                  any                  new fair value measurements. The provisions of SFAS No. 157 are                  effective                  for fair value measurements made in fiscal years beginning after                  November                  15, 2007. The adoption of this statement is not expected to have                  a                  material effect on the Company's future reported financial position                  or                  results of operations. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Valcent        Products Inc.**

**Notes        to the Consolidated Financial Statements**

**(Expressed        in Canadian Dollars)**

**March        31, 2007 **

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** **

| **16.** | **Differences                    between Canadian and United States Generally Accepted Accounting                    Principles (continued)** |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | Recent                  US accounting pronouncements                  (continued) |
|--------|-----|-----------------------------------------------------------------------------------|

|   | v) | In                  June 2006, the FASB issued Interpretation No. 48, *“Accounting for                  Uncertainty in Income Taxes, an interpretation of FASB Statement                  No. 109”*(“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income                  taxes by prescribing a two-step method of first evaluating whether                  a tax                  position has met a more likely than not recognition threshold and,                  second,                  measuring that tax position to determine the amount of benefit                  to be                  recognized in the financial statements. FIN 48 provides guidance                  on the                  presentation of such positions within a classified statement of                  financial                  position as well as on de-recognition, interest and penalties,                  accounting                  in interim periods, disclosure and transition. FIN 48 is effective                  for                  fiscal years beginning after December 15, 2006. The adoption of                  this                  statement is not expected to have a material effect on the Company's                  financial statements. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | vi) | In                  March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing                  of                  Financial Assets, an amendment of FASB Statement No. 140, Accounting                  for                  Transfers and Servicing of Financial Assets and Extinguishments                  of                  Liabilities". This statement requires all separately recognized                  servicing                  assets and servicing liabilities be initially measured at fair                  value, if                  practicable, and permits for subsequent measurement using either                  fair                  value measurement with changes in fair value reflected in earnings                  or the                  amortization and impairment requirements of Statement No. 140.                  The                  subsequent measurement of separately recognized servicing assets                  and                  servicing liabilities at fair value eliminates the necessity for                  entities                  that manage the risks inherent in servicing assets and servicing                  liabilities with derivatives to qualify for hedge accounting treatment                  and                  eliminates the characterization of declines in fair value as impairments                  or direct write-downs. SFAS No. 156 is effective for an entity's                  first                  fiscal year beginning after September 15, 2006. The adoption of                  this                  statement is not expected to have a material effect on the Company's                  financial statements. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | vii) | In                  February 2006, the FASB issued SFAS No. 155, "*Accounting for Certain                  Hybrid Financial Instruments-an amendment of FASB Statements No.                  133 and                  140*", to simplify and make more consistent the accounting for                  certain                  financial instruments. SFAS No. 155 amends SFAS No. 133, "*Accounting                  for Derivative Instruments and Hedging Activities*", to permit fair                  value re-measurement for any hybrid financial instrument with an                  embedded                  derivative that otherwise would require bifurcation, provided that                  the                  whole instrument is accounted for on a fair value basis. SFAS No.                  155                  amends SFAS No. 140, "*Accounting for the Impairment or Disposal of                  Long-Lived Assets*", to allow a qualifying special-purpose entity to                  hold a derivative financial instrument that pertains to a beneficial                  interest other than another derivative financial instrument. SFAS                  No. 155                  applies to all financial instruments acquired or issued after the                  beginning of an entity's first fiscal year that begins after September                  15,                  2006, with earlier application allowed. The adoption of this statement                  is                  not expected to have a material effect on the Company's financial                  statements. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**ITEM      18. EXHIBITS.**

|    |   |                                                                                                                                                                                                                                                     |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **No.** |   | **Description                of Exhibit**                                                                                                                                                                                                                |
|    |   |                                                                                                                                                                                                                                                     |
| 1(i)(1) |   | Articles                of Incorporation of Valcent Products Inc., dated January 19, 1996,                incorporated by reference to Exhibit 1(a)(i) on Form 20-F filed October                13, 2005.                                               |
|    |   |                                                                                                                                                                                                                                                     |
| 1(i)(2) |   | Amendment                to Articles of Incorporation of Valcent Products Inc., dated March                12,                1996, incorporated by reference to Exhibit 1(a)(ii) on Form 20-F                filed                October 13, 2005.     |
|    |   |                                                                                                                                                                                                                                                     |
| 1(i)(3) |   | Amendment                to Articles of Incorporation of Valcent Products Inc., dated August19,                1996, incorporated by reference to Exhibit 1(a)(i) on Form 20-F filed                October 13, 2005.                                    |
|    |   |                                                                                                                                                                                                                                                     |
| 1(i)(4) |   | Amendment                to Articles of Incorporation of Valcent Products Inc., dated June                30,                1998, incorporated by reference to Exhibit 1(a)(iv) on Form 20-F                filed                October 13, 2005.      |
|    |   |                                                                                                                                                                                                                                                     |
| 1(i)(5) |   | Amendment                to Articles of Incorporation of Valcent Products Inc., dated July                8, 1999,                incorporated by reference to Exhibit 1(a)(v) on Form 20-F filed October                13, 2005.                       |
|    |   |                                                                                                                                                                                                                                                     |
| 1(i)(6) |   | Amendment                to Articles of Incorporation of Valcent Products Inc., dated September                28,                1999, incorporated by reference to Exhibit 1(a)(vi) on Form 20-F                filed                October 13, 2005. |
|    |   |                                                                                                                                                                                                                                                     |
| 3(i)(7) |   | Amendment                to Articles of Incorporation of Valcent Products Inc., dated April                15,                2005, incorporated by reference to Exhibit 1(a)(vii) on Form 20-F                filed                October 13, 2005.    |
|    |   |                                                                                                                                                                                                                                                     |
| 3(ii)   |   | By-laws                of Valcent Products Inc., dated March 26, 1996, incorporated by reference                to Exhibit 1(b) on Form 20-F filed October 13, 2005.                                                                                     |
|    |   |                                                                                                                                                                                                                                                     |

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**ITEM 18. EXHIBITS.** -      *(continued)*

|   |   |                                                                                                                                                                                                                                                                                                                       |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.1    |   | Master                license agreement between Valcent Products Inc. and MK Enterprises                LLC,                dated July 29, 2005, incorporated by reference to Exhibit 4(a)(i)                on Form                20-F filed October 13, 2005.                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                       |
| 4.2    |   | Product                development agreement between Valcent Products Inc. and MK Enterprises                LLC, dated July 29, 2005, incorporated by reference to Exhibit 4(a)(ii)                on                Form 20-F filed October 13, 2005.                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                       |
| 4.3    |   | Invention                license agreement between Valcent Products Inc. and MK Enterprises                LLC,                dated July 29, 2005, incorporated by reference to Exhibit 4(a)(iii)                on                Form 20-F filed October 13, 2005.                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                       |
| 4.4    |   | Consulting                agreement between Valcent Products Inc. and Malcolm Glen Kertz, dated                July                29, 2005, incorporated by reference to Exhibit 4(a)(iv) on Form 20-F                filed                October 13, 2005.                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                       |
| 4.5    |   | Consulting                agreement between Valcent Products Inc. and MK Enterprises LLC, dated                July                29, 2005, incorporated by reference to Exhibit 4(a)(v) on Form 20-F                filed                October 13, 2005.                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                       |
| 4.6    |   | Form                of subscription agreement between Valcent Products Inc., and certain                institutional note holders, dated April 6, 2006, incorporated by                reference                to Exhibit 10.6 on Form F-1 filed April 27, 2006.                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                       |
| 4.7    |   | Form                of convertible note agreement between Valcent Products Inc., and                certain                institutional note holders, dated April 6, 2006, incorporated by                reference                to Exhibit 10.7 on Form F-1 filed April 27, 2006.                                      |
|   |   |                                                                                                                                                                                                                                                                                                                       |
| 4.8    |   | Form                of Class A warrant agreement between Valcent Products Inc., and certain                institutional note holders, dated April 6, 2006, incorporated by                reference                to Exhibit 10.8 on Form F-1 filed April 27, 2006.                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                       |
| 4.9    |   | Form                of Class B warrant agreement between Valcent Products Inc., and certain                institutional note holders, dated April 6, 2006, incorporated by                reference                to Exhibit 10.9 on Form F-1 filed April 27, 2006.                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                       |
| 4.10   |   | Form                of Class A finder’s warrant agreement between Valcent Products Inc., and                Viscount Investments Ltd., dated April 6, 2006, incorporated by reference                to Exhibit 10.10 on Form F-1 filed April 27, 2006.                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                       |
| 4.11   |   | Form                of Class B finder’s warrant agreement between Valcent Products Inc., and                Viscount Investments Ltd., dated April 6, 2006, incorporated by reference                to Exhibit 10.11 on Form F-1 filed April 27, 2006.                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                       |
| 4.12   |   | Form                of liquidated damages convertible note agreement between Valcent                Products                Inc., and certain institutional note holders, dated April 6, 2006,                incorporated by reference to Exhibit 10.12 on Form F-1/A filed June                30,                2006.. |

----

**ITEM      18. EXHIBITS.** -      *(continued)*

|        |   |                                                                                                                                                                                                                                                                                                             |
|-------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.13        |   | Form                of liquidated damages warrant agreement between Valcent Products                Inc., and                certain institutional note holders, dated April 6, 2006, incorporated                by                reference to Exhibit 10.13 on Form F-1/A filed June 30,                2006. |
|        |   |                                                                                                                                                                                                                                                                                                             |
| 4.14        |   | Creative                and production services agreement between Valcent Products Inc.,                and                Hawthorne Direct, dated June 14, 2006, incorporated by reference                to                Exhibit 10.14 on Form F-1/A filed June 30, 2006.                                    |
|        |   |                                                                                                                                                                                                                                                                                                             |
| 1415        |   | Media                services agreement between Valcent Products Inc., and Hawthorne Direct,                dated June 14, 2006, incorporated by reference to Exhibit 10.15 on                Form                F-1/A filed June 30, 2006.                                                                     |
|        |   |                                                                                                                                                                                                                                                                                                             |
| 4.16        |   | Manufacturing                agreement between Valcent Manufacturing Ltd. and Solid Integrations                LLC                dated September 22, 2006, incorporated by reference to Exhibit 10.16                on                Form F-1/A filed October 2, 2006.                                       |
|        |   |                                                                                                                                                                                                                                                                                                             |
|  4.17  |   |  Letter              Agreement between Pagic LP, West Peak Ventures of Canada and Global              Green              Solutions dated October 2, 2006, incorporated by reference to Exhibit              10.17 on Form F-1/A filed February 2, 2007                                                      |
|        |   |                                                                                                                                                                                                                                                                                                             |
| 4.18        |   | Promissory                Note, Deed of Trust between Valcent Manufacturing Ltd. and State                National                Bank, El Paso dated September 29, 2006., incorporated by reference                to                Exhibit 10.18 on Form F-1/A filed February 2, 2007                         |
|        |   |                                                                                                                                                                                                                                                                                                             |
| 4.19        |   | Farm                Ranch Contract between Valcent Manufacturing Ltd. and Robert H. Silvas                dated October 2, 2006, incorporated by reference to Exhibit 10.19                on Form                F-1/A filed February 2, 2007.                                                                  |
|        |   |                                                                                                                                                                                                                                                                                                             |
| 4.20        |   | 2006                Stock Option Plan of Valcent Manufacturing Ltd. dated December 14,                2006,                incorporated by reference to Exhibit 10.21 on Form F-1/A filed February                2,                2007.                                                                        |
|        |   |                                                                                                                                                                                                                                                                                                             |
| 4.21        |   | Vertigo                Algae Technologies Stakeholders Letter of Agreement dated June 25,                2007,                incorporated by reference to Exhibit 99.1 on Form 6-K filed July                12,                2007.                                                                           |
|        |   |                                                                                                                                                                                                                                                                                                             |
| 8.1         |   | Subsidiaries                of Valcent Products Inc., as of October 1, 2007.  FILED                HEREWITH                                                                                                                                                                                            |
|        |   |                                                                                                                                                                                                                                                                                                             |
| 12(a)(iii)  |   | Certification                pursuant to Rule 13A-14(A) in Accordance with Section 302 of the                Sarbanes-Oxley Act of 2002 FILED HEREWITH.                                                                                                                                                          |
|        |   |                                                                                                                                                                                                                                                                                                             |
| 12(a)(iiii) |   | Certification                pursuant to Rule 13A-14(A) in Accordance with Section 302 of the                Sarbanes-Oxley Act of 2002 FILED HEREWITH.                                                                                                                                                          |
|        |   |                                                                                                                                                                                                                                                                                                             |
| 13(a)(iii)  |   | Certification                pursuant to 18 U.S.C. Section 1350 as Adopted pursuant to Section                906 of                the of the Sarbanes-Oxley Act of 2002 FILED HEREWITH.                                                                                                                        |
|        |   |                                                                                                                                                                                                                                                                                                             |
| 13(a)(iiii) |   | Certification                pursuant to 18 U.S.C. Section 1350 as Adopted pursuant to Section                906 of                the of the Sarbanes-Oxley Act of 2002 FILED                HEREWITH.                                                                                                         |

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**SIGNATURES**

|                                      |                                      |                                                                       |
|-------------------------------------------|-------------------------------------------|----------------------------------------------------------------------------|
|                                      | **VALCENT                PRODUCTS, INC.** |
|                                      |                                      |                                                                       |
|                                      |                                      |                                                                       |
| Date: October                1, 2007 | By:                             | /s/ M.                Glen Kertz                                      |
|                                      |                                      |                                                                       |
|                                      |                                      | M.                Glen Kertz                                               |
|                                      |                                      | Chief                Executive Officer and Acting                President |

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