**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, 2005.
 **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**
 
 Date
        of
        event requiring this shell company report________________.
 
 
 For
        the
        transition period from __________________ to
        ________________ .
 
 Commission
        File Number: 0-30858
 
 **VALCENT
        PRODUCTS INC.**
 Province
        of Alberta, Canada
 *(Jurisdiction
        of incorporation or organization)*
 
 420
        - 475
        Howe Street, Vancouver
 British
        Columbia V6C 2B3
 *(Address
        of principal executive offices)*
  Securities
        registered or to be registered pursuant to Section 12(b) of the
        Act.
 
 None
              
              None*Title
                  of each class*
              
              *Name
                  of each exchange on which registered*
 Securities
        registered or to be registered pursuant to Section 12(g) of the Act.
 
 Common
                  Shares, without par value*(Title
                  of Class)*
 Securities
        for which there is a reporting obligation pursuant to Section 15(d) of the
        Act:
 
 None*(Title
                  of Class)*
 
 Indicate
        the number of outstanding shares of each of the issuer’s classes of capital or
        common shares at March 31, 2005 - 6,435,374.
  Indicate
        by check mark whether the Registrant (1) has filed all reports required to
        be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding 12 months (or for such shorter period that the Registrant was required
        to file such reports), and (2) has been subject to such filing requirements
        for
        the past 90 days. Yes
x
        No o
 
 Indicate
        by check mark which financial statement item the Registrant has elected to
        follow. xItem
        17 o Item
        18
 
 If
        this
        is an annual report, indicate by check mark whether the registrant is a shell
        company (as defined in Rule 12b-2 of the Exchange Act). Yes
o
        No x
  (APPLICABLE
        ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS IN THE PAST FIVE
        YEARS)
 
 Indicate
        by check mark whether the registrant has filed all documents and reports
        required to be filed by Section 12, 13 or 15(d) of the Securities Exchange
        Act
        of 1934 subsequent to the distribution of securities plan confirmed by a
        court. Yes
o
        No o
   Table
            of Contents
  **TABLE
        OF CONTENTS**
 Page
                NumberPART
                  I
              3ITEM
                  1. Identity of Directors, Senior Management and
                  Advisors.
              3ITEM
                  2. Offer Statistics and Expected
                  Timetable.
              3ITEM
                  3. Key Information.
              3ITEM
                  4. Information on the Company.
              12ITEM
                  5. Operating and Financial Review and
                  Prospects.
              19ITEM
                  6. Directors, Senior Management and
                  Employees.
              24ITEM
                  7. Major Shareholders and Related Party
                  Transactions.
              29ITEM
                  8. Financial Information.
              32ITEM
                  9. The Offer and Listing.
              34ITEM
                  10. Additional Information.
              35ITEM
                  11. Quantitative and Qualitative Disclosures About
                  Market Risk.
              42ITEM
                  12. Description of Securities Other than Equity
                  Securities.
              42PART
                  II
              43ITEM
                  13. Defaults, Dividends, Arrearages and
                  Delinquencies.
              43ITEM
                  14. Material Modifications to the Rights of Security
                  Holders and Use of Proceeds.
              43ITEM
                  15. Controls and Procedures.
              43ITEM
                  16. [Reserved].
              43ITEM
                  16A. Audit Committee Financial
                  Expert.
              43ITEM
                  16B. Code of Ethics.
              44ITEM
                  16C. Principal Accountant Fees and
                  Services.
              44ITEM
                  16D. Exemptions form the Listing Standards for Audit
                  Committee.
              44ITEM
                  16E. Purchase of Equity Securities by the Issuer and
                  Affiliated Purchasers.
              44PART
                  III
              F-1ITEM
                  17. Financial Statements.
              F-1ITEM
                  18. Financial Statements.
              45ITEM
                  19. Exhibits.
              45
 
  -2-
 Table
            of Contents
  
  **PART
        I**
  **CAUTIONARY
        NOTICE REGARDING FORWARD LOOKING STATEMENTS**
 
 This
        Form
        20-F, press releases and certain information provided periodically in writing
        or
        orally by our officers or our agents contain statements which constitute
        forward-looking statements. The words “may”, “would”, “could”, “will”, “expect”,
“estimate”, “anticipate”, “believe”, “intend”, “plan”, “goal”, and similar
        expressions and variations thereof are intended to specifically identify
        forward-looking statements. These statements appear in a number of places
        in
        this Form 20-F and include all statements that are not statements of historical
        fact regarding the intent, belief or current expectations of us, our directors
        or our officers, with respect to, among other things: (i) our liquidity and
        capital resources, (ii) our financing opportunities and plans, (iii) our
        ability
        to attract customers to generate revenues, (iv) competition in our business
        segment, (v) market and other trends affecting our future financial condition
        or
        results of operations, (vi) our growth strategy and operating strategy, and
        (vii) the declaration and/or payment of dividends.
 
 Investors
        and prospective investors are cautioned that any such forward-looking statements
        are not guarantees of future performance and involve risks and uncertainties,
        and that actual results may differ materially from those projected in the
        forward-looking statements as a result of various factors. The factors that
        might cause such differences include, among others, those set forth in Part
        I,
        Item 3, Subsection D of this annual report on Form 20-F, entitled “Risk Factors”
        and Part I, Item 5, entitled “Operating and Financial Review and Prospects”.
        Except as required by law, we undertake no obligation to update any of the
        forward-looking statements in this annual report on Form 20-F after the date
        of
        this report.
 
 **ITEM
        1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
        ADVISERS**
 
 Not
        applicable.
 
 **ITEM
        2. OFFER STATISTICS AND EXPECTED
        TIMETABLE**
 
 Not
        applicable .
 
 **ITEM
        3. KEY INFORMATION**
 
 **SELECTED
        FINANCIAL DATA**
 
 The
        following selected financial data has been derived from our audited financial
        statements and related notes for the preceding five years and has been prepared
        and presented in accordance with Canadian generally accepted accounting
        principles. Effective March 24, 2004, we disposed of our interest in Nettron
        Media Group, formerly our wholly-owned subsidiary. The comparative financial
        results of Nettron Media Group for the year ended March 31, 2004 have been
        segregated and presented as discontinued operations on the Statements of
        Operations and Deficit and Cash Flows in our audited financial statements.
        Effective January 1, 2001 we sold our interest in two wholly-owned subsidiaries,
        Bikestar Rentals Inc. and Arizona Outback Adventures, LLC. The comparative
        financial results of Bikestar Rentals Inc. and Arizona Outback Adventures,
        LLC,
        from the date of acquisition have been segregated and presented as discontinued
        operations on the Statements of Operations and Deficit and Cash Flows in
        our
        audited financial statements. The assets and liabilities of Bikestar Rentals
        Inc. and Arizona Outback Adventures, LLC, for periods prior to disposition
        have
        not been segregated in the Balance Sheets. For comparative purposes this
        selected financial data for the years ended March 31, 2001, 2002, 2003, 2004
        and
        2005 is also presented as though it were prepared under United States generally
        accepted accounting principles. Our audited financial statements for the
        year
        ended March 31, 2005 have been prepared in accordance with Canadian generally
        accepted accounting principles, which, as set forth in Note 8, conform in
        all
        material respects with those of the United States and with the requirements
        of
        the Securities and Exchange Commission.
 
 -3-
 Table
            of Contents
 
 **Valcent
                  Products Inc.**
                **Selected
                  Financial Data**
                **(Expressed
                  in Canadian Dollars)**
              
              **March
                  31,**
              
              **March
                  31,**
              
              **March
                  31,**
              
              **March
                  31,**
              
              **March
                  31,****2005**
              
              **2004**
              
              **2003**
              
              **2002**
              
              **2001****12
                  Months**
              
              **12
                  Months**
              
              **12
                  Months**
              
              **12
                  Months**
              
              **12
                  Months**Net
                  Operating Revenues per Canadian
                  and U.S. GAAP
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00Loss
                  (Income) from operations Canadian
                  GAAP
              
              $
              45,694
              
              $
              25,885
              
              $
              (81,637
              )
              $
              123,144
              
              $
              1,376,165Loss
                  (Income) from operations U.S.
                  GAAP
              
              $
              45,694
              
              $
              25,885
              
              $
              (81,637
              )
              $
              123,144
              
              $
              1,550,594Loss
                  (Income) from continued operations
                  per Canadian GAAP
              
              $
              45,694
              
              $
              25,885
              
              $
              (82,433
              )
              $
              136,885
              
              $
              1,308,481Loss
                  (Income) from discontinued operations
                  per Canadian GAAP
              
              $
              45,694
              
              $
              2,238
              
              $
              (0.00
              )
              $
              0.00
              
              $
              268,605Net
                  (Income) loss per Canadian GAAP
              
              $
              45,694
              
              $
              23,647
              
              $
              (82,433
              )
              $
              136,885
              
              $
              1,577,086Loss
                  from continued operations per U.S.
                  GAAP
              
              $
              45,694
              
              $
              25,885
              
              $
              (82,433
              )
              $
              136,885
              
              $
              1,482,910Loss
                  from discontinued operations per
                  U.S. GAAP
              
              $
              0.00
              
              $
              (2,238
              )
              $
              0.00
              
              $
              0.00
              
              $
              518,284Net
                  loss per U.S. GAAP
              
              $
              15,694
              
              $
              23,647
              
              $
              (82,433
              )
              $
              136,885
              
              $
              2,001,194Loss
                  (Income) per share from continued
                  operations, Canadian GAAP
              
              $
              0.01
              
              $
              0.01
              
              $
              (0.01
              )
              $
              0.02
              
              $
              0.21Loss
                  per share from discontinued operations,
                  Canadian GAAP
              
              $
              0.01
              
              $
              0.01
              
              $
              0.00
              
              $
              0.00
              
              $
              0.04Loss
                  (Income) per share after discontinued
                  operations, Canadian
                  GAAP
              
              $
              0.00
              
              $
              (0.00
              )
              $
              (0.01
              )
              $
              0.02
              
              $
              0.25Loss
                  (Income) per share from continued
                  operations, U.S. GAAP
              
              $
              0.01
              
              $
              0.01
              
              $
              (0.01
              )
              $
              0.02
              
              $
              0.25Loss
                  (Income) per share from discontinued
                  operations, U.S.GAAP
              
              $
              0.00
              
              $
              0.01
              
              $
              0.00
              
              $
              0.00
              
              $
              0.09Loss
                  (Income) per share after discontinued
                  operations, U.S. GAAP
              
              $
              0.01
              
              $
              0.01
              
              $
              (0.01
              )
              $
              0.02
              
              $
              0.34Share
                  capital per Canadian GAAP
              
              $
              2,999,420
              
              $
              2,999,420
              
              $
              2,999,420
              
              $
              2,999,420
              
              $
              2,999,420Share
                  capital per U.S. GAAP
              
              $
              2,999,420
              
              $
              2,999,420
              
              $
              3,383,540
              
              $
              3,383,540
              
              $
              3,383,540Common
                  shares issued
              
              
              6,435,374
              
              
              6,435,374
              
              
              6,435,374
              
              
              6,435,374
              
              
              6,715,374Weighted
                  average shares outstanding
                  per Canadian GAAP
              
              
              6,435,374
              
              
              6,435,374
              
              
              6,435,374
              
              
              6,447,041
              
              
              6,184,074Weighted
                  average shares outstanding
                  per U.S. GAAP
              
              
              6,435,374
              
              
              6,435,374
              
              
              6,435,374
              
              
              6,447,041
              
              
              5,904,074Total
                  Assets per Canadian GAAP
              
              $
              936
              
              $
              2,059
              
              $
              18,866
              
              $
              24,527
              
              $
              176,993Total
                  Assets per U.S. GAAP
              
              $
              936
              
              $
              2,059
              
              $
              18,866
              
              $
              24,527
              
              $
              176,993Net
                  assets (liabilities) per Canadian GAAP
              
              $
              (237,950
              )
              $
              192,256
              
              $
              (168,609
              )
              $
              (251,042
              )
              $
              (114,157
              )Net
                  assets (liabilities) per U.S. GAAP
              
              $
              (237,950
              )
              $
              192,256
              
              $
              (168,609
              )
              $
              (251,042
              )
              $
              (114,157
              )Convertible
                  debentures (current and
                  long term portions) per U.S. GAAP
                  )
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00Cash
                  Dividends Declared per common
                  shares, Canadian and U.S.
                  GAAP
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00Exchange
                  Rates (CND to USD) Period
                  Average
              
              $
              0.7824
              
              $
              0.7393
              
              $
              0.6797
              
              $
              0.6388
              
              $
              0.6650
  -4-
 Table
            of Contents
  
 Exchange
                    Rates (CND to USD)
                
                Period
                
                Periodfor
                    six most recent months
                
                High
                
                LowApril
                    2005
                
                $
                0.8286
                
                $
                0.7923May
                    2005
                
                $
                0.8091
                
                $
                0.7851June
                    2005
                
                $
                0.8173
                
                $
                0.7915July
                    2005
                
                $
                0.8316
                
                $
                0.8008August
                    2005
                
                $
                0.8443
                
                $
                0.8126September
                    2005
                
                $
                0.8606
                
                $
                0.8373Exchange
                    Rate (CND to USD) October
                    3, 2005
                
                $
                0.8598
 **CAPITALIZATION
        AND INDEBTEDNESS**
 
 Not
        Applicable.
 
 **REASONS
        FOR THE OFFER AND USE OF PROCEEDS**
 
 Not
        Applicable.
 
 **RISK
        FACTORS**
 
 Our
        business entails a significant degree of risk, and an investment in our
        securities should be considered highly speculative. An investment in our
        securities should only be undertaken by persons who can afford the loss of
        their
        entire investment. The following is a general description of material risks,
        which may adversely affect our business, our financial condition, including
        liquidity and profitability, and out results of operations, ultimately affecting
        the value of an investment in shares of our common stock.
 
 **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.***
 
 We
        have a
        history of operating losses and negative cash flows from operating activities,
        resulting in our continued dependence on external financing arrangements
        and
        raising substantial doubts as to our ability to continue as a going concern.
        Any
        such inability to continue as a going concern may result in our security
        holders
        losing their entire investment. Our financial statements which have been
        prepared in accordance with Canadian generally accepted accounting principles,
        contemplate that we will continue as a going concern and do not contain any
        adjustments that might result if we were unable to continue as a going concern.
        Changes in our operating plans, our existing and anticipated working capital
        needs, the acceleration or modification of our expansion plans, lower than
        anticipated revenues, increased expenses, potential acquisitions or other
        events
        will affect our ability to continue as a going concern. In the event that
        we are
        unable to achieve or sustain profitability or are otherwise unable to secure
        additional external financing, it is likely to have a material adverse effect
        on
        our business, our financial conditions, including liquidity and profitability,
        and our results of operations.
 
 ***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.***
 
 From
        inception, we have generated minimal revenues and experienced negative cash
        flows from operating losses. We anticipate to continue to incur such operating
        losses and negative cash flows in the foreseeable future, and to accumulate
        increasing deficits as we increase expenditures for (i) technology, (ii)
        infrastructure, (iii) research and development, (iv) sales and marketing,
        (v)
        interest charges and expenses related to previous equity and debt financings,
        and (v) general business enhancements. Any increases in our operating expenses
        will require us to achieve significant revenue before we can attain
        profitability. Consequently, we cannot assure you that we will be able to
        achieve profitability or raise sufficient funding to cover our losses and
        as
        such we may not be able to continue as a going concern.
 
 -5-
 Table
            of Contents
  ***Our
        accumulated deficit makes it more difficult to borrow
        funds.***
 
 As
        of the
        year ended March 31, 2005, and as a result of historical operating losses,
        our
        accumulated deficit was $3,237,370. Lenders generally regard an accumulated
        deficit as a negative factor in assessing creditworthiness, for this reason
        the
        extent of our accumulated deficit coupled with our historical operating losses
        will negatively impact our ability to borrow funds if and when required.
        An
        inability to borrow funds, or a reduction in favorability of terms upon which
        we
        are able to borrow funds, including the amount available to us, the applicable
        interest rate and the collateralization required, will likely have a materially
        adverse effect on our business, our financial condition, including liquidity
        and
        profitability, our results of operations and may impact our ability to continue
        as a going concern.
 
 ***Our
        Limited Experience as a Publicly-Traded Company in the United States May
        Increase our Expenses and Place Significant Demands on Our Management.***
 
 We
        have
        only limited experience as a publicly-traded company in the United States,
        and
        as such responding to our regulatory and reporting obligations could increase
        our general and administrative costs and place substantial time demands on
        our
        management. We anticipate that our regulatory and reporting obligations will
        require further expenditures to train personnel and retain appropriate legal
        and
        accounting professional services, and to the extent that these expenditures
        precede or are not subsequently followed by revenues, our business, our
        financial condition, including liquidity and profitability, and our results
        of
        operations may be materially and adversely affected.
 
 **Risks
        Associated With Our Business and Industries**
 
 ***We
        face serious competition in our business segments.*** ****
 
 The
        market for our products rapidly evolves and is intensely competitive as new
        consumer retail products are regularly introduced. Competition in our market
        segments is based primarily upon:
 
 ·
              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
 
 We
        face
        competition from other consumer retail manufacturers, all of whom generally
        sell
        through the same combination of channels same as we intend to, including
        retail,
        wholesale, direct response and online marketing sales.
 
 To
        remain
        competitive in our market segments we rely heavily upon what we believe to
        be
        our superior product quality, marketing and sales abilities, proprietary
        technology, product development capabilities and our management’s experience.
        However, there can be no assurance that we will be able to effectively compete
        in these intensely competitive markets. Moreover, some of our competitors
        have
        longer operating histories, larger customer bases and greater financial,
        marketing, service, support, technical and other resources, affording them
        the
        ability to undertake more extensive marketing campaigns and adopt more
        aggressive pricing policies, than we can. Further, we believe that competition
        from new entrants will increase as the market for each of our products expands.
        If our product lines are not successful, our business, our financial condition,
        including liquidity and profitability, and our results of operations will
        be
        negatively impacted.
 
 -6-
 Table
            of Contents
  ***Our
        intellectual property may not be adequately protected from unauthorized use
        by
        others, which could increase our litigation costs and adversely affect our
        sales.***
 
 Our
        intellectual property is the most important assets that we possess in our
        ability to generate revenues and profits, and we rely very significantly
        on
        these intellectual property assets in being able to effectively compete in
        our
        market. There can be no assurance that our intellectual property rights in
        this
        regard will provide meaningful protection from unauthorized use by others,
        which
        could result in an increase in competing products and a reduction in our
        own
        sales. If we must pursue litigation in the future to enforce or otherwise
        protect our intellectual property rights, or to determine the validity and
        scope
        of the proprietary rights of others, we may not prevail and will likely have
        to
        make substantial expenditures and divert valuable resources in any case.
        We may
        not have adequate remedies if our proprietary content is
        appropriated.
 
 ***If
        our products infringe upon any proprietary rights of others, a lawsuit may
        be
        brought against us that could require us to pay large legal expenses and
        judgments and redesign or discontinue selling one or more of our
        products.***
 
 We
        are
        not aware of any circumstances under which our products infringe upon any
        valid
        existing proprietary rights of third parties. Any infringement claims, however,
        whether or not meritorious, could result in costly litigation or require
        us to
        enter into royalty or licensing agreements. If we are found to have infringed
        the proprietary rights of others, we could be required to pay damages, redesign
        our products or discontinue their sale. Any of these outcomes, individually
        or
        collectively, could have a material adverse effect on our business, our
        financial condition, including liquidity and profitability, and our results
        of
        operations.
 
 ***If
        our Ultrasonic Skincare System is classified as a medical device and we fail
        to
        obtain and maintain the necessary United States Food and Drug Administration
        clearances for our Ultrasonic Skincare System, our business will be adversely
        affected.***
 
 While
        we
        do not believe that our Ultrasonic Skincare System is a medical device as
        defined by section 201(h) of the United States Federal Food, Drug and Cosmetic
        Act, there can be no assurance that our Ultrasonic Skincare System will not
        be
        classified as a medical device and subject to regulation by the Food and
        Drug
        Administration or other federal, state and local authorities. These regulations
        relate to the manufacture, labeling, sale, promotion, distribution, import
        and
        export and shipping of products that are deemed medical devices. In the United
        States, before a new medical device may be marketed the manufacturer must
        first
        receive, unless there exists an applicable exemption, either clearance under
        section 510(k) of the Federal Food, Drug and Cosmetic Act or premarket approval
        from the Food and Drug Administration. The Food and Drug Administration’s 510(k)
        clearance process usually takes anywhere from three to twelve months, or
        longer,
        while the process of obtaining premarket approval is much more costly and
        uncertain and generally takes from one to three years, or longer.
 
 To
        obtain
        premarket approval and, in some cases, a 510(k) clearance, a manufacturer
        must
        conduct controlled clinical trials designed to test the safety and effectiveness
        of the medical device. Conducting clinical trials generally entails a long,
        expensive and uncertain process that is subject to delays and failure at
        any
        stage. The data obtained from clinical trials may be inadequate to support
        approval or clearance of a submission. In addition, the occurrence of unexpected
        findings in connection with clinical trials may prevent or delay obtaining
        Food
        and Drug Administration approval or clearance. If we conduct clinical trials
        of
        the Sonic Skincare System, they may be delayed or halted, or be inadequate
        to
        support approval or clearance, for numerous reasons, including:
 
 ·
              Food
                  and Drug Administration, other regulatory authorities or an institutional
                  review board placing a clinical trial on
                  hold;
 
 ·
              Patients
                  not enrolling in clinical trials, or patient follow-up not occurring,
                  at
                  the rate we expect;
 
 ·
              Patients
                  not complying with trial protocols;
 
 ·
              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 FDA
                  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
                  or
                  terminate our clinical trials, or invalidate our clinical
                  trials;
 
 ·
              Changes
                  in governmental regulations or administrative actions;
                  and
 
 ·
              The
                  interim or final results of clinical trials being inconclusive
                  or
                  unfavorable as to safety or
                  effectiveness.
  -7-
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            of Contents
  Medical
        devices may be marketed only for the indications for which they are approved
        or
        cleared. The Food and Drug Administration may not approve or clear indications
        that are necessary or desirable for successful commercialization of our Sonic
        Skincare System. Indeed, the FDA may refuse our requests for 510(k) clearance
        or
        premarket approval and our clearances can be revoked if safety or effectiveness
        problems develop. If
        this
        occurs, our financial condition, including liquidity and profitability, and
        our
        results of operations may be materially and adversely affected.
 
 ***If
        we are unable to successfully break into new markets, implement our growth
        strategy or manage our business as it does grows, our future operating results
        could suffer.***
 
 We
        face
        several challenges in entering each of the consumer retail markets for our
        respective products, including the end users’ lack of awareness of our company
        and our product lines, difficulties in hiring and retaining representative
        personnel in each of our respective markets and problems associated with
        our
        unfamiliarity with local market conditions and market demographics. Each
        market
        we enter may also have different competitive conditions, consumer tastes
        and
        discretionary spending patters. To the extent that we are not able to meet
        these
        new challenges, our business, our financial condition, including liquidity
        and
        profitability, and our results of operations may be materially and adversely
        affected.
 
 ***Changes
        in consumer preferences or*** ***discretionary*** ****** ***spending*** ***patters may negatively affect our future operating results.***
 
 Our
        continued success will depend, in part, on the popularity of our product
        lines.
        Any shift in consumer preferences could have a material adverse affect on
        our
        future profitability. Our success also depends to some extent on a number
        of
        factors affecting discretionary consumer spending, including, among others,
        the
        following:
 
 ·
              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;
 
 Consumer
        purchases of discretionary items, including our product lines, could decline
        during periods when disposable income is lower or actual or perceived
        unfavorable economic conditions exist. If this occurs, our financial condition,
        including liquidity and profitability, and our results of operations may
        be
        materially and adversely affected.
 
 -8-
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            of Contents
  ***We
        may be subject to adverse publicity or claims by consumers arising out use
        of
        our product lines.***
 
 We
        may be
        subject to complaints from or litigation by consumers relating to quality,
        health or operational aspects of our product lines. We cannot assure you
        that we
        will not be subject to such claims or that we will be successful in defending
        any such claims should they arise. Any litigation, regardless of the outcome,
        would entail significant costs and use of management time which could impair
        our
        ability to generate revenue and profit. In the event that we are found liable
        with regard to a claim arising out of any of our product lines our financial
        condition, including liquidity and profitability, and our results of operations
        may be materially and adversely affected.
 
 ***If
        we enter foreign markets, as we intend to, we may be subject to additional
        risks.***
 
 Our
        license agreement with MK Enterprises LLC grants us exclusive distribution
        rights worldwide. While we do not presently intend to market our products
        outside of North America, we do intend to eventually enter consumer retail
        markets in both Europe and Asia. Risks associated with marketing our product
        lines in foreign countries include, among other, the following:
 
 ·
              Our
                  ability to develop and maintain relationships with distributors
                  and
                  manufacturers who are familiar with local market conditions and
                  market
                  demographics and are able to generate an effective marketing
                  strategy
 
 ·
              Foreign
                  government laws, decrees, regulations or other legislation relating
                  to the
                  nature of our product lines, labor relations, or our relations
                  with
                  foreign distributors and dealers;
 
 ·
              The
                  effect of uncertain economic conditions and an uncertain global
                  political
                  environments, including foreign preferences for, or aversions to,
                  products
                  from North American companies;
 
 ·
              Fluctuations
                  in currency exchange rates which could affect both our ability
                  to sell our
                  product lines and our ability to generate profits from sales;
                  and
 
 ·
              Difficulties
                  in maintaining the uniform standards, controls, procedures and
                  policies in
                  effect in different countries.
 
 If
        these,
        or other risks which we have not anticipated, materialize they may have a
        material and adverse affect on our financial condition, including liquidity
        and
        profitability, and our results of operations.
  ***The
        loss of one or more of our senior management or key personnel may adversely
        affect our operations and could lead to loss of clients and proprietary
        information.***
 
 Our
        business, success, growth, operating results and financial condition, including
        liquidity and profitability, is dependent upon the skills, experience, efforts,
        performance and abilities of our senior management and other key personnel.
        If
        any members of our management or key personnel were to leave, our business,
        our
        financial condition, including liquidity and profitability, and our results
        of
        operations will likely suffer. Furthermore, if we lose any members of our
        management or key personnel, we may be unable to prevent the unauthorized
        disclosure or use of our technical knowledge, practices, procedures or client
        lists by such former management or personnel. Any disclosure or use of such
        information would likely have a materially adverse effect on our business,
        our
        financial condition, including liquidity and profitability, and our results
        of
        operations.
 
 ***We
        face substantial competition in attracting and retaining qualified personnel
        and
        may be unable to develop and grow our business if we cannot attract and retain
        such qualified personnel.***
 
 Our
        success, to a large extent, depends upon our ability to attract, hire and
        retain
        highly qualified and knowledgeable personnel who possess the skills and
        experience necessary to satisfy our business and client service needs. Our
        ability to attract and retain key personnel with the requisite skills and
        experience will depend on numerous factors, including our ability to offer
        competitive salaries, benefits and professional growth opportunities.
        Furthermore, we may be required to invest significant time and resources
        to
        attract and retain additional personnel. Many companies with which we will
        compete for experienced personnel have greater financial resources and name
        recognition than we do. Moreover, an important component to the overall
        compensation offered to our personnel will be equity. If our stock prices
        do not
        appreciate over time, it may be difficult to attract and retain key personnel.
        An inability to attract or retain the services of key personnel will likely
        have
        a materially adverse effect on our business, our financial condition, including
        liquidity and profitability, our results of operations and may impact our
        ability to continue as a going concern.
 
 -9-
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            of Contents
 
 **Risks
        Associated with an Investment in Our Common Stock**
 
 ***We
        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.***
 
 During
        the period of July 25, 2005 through August 5, 2005 we consummated a series
        of
        related private offering transactions with and among a syndicated group of
        institutional and other investors pursuant to which we agreed to issue, in
        the
        aggregate, USD $1,277,200 in 8% per annum convertible notes and three year
        warrants to acquire (i) up to 1,702,924 shares of common stock at a price
        per
        share of USD $0.50, and (ii) up to an additional 1,702,924 shares of common
        stock at a price per share of USD $1.00. In conjunction with these private
        offering transactions we paid a finders’ fees of (i) USD $127,720 in cash,
        representing 10% of the gross proceeds realized, (ii) 425,735 shares of common
        stock, (iii) three year warrants to purchase up to 255,440 shares of common
        stock at a price per share of USD $0.50 and (iv) three year warrants to purchase
        up to 425,733 shares of common stock at a price per share of USD $0.75. We
        also
        agreed to certain registration rights for each of the investors and finders
        pursuant to which we became committed to registering all of the shares issued
        as
        part of such transactions, by filing a registration statement on Form F-1
        covering the shares underlying the convertible notes and the warrants within
        sixty days of the closing date, or by September 27, 2005. Under the terms
        of
        these private offering transactions, we have until January 25, 2006 to cause
        such registration statement to be declared effective by the SEC. Furthermore,
        in
        accordance with the terms of these private offering transactions, any delays
        in
        meeting this obligation subjects us to liability in an amount, payable in
        cash,
        at a rate of 2% of the outstanding amount on the convertible notes per thirty
        day period for the duration of any such delay.
  As
        of the
        date of the filing of this annual report on Form 20-F, the registration
        statement on Form F-1 has not yet been filed. Penalties continue to accrue
        as we
        have experienced ongoing delays as a consequence of our having recently
        undergone a significant restructuring and change in business direction, and
        certain information pertaining to which is necessary for preparing a complete
        and accurate Form F-1 and which could not be obtained within the prescribed
        period. Although there can be no assurance, management is hopeful that we
        will
        be able to cause the registration statement to be filed within the next several
        weeks and that, because of their interest in our financial prosperity, we
        will
        be able to obtain an agreement with the syndicated group of institutional
        and
        other investors with respect to accruing penalties such that any amounts
        owed by
        us as of the time the registration statement is filed can be paid by us in
        installments over time on the basis of a schedule that we will be able to
        meet
        without undue financial hardship. If we are unsuccessful in causing the
        registration statement to be filed or to be subsequently declared effective
        by
        the SEC, however, it is likely to have a very material adverse effect on
        our
        business, our financial condition, including liquidity and profitability,
        and
        our results of operations.
 
 ***Unless
        an active trading market develops for our securities, you may not be able
        to
        sell your shares.***
 
 We
        are a
        reporting company and our common stock are listed on the OTC Bulletin Board
        (owned and operated by the Nasdaq Stock Market, Inc.) under they symbol “VCTPF”,
        however there is no active trading market for our common stock. There can
        be no
        assurance that an active trading market will ever develop for our common
        stock
        or, if it does develop, that it will be maintained. Failure to develop or
        maintain an active trading market will have a generally negative effect on
        the
        price of our common stock, and you may be unable to sell your common stock
        or
        any attempted sale of such common stock may have the effect of lowering the
        market price and therefore your investment could be a partial or complete
        loss.
 
 ***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.***
 
 You
        may
        have difficulty reselling share of our common stock, either at or above the
        price you paid, or even at fair market value. The stock markets often experience
        significant price and volume changes that are not related to the operating
        performance of individual companies, and because our common stock is thinly
        traded it is particularly susceptible to such changes. These broad market
        changes may cause the market price of our common stock to decline regardless
        of
        how well we perform as a company, and depending on when you determine to
        sell,
        you may not be able to obtain a price at or above the price you
        paid.
 
 -10-
 Table
            of Contents
  ***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 trades on the OTC Bulletin Board (owned and operated by the
        Nasdaq
        Stock Market, Inc.). The OTC Bulletin Board is not an exchange and, because
        trading of securities on the OTC Bulletin Board is often more sporadic than
        the
        trading of securities listed on a national exchange or on the Nasdaq National
        Market, you may have difficulty reselling any of the shares of our common
        stock
        that you may own.
 
 ***Our
        common stock is subject to the “penny stock” regulations, which is likely to
        make it more difficult to sell.***
 
 Our
        common stock is considered a “penny stock,” which generally is a stock trading
        under $5.00 and not registered on national securities exchanges or quoted
        on the
        Nasdaq National Market. The Securities and Exchange Commission has adopted
        rules
        that regulate broker-dealer practices in connection with transactions in
        penny
        stocks. These rules generally have the result of reducing trading in such
        stocks, restricting the pool of potential investors for such stocks and making
        it more difficult for investors to sell their shares. Prior to a transaction
        in
        a penny stock, a broker-dealer is required to:
 
 ·
              Deliver
                  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 customer with current bid and offer quotations for the penny
                  stock;
 
 ·
              Explain
                  the compensation of the broker-dealer and its salesperson in the
                  transaction;
 
 ·
              Provide
                  monthly account statements showing the market value of each penny
                  stock
                  held in the customer’s 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.
 
 These
        requirements may have the effect of reducing the level of trading activity
        in
        the secondary market for a stock that is subject to the penny stock rules.
        Since
        our common stock is subject to the penny stock rules, investors in our common
        stock may find it more difficult to sell their shares.
 
 ***Our
        stock price could be volatile, and your investment could suffer a decline
        in
        value.***
 
 The
        trading price of our common stock is likely to be highly volatile and could
        be
        subject to extreme fluctuations in price in response to various factors,
        many of
        which are beyond our control, including:
 
 ·
              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
 
 ·
              Stock
                  market price and volume fluctuations of publicly-traded, particularly
                  microcap, companies generally.
 
 -11-
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            of Contents
  The
        stock
        market has recently experienced significant price and volume fluctuations.
        Volatility in the market price for particular companies has often been unrelated
        or disproportionate to the operating performance of those companies. These
        broad
        market and industry factors may seriously harm the market price of our common
        stock, regardless of our operating performance. In addition, securities class
        action litigation has often been initiated following periods of volatility
        in
        the market price of a company’s securities. A securities class action suit
        against us could result in substantial legal fees, potential liabilities
        and the
        diversion of management’s attention and resources from our business. Moreover,
        and as noted above, our shares are currently traded on the OTC Bulletin Board
        and, further, are subject to the penny stock regulation. Price fluctuations
        in
        such shares are particularly volatile and subject to manipulation by
        market-makers, short-sellers and option traders.
 
 ***We
        do not intend to pay any common stock dividends in the foreseeable
        future.***
 
 We
        have
        never declared or paid a dividend on our common stock and because we have
        very
        limited resources and a substantial accumulated deficit we do not anticipate
        declaring or paying any dividends on our common stock in the foreseeable
        future.
        Rather, we intend to retain earnings, if any, for the continued operation
        and
        expansion of our business. It is unlikely, therefore, that the holders of
        our
        common stock will have an opportunity to profit from anything other than
        potential appreciation in the value of our common shares held by them. If
        you
        require dividend income, you should not rely on an investment in our common
        stock.
 
 ***Future
        issuances of our common stock may depress our stock price and dilute your
        interest.*** ****
 
 We
        may
        want to issue additional shares of our common stock in future financings
        or may
        grant stock options to our employees, officers, directors and consultants
        under
        our stock incentive plan. Any such issuances could have the effect of depressing
        the market price of our common stock and, in any case, would dilute the
        interests of our shareholders. In addition, we could issue serial preferred
        stock having rights, preferences and privileges senior to those of our common
        stock, including the right to receive dividends and/or preferences upon
        liquidation, dissolution or winding-up in excess of, or prior to, the rights
        of
        the holders of our common stock. This could depress the value of our common
        stock and could reduce or eliminate the amounts that would otherwise have
        been
        available to pay dividends on our common stock (which are unlikely in any
        case)
        or to make distributions on liquidation.
 
 **ITEM
        4. INFORMATION ON OUR COMPANY**
 
 **HISTORY
        AND DEVELOPMENT OF OUR COMPANY**
 
 At
        present, we are a development-stage company focusing on the refinement and
        manufacture of a line of unrelated consumer retail products, which we intend
        to
        begin marketing and distributing prior to the end of the current fiscal
        year.
 
 We
        were
        originally incorporated on January 19, 1996 in accordance with the provisions
        of
        the *Business
        Corporations Act* (Alberta),
        as 681673 Alberta Ltd. By Certificate of Amendment, issued March 13, 1996,
        we
        changed our name from 681673 Alberta Ltd. to Ironclad Systems Inc.
 
 On
        October 23, 1996, we completed a public offering and our common shares commenced
        trading as a junior capital pool company on the Alberta Stock Exchange (which
        subsequently became part of the TSX Venture Exchange, Inc. (the “TSX-V”)). In
        connection with this public offering we amended our Certificate of
        Incorporation, on August 19, 1996, to remove certain technical restrictions
        applicable only to privately held entities.
 
 On
        June
        30, 1998, we completed the acquisition of Good Times Roll Bicycle Rentals
        Inc.,
        a bicycle rental business operating through hotels in Canada and the United
        States, and originally incorporated on June 15, 1994 under the *Company
        Act* (British
        Columbia). We acquired 100% of the issued and outstanding common and preferred
        shares of Good Times Roll Bicycle Rentals Inc., in exchange for the issuance
        of
        427,296 of our common shares and the execution of an assumption agreement
        by and
        among ourselves, Good Times Roll Bicycle Rentals Inc. and its creditors,
        whereby
        we assumed, and settled through issuance of 160,000 common shares and $200,000
        of convertible debentures, a total of $400,000 in debt owed by Good Times
        Roll
        Bicycle Rentals Inc.
 
 Also
        on
        June 30, 1998, we completed the acquisition of Arizona Outback Adventures
        LLC,
        an adventure tours company originally organized as an Arizona limited liability
        company on April 13, 1996, offering tours of Arizona that ranged from guided
        hiking and biking tours to multiple-day adventure Eco-tours to the Grand
        Canyon.
        We acquired 100% of the shares of Arizona Outback Adventures LLC, for $1
        plus
        the assumption of $9,054 in net liabilities.
 
 By
        Certificate of Amendment, issued June 30, 1998, we changed our name from
        Ironclad Systems Inc. to Bikestar Inc., and by Certificate of Amendment,
        issued
        October 28, 1999, Good Times Roll Bicycle Rentals Inc. changed its name to
        Bikestar Rentals Inc.
 
 On
        January 1, 2001, we disposed of our interest in Arizona Outback Adventures
        LLC
        and Bikestar Rentals Inc. The total proceeds of the sale of all issued and
        outstanding capital stock to a single purchaser were approximately $132,380,
        with $23,024 in cash received on closing and the balance of $109,356
        representing the assumption of certain debt and payables by the purchaser.
        As a
        condition of the disposal, on April 10, 2001, we cancel 280,000 common shares
        held in escrow.
 
 The
        comparative financial results of Arizona Outback Adventures LLC and Bikestar
        Rentals Inc. from their respective acquisition dates have been segregated
        and
        presented as discontinued operations in our audited financial statements.
        Combined revenues from these activities were $419,486 at the year ended March
        31, 2001
 
 In
        1999,
        our management identified the internet as a preferred platform for our global
        consumer and business strategy and in response, on May 8, 1999, we incorporated
        Nettron Media Group Inc., as a wholly-owned subsidiary under the laws of
        the
        State of Texas. Nettron Media Group Inc. was a marketing enterprise focused
        on
        products and services that could be marketed through the internet as well
        as
        through traditional point of sale, telecommunications, voicemail and “bricks and
        mortar” business channels. Nettron Media Group Inc.’s primary product was
        Cupid’s Web an interactive online dating and marketing service.
 
 -12-
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            of Contents
  By
        Certificate of Amendment issued July 8, 1999, we changed our name from Bikestar
        Inc. to AdventurX.Com, Inc., but due to confusion with another company of
        similar name, on September 28, 1999 we again changed our name from AdventurX.Com
        to Nettron.Com, Inc.
 
 On
        July
        7, 2000, we announced the signing of an agreement in principle to purchase
        a
        100% interest in a group of companies that operated the “The Right One” and
“Together” dating service master franchises worldwide, including fourteen
        existing franchise operations (with the right to develop further franchises)
        and
        a 100% interest in each of Single File Magazine, Eight Friends Out dating
        service, and three dating websites (collectively the “Together Group”), in
        exchange for a combination of cash payments, issuance of common shares and
        debt,
        and the assumption of certain debts of the Together Group. We bore all costs
        involved in developing the necessary framework for the acquisition including
        legal and accounting professional fees, corporate finance and consulting
        fees
        and management time.
 
 On
        February 18, 2002, due to general weakness in equity markets, we witnessed
        a
        severe drop in interest in the “dot com” world and in equity financings in
        general for emerging growth companies. Caught precisely in the middle of
        this
        market meltdown, and while many attempts were made to renegotiate the terms
        of
        the Together Group acquisition we announced that the transaction originally
        disclosed July 7, 2000 was effectively terminated. Effective March 24, 2004,
        we
        disposed of our interest in Nettron Media Group Inc.
 
 On
        August
        24, 1999, we consolidated our common shares on a basis of one new share for
        each
        five old shares and on May 3, 2005, we again consolidated our common shares
        on a
        basis of one new share for each three old shares. Unless otherwise noted,
        all
        references to the number of common shares in this annual report for the fiscal
        year ended March 31, 2005, on Form 20-F are stated on a post consolidation
        basis. Per share amounts have also been restated for the share consolidation.
 
 By
        Certificate of Amendment issued April 15, 2005, we changed our name from
        Nettron.Com, Inc. to Valcent Products Inc., and on May 3, 2005 we delisted
        from
        the TSX-V, maintaining only our OTC Bulletin Board listing and changing our
        symbol to “VCTPF”.
 
 On
        August
        5, 2005 we announced the completion of a licensing agreement with MK Enterprises
        LLC for the exclusive worldwide marketing rights to certain MK Enterprise
        products and a right of first offer on future products.
 
 Our
        registered and records office is located at 3100, 324-8th Avenue S.W., Calgary,
        Alberta, T2P 2Z2 and our principal executive offices are located at 420-475
        Howe
        Street, Vancouver, British Columbia V6C 2B3. Our telephone number is (604)
        606-7979.
 
 **BUSINESS
        OVERVIEW**
 
 We
        are a
        development-stage company focused on the refinement and manufacture of a
        line of
        unrelated consumer retail products, which we anticipate to being marketing
        and
        distributing prior to the conclusion of the current fiscal year.
 
 ***Products***
 
 Our
        objective is to become a leading provider of consumer retail products in
        each of
        the respective markets for our product lines. To that end, we intend to use
        retail, wholesale, direct response and online marketing to promote our products,
        initially concentrating on North America and ultimately expanding into the
        European and Asian markets.
 
 Current
        product lines under development include:
 
 **The
        Ultrasonic Skincare System**
 
 Regular
        deep cleaning of the surface of facial skin has been shown to improve overall
        appearance, reduce fine lines, improve blood flow, stimulate collagen fibers
        and
        in general reduce the visible effects of aging. Our Ultrasonic Skincare System
        is a personal hygiene product designed to facilitate the action of skin cleaners
        and moisturizers through the application of ultrasonic vibrations by means
        of a
        disposable head attached a base device.
 
 The
        Ultrasonic Skincare System has three settings, one intended for daily cleaning,
        one for deep moisturizing and one intended for weekly exfoliation. Each setting
        will have a corresponding detachable and disposable applicator pad, designed
        for
        one use. As a final product, the Ultrasonic Skincare System will include
        interchangeable attachments and accessories, as well as an initial supply
        of
        disposable applicators. The system is compact, self-contained and powered
        by
        rechargeable batteries. It will be sold with cleansers and creams designed
        to
        maximize its desirable effects, but can also be used with water or any other
        cleanser intended for facial use. Although there can be no assurance, we
        anticipate that our ultrasonic skincare system will be priced at retail at
        approximately $149.95 per unit.
 
 -13-
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            of Contents
 
 **The
        Dust Wolf**
 
 Our
        Dust
        Wolf is a vacuum attachment intended for use in dusting and cleaning difficult,
        uneven or textured surfaces. The Dust Wolf is ergonomically designed and
        contains a non-motorized dual impeller brush system which rotates as a result
        of
        negative air pressure. As the Dust Wolf’s brush revolves its long fibers develop
        a slight electrostatic charge and attract dust particles which then travel
        to
        the inside of the unit’s cover where the fibers hit a receptacle, knocking the
        dust particles free and allowing them to be sucked into the vacuum. Our Dust
        Wolf is suitable for use with, among other items, Venetian blinds, shutters,
        computer keyboards, piano keys, lampshades, chandeliers, picture frames,
        television and computer screens and vehicle dashboards. Although there can
        be no
        assurance, we anticipate that our Dust Wolf will be priced at retail at
        approximately $24.95 per unit.
 
 **The
        Tomorrow Garden Kit**
 
 Our
        Tomorrow Garden Kit is an indoor herb garden kit, designed to offer, direct
        to
        the consumer, an easy to use kit featuring herbs and plants not otherwise
        readily available in the marketplace. The Tomorrow Garden Kit offers an improved
        plant lifespan of three to six months, as opposed to the traditional shelf
        life
        of approximately seven to ten days for fresh herbs, and requires only ambient
        light, with no watering or other maintenance, to survive. Our Tomorrow Garden
        Kit will be capable of supplying all of the standard herbs traditionally
        offered
        in grocery shops today, such as basil, mint, thyme, rosemary, parsley and
        cilantro, but may, in addition, supply more exotic herbs, such as lemon basil,
        lime basil, grapefruit mint and chocolate mint. Although there can be no
        assurance, we anticipate that our Tomorrow Garden Kit will be priced at retail
        at approximately $29.95 per unit.
 
 ***Our
        Potential Markets***
 
 **The
        Ultrasonic Skincare System**
 
 The
        skincare market is one of the largest and fastest growing market segments
        in the
        world today. In 1998, Johnson & Johnson estimated the annual global skincare
        market at approximately $48 billion dollars. Between 1996 and 2001, the facial
        skincare market segment itself saw a 41.1% growth rate extending across all
        demographic boundaries. In 2002, the United States became the single largest
        facial skincare market in the world by surpassing Japan. The United States
        and
        Japan alone account for well over one third of global skincare sales. Although
        there can be no assurance, we believe that our Ultrasonic Skincare System
        has
        the potential to become a leader among products in the global skincare
        market.
 
 **The
        Dust Wolf**
 
 Vacuuming
        is part of the daily cleaning regimen in many commercial, institutional and
        domestic settings. Vacuuming can account for a substantial portion of time
        and
        labor associated with cleaning and to make the most of time spent vacuuming
        many
        vacuum and cleaning product manufacturers offer various tools and accessories
        to
        expand a vacuum’s abilities beyond the floor. Although there can be no
        assurance, we believe that our Dust Wolf has the potential to become a leader
        among new and replacement vacuum accessories in both the industrial and domestic
        market segments.
 
 **The
        Tomorrow Garden Kit**
 
 Culinary
        and exotic herbs in fresh, dried, frozen, powdered and canned forms are
        primarily used in the retail and food services markets, where local products
        and
        imports have traditionally met demand. Although there can be no assurance,
        we
        believe that our Tomorrow Garden Kit has the potential to become a leader
        in the
        retail and food services markets by offering fresh herbs in market segments
        where they may not otherwise be available without considerable
        expense.
 
 -14-
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            of Contents
 
 ***Marketing
        and Advertising***
 
 We
        will
        endeavor to create strong brands for each of our product lines and generally
        market our products through:
 
 ·
              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
 
 We
        intend
        to adhere to comprehensive sales and marketing plans tailored to each of
        our
        product lines and to use a number of venues to create product awareness and
        knowledge, including:
 
 **Direct
        Response / Online Marketing**
 
 According
        to the Direct Marketing Association’s *DMA
        Statistical Fact Book 2004* ,
        the
        United States electronic direct response industry, including direct orders,
        lead
        generation and traffic generation for television, radio and internet, reached
        $296 billion in 2004, of this direct response television accounted for $167
        billion and the internet $64 billion. According to the Electronic Retailing
        Association more than one-quarter of Americans have reportedly purchased
        products advertised via infomercials.
 
 Initially,
        we intend to launch direct response marketing programs tailored to each of
        our
        consumer retail product lines, focusing on infomercials that use celebrity
        and
        professional endorsements, home shopping channels, the release of our own
        website site and distribution through other internet retailers.
 
 **Retail
        Sales**
 
 Immediately
        following the release of our infomercials and our launch on home shopping
        channels, we intend to begin aggressively promoting our products through
        large
        consumer retail chains and high-end department stores, as appropriate. We
        plan
        to reach smaller and mid-sized consumer retail chains through marketing
        representatives.
 
 To
        further promote our products and potentially expand distribution, we also
        intend
        to exhibit each of our product lines at large regional and international
        trade
        shows both in the United States and abroad.
 
 ***Manufacturing,
        Fulfillment and Suppliers***
 
 We
        are
        presently a development-stage company with initial prototypes for each of
        our
        products at or near completion. Once completed we plan to engage a third-party
        to engineer, manufacture, assemble and package our products in either Mexico
        or
        China, from where will have them shipped to our distribution center in El
        Paso,
        Texas.
 
 We
        currently have no long-term written agreements with suppliers and are not
        substantially dependent, nor do we anticipate becoming substantially dependant,
        upon any one or more suppliers, as there are many readily
        available.
 
 We
        have
        been in contact with Maroon Product Development regarding designing an
        ergonomic, aesthetically pleasing exterior for the body of the Ultrasonic
        Skincare System, and designing packaging systems for each of our products
        lines.
        To date, however, we have not reached oral or written agreements with Maroon
        Products Development concerning any of our consumer retail
        products.
 
 ***Regulations***
 
 We
        are
        not currently subject to direct regulation by any foreign or domestic government
        agency, other than regulations applicable to businesses generally. However,
        o ur
        Ultrasonic Skincare System may be classified as a medical device by United
        States Food and Drug Administration or other federal, state and local
        authorities and may be subject to regulation in this regard.
 
 -15-
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            of Contents
 
 ***Competition***
 
 Competition
        in each of the industries in which we intend to sell our consumer retail
        products is based primarily upon:
 
 ·
              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
 
 We
        will
        rely, for all of our product lines, on what we believe to be our superior
        product quality, marketing and sales abilities, proprietary technology, product
        development capabilities and our management’s experience to compete within each
        of our market segments. However, there can be no assurance that we will be
        able
        to effectively compete in these intensely competitive markets. Moreover,
        some of
        our competitors have longer operating histories, larger customer bases and
        greater financial, marketing, service, support, technical and other resources,
        affording them the ability to undertake more extensive marketing campaigns
        and
        adopt more aggressive pricing policies, than we can. Further, we believe
        that
        competition from new entrants will increase as the markets for each of our
        products expand.
 
 **The
        Ultrasonic Skincare System**
 
 In
        relation to our Ultrasonic Skincare System, we will face competition from
        other
        cosmetic and personal hygiene retail manufacturers, all of whom generally
        sell
        through the same combination of channels as we intend to, including retail,
        wholesale, direct response and online marketing sales.
 
 There
        are
        currently several cosmetic and personal hygiene retail manufacturers that
        employ
        various technologies intended to assist in cleansing and exfoliate the skin.
        The
        most common products use microdermabrasion; a procedure whereby the skin
        is
        sandblasted with aluminum oxide crystals though a wand-like devise that suctions
        itself to the skin’s surface. Other products make use of high frequency
        vibrations or electrical impulses to stimulate, massage and exfoliate the
        skin.
 
 We
        currently anticipate competing with the following companies and products,
        among
        others:
 
 ·
              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
 
 -16-
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            of Contents
 
 **The
        Dust Wolf**
 
 In
        relation to our Dust Wolf, we will face competition from other manufacturers
        of
        cleaning accessories as well as competition from vacuum cleaner manufactures,
        all of whom generally sell through the same combination of channels as we
        intend
        to, including wholesale and retail markets, and direct and online sales.
 
 There
        are
        currently several other manufacturers of cleaning supplies and accessories
        offering products designed to clean uneven or textured surfaces. The most
        common
        products are of two types, hand-held devices and vacuum attachments. The
        hand-held devices include items such as feather dusters and shag cloths,
        while
        the vacuum attachments typically feature brush-like accessories.
 
 We
        currently anticipate competing with the following companies and products,
        among
        others:
 
 ·
              The
                  Vermont Country Store - Diva
                  Duster;
 
 ·
              Home
                  Focus®-
                  Mini-Blind Cleaner (2);
 
 ·
              Unger
                  - Natural Wool Duster;
 
 ·
              Rubbermaid®-
                  Feather Duster;
 
 ·
              Beam
                  - Mini-Blind/Vertical Blind
                  Attachment;
 
 ·
              DermaPower
                  - Home Microdermabrasion System;
 
 ·
              Wacky
                  Vac - Wacky Vac Vacuum Attachment;
 
 ·
              Jobar
                  - Mini Blind Vacuum Attachment; and
 
 ·
              FilterStream
                  - Ultra Vacuum Powered Duster;
 
 **The
        Tomorrow Garden Kit**
 
 In
        relation to our Tomorrow Garden Kit, we will face competition from other
        manufacturers and providers of dried, frozen, powdered and canned herbs,
        as well
        as competition from local growers and distributors of fresh herbs, all of
        whom
        generally sell through the same combination of channels as we intend to,
        including wholesale and retail markets, and direct and online sales.
 
 There
        are
        several other manufacturers and providers of culinary and exotic herbs, the
        most
        common products being prepackaged, dried, frozen or canned herbs or
        do-it-yourself kits. We currently anticipate competing with the following
        companies and products, among other local growers and distributors:
 
 ·
              HerbKits.com
                  - Indoor Herb Gardening Kits;
 
 ·
              New
                  England Herb Company (various
                  herb);
 
 ***Intellectual
        Property***
 
 **Overview**
 
 We
        will
        rely for our business on a combination of provisional patents, patent-pending
        technology and trade secrets to protect our intellectual property. Our
        provisional patents, patent-pending technology and trade secrets are among
        the
        most important assets we possess in our ability to generate revenue and profits
        and we will depend significantly on these intellectual property assets in
        being
        able to effectively compete in our markets.
 
 We
        cannot
        be certain that the precautions we have taken to safeguard our provisional
        patents, patent-pending technology and trade secrets will provide meaningful
        protection from unauthorized use. If we must pursue litigation in the future
        to
        enforce or otherwise protect our intellectual property rights, or to determine
        the validity and scope of the proprietary rights of others, we may not prevail
        and will likely have to make substantial expenditures and divert valuable
        resources in the process. Moreover, we may not have adequate remedies if
        our
        intellectual property is appropriated or our trade secrets are
        disclosed.
  -17-
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            of Contents
  **Patents**
 
 On
        July
        29, 2005, we entered in to a Master License Agreement with MK Enterprises
        LLC
        for certain provisional patents applications, patent-pending technology and
        expertise which will form the basis of the products from which we intend
        to
        derive our revenue. In accordance with the terms of the agreement, and in
        exchange for the exclusive worldwide license to manufacture, market and sell
        the
        covered products, we agreed to pay MK Enterprises LLC a one-time license
        fee of
        $125,000, issue 20 million shares of our common stock, reimburse MK Enterprises
        LLC for product development fees incurred from March 17, 2005 onward, and
        undertook an obligation to make certain ongoing royalty payments to MK
        Enterprises LLC.
 
 We
        cannot
        be certain, and MK Enterprises gives no assurance, that provisional patent
        applications, or the pending non-provisional patent applications covering
        the
        technology and expertise licensed under the Master License Agreement will
        be
        granted. In the event that patents are issued to cover the technology and
        expertise that is the subject of the Master License Agreement, the title,
        rights
        and interests associated with such patents shall remain the exclusive property
        of MK Enterprises LLC’s consultant, Malcolm Glen Kertz.
 
 **Trade
        Secrets**
 
 Whenever
        we deem it important for purposes of maintaining competitive advantages,
        we
        require parties with whom we share, or who otherwise are likely to become
        privy
        to, our trade secrets or other confidential information to execute and deliver
        to us confidentiality and/or non-disclosure agreements. Among others, this
        includes employees, consultants and other advisors, each of whom we require
        to
        execute such an agreement upon commencement of their employment, consulting
        or
        advisory relationships. These agreements generally provide that all confidential
        information developed or made known to the individual by us during the course
        of
        the individual’s relationship with us is to be kept confidential and not to be
        disclosed to third parties except under specific circumstances.
 
 ***Employees***
 
 As
        of
        October 13, 2005, we had no full or part-time employees and three
        consultants.
 
 So
        as to
        maintain our competitive position, we require consultants and other advisors
        with whom we contract to execute, among other things, non-competition agreements
        upon commencement of their consulting or advisory relationships. These
        agreements typically provide that for a reasonable time following the conclusion
        of the consulting or advisory relationship such individuals will not engage
        directly or indirectly in our business or solicit our customers or
        suppliers.
 
 ***Seasonality***
 
 We
        may
        experience slight seasonal fluctuations in the sale of our consumer retail
        products if consumers elect to defer discretionary spending; however, we
        believe
        that the overall effects of any seasonal variations will be
        insignificant.
 
 **ORGANIZATIONAL
        STRUCTURE**
 
 The
        following organizational chart sets forth our corporate structure and reflects
        historical changes in our corporate name and the names of our various entities.
        Effective March 24, 2004, we are no longer part of any other group, nor do
        we
        have any subsidiaries.
 
 -18-
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            of Contents
  
 
 **PROPERTY,
        PLANTS AND EQUIPMENT**
 
 Our
        principal executive offices are located at #420 - 475 Howe Street, Vancouver,
        British Columbia (Canada) V6C 2B3. Our telephone number is (604)
        606-7979 .
 
 We
        maintain additional leased office space in El Paso, Texas for certain product
        development activity. We lease this 6,000 square foot premises under a three
        year lease agreement with Sunland Business Center Partners, L.P. Our monthly
        rent is $3,170 for a term of three years and there are thirty-three months
        remaining under the lease.
 
 **ITEM
        5. OPERATING AND FINANCIAL REVIEW AND
        PROSPECTS**
 
 The
        following discussion and analysis should be read together with our audited
        financial statements for the year ended March 31, 2005 and the notes to the
        financial statements. Our audited financial statements have been prepared
        in
        accordance with Canadian generally accepted accounting principles which,
        in
        accordance with Note 8 to our March 31, 2005 audited financial statements,
        conform in all material respects with those of United States generally accepted
        accounting principles and with the requirements of the U.S. Securities and
        Exchange Commission.
 
 **OPERATING
        LEGACY AND ACCUMULATED LOSSES**
 
 We
        are a
        development-stage company focusing on the refinement and manufacture of a
        line
        consumer of products. Since our organization in 1996, we have commenced and
        ceased operations in connection with a series of now-abandoned businesses,
        the
        last of which was a Web-based interactive dating service conducted through
        a
        wholly-owned subsidiary, Nettron Media Group, Inc. which we operated from
        May 8,
        1999 through March 24, 2004, when that business was discontinued and abandoned.
        As reflected in Note 3 to our March 31, 2005 audited financial statements
        included in this Annual Report on Form 20-F, we realized a gain on disposal
        of
        discontinued operations from this action in the amount of $2,238.
  At
          March
          31, 2005, we had accumulated losses totaling $3,237,370 and a working capital
          deficiency of $237,950 and had not commenced revenue producing operations.
          Our
          independent auditors have made reference in their auditors’ report issued in
          connection with the March 31, 2005 audited financial statements stating
          that
          existing conditions raise substantial doubt as to our ability to continue
          as a
          going concern. This doubt exists as a result of our accumulated significant
          losses to March 31, 2005, and had the audit been conducted in accordance
          with
          United States generally accepted auditing standards, such a modification
          would
          have been included. Under applicable Canadian auditing standards, no such
          corresponding or similar reference to going concern is permitted when
          events and conditions leading to such a determination are adequately disclosed
          in the financial statements .
 
  -19-
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  From
        March 24, 2004 through the year ended March 31, 2005, we had no meaningful
        operations and were exclusively focused on identifying and adopting a suitable
        business plan and securing appropriate financing for its execution.
 
 On
        March
        17, 2005, we reached an agreement in principal with MK Enterprises LLC (“MK”) to
        obtain or otherwise secure the following:
 
 (i)
              A
                  license for a period lasting so long as royalty payments continue
                  to be
                  made as required, for the exclusive worldwide marketing and distribution
                  rights to three unrelated and proprietary consumer retail products
                  that
                  had previously been developed, and certain of which have been patented,
                  by
                  MK, including the Ultrasonic Skincare System, the Dust Wolf, and
                  the
                  Tomorrow Garden (collectively, and together with any improvements
                  thereon,
                  the “Initial Products”) each of which are described in fuller detail in
                  Item 4 of this Annual Report on Form
                  20-F;
 
 (ii)
              A
                  license for a period lasting 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 (“Initial
                  Ancillaries”);
 
 (iii)
              A
                  right for an initial period of five years to acquire a license
                  for a
                  period lasting 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 MK (collectively, “Additional Products”);
 
 (iv)
              A
                  license for a period lasting 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 (“Additional Ancillaries”);
                  and
 
 (v)
              A
                  related services agreement pursuant to which MK would provide consulting
                  support in connection with the Initial Products, the Initial Ancillaries,
                  the Additional Products and the Additional
                  Ancillaries.
 
 **SUBSEQUENT
        EVENTS**
  Subsequent
        to March 31, 2005, we changed our name to Valcent Products Inc. to reflect
        our
        newly adopted business plan. Effective May 3, 2005, and in order to render
        our
        capital structure more amenable to contemplated financing, we effected a
        consolidation of our common shares on a basis of one new share for each three
        old shares. All reference to shares after this date are on a post-consolidated
        basis.
  On
          July
          29, 2005, we entered into a series of related definitive agreements with
          MK
          (collectively, the “MK Agreements”), including (i) a master license agreement
          for a period lasting so long as royalty payments continue to be made as
          required, for the exclusive worldwide marketing and distribution rights
          to the
          Initial Products and the Initial Ancillaries (the “MK Master License”), (ii) 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 period lasting
          so long
          as royalty payments continue to be made as required, for the exclusive
          worldwide
          marketing and distribution rights to any Additional Products and any Additional
          Ancillaries (the “MK Product Development Agreement”), and (iii) a consulting
          agreement pursuant to which we will receive consulting support from MK
          in
          connection with each of the Initial Products, the Initial Ancillaries,
          the
          Additional Products and the Additional Ancillaries (the “MK Consulting
          Agreement”), in exchange for the following:


·
              20,000,000
                  shares of our common stock;
 
 ·
              A
                  one-time USD $125,000 license fee;
 
 ·
              Reimbursement
                  for USD $125,000 in development costs associated with each of the
                  Initial
                  Products since March 17, 2005;
 
 ·
              The
                  greater of the following, payable
                  annually:
 
 -20-
 Table
            of Contents
  (i)
              USD
                  $400,000; or
 
 (ii)
              The
                  aggregate of the following:
 
 ·
              Subject
                  to a minimum amount of USD $37,500 per Initial Product during the
                  second
                  year of the MK Master License, and USD $50,000 each year thereafter,
                  continuing royalties payable quarterly at a rate
                  of:
 
 :
              USD
                  $10.00 per Ultrasonic Skincare System unit sold;
 
 :
              USD
                  $2.00 per Dust Wolf unit sold;
 
 :
              4.5%
                  of annual net sales of the Tomorrow Garden Kit; and
 
 :
              3%
                  of annual net sales of Initial
                  Ancillaries.
 
 ·
              A
                  one-time USD $50,000 license fee for each Additional Product licensed
                  (except for a one pre-identified
                  product);
 
 ·
              Subject
                  to a minimum amount of USD $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;
                  and
 
 ·
              Consulting
                  fees of USD $156,000 per year, payable monthly in advance.
  To
          finance obligations arising under the MK Agreements, and to provide working
          capital to pursue our business plan, during the period July 25, 2005 through
          August 5, 2005, we consummated a series of related private offering transactions
          with and among a syndicated group of institutional and other investors
          pursuant
          to which we issued, in the aggregate, USD $1,277,200 in 8% per annum convertible
          notes and three year warrants to acquire (i) up to 1,702,924 shares of
          common
          stock at a price per share of USD $0.50, and (ii) up to an additional 1,702,924
          shares of common stock at a price per share of USD $1.00. Subject to certain
          limitations on amount, 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 the
          common
          stock for the ten trading days prior to conversion, or (ii) USD $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 the amount being redeemed,
          but
          only in the event that our common shares have a closing price of USD $1.50
          per
          share for at least twenty consecutive trading days and there has otherwise
          been
          no default.
  In
          connection with the financing described above, compensation in the form
          of
          finder’s fees was paid which consisted in the aggregate of the
          following:
 
 ·
              USD
                  $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 USD $0.50; and
 
 ·
              Three
                  year warrants to purchase up to 425,733 shares of our common stock
                  at a
                  price of USD $0.75.
 
 -21-
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            of Contents
  We
        anticipate that our focus over the next twelve months will be on the continued
        development and marketing of our consumer products. With respect to the
        Ultrasonic Skincare System and the Dust Wolf, we expect to complete our product
        development later this year and be in a position by the end of this year
        to
        commence sales initiatives. With respect to the Tomorrow Garden, we expect
        to be
        in a position to commence sales initiatives by March 2005. While we believe
        that
        our current financial resources are sufficient to meet our working capital
        and
        other needs through approximately January 2006, there can be no assurance
        that
        our belief in this regard will prove accurate, and, in any event, we believe
        that we will need additional equity or debt financing by approximately January
        2006 in order to continue operations. As of the date of this Annual Report
        on
        Form 20-F, we have not obtained commitments for any such financing, and there
        can be no assurance that we will be able to obtain any such commitments,
        or
        that, if we are able to obtain one or more such commitments, that they will
        be
        on terms favorable, or even acceptable, to us.
 
 **OPERATING
        RESULTS**
 
 For
        the
        years ended March 31, 2005 and March 31, 2004, we incurred losses from continued
        operations of $45,694 and $25,885, respectively.
 
 ***Revenues***
 
 For
        the
        fiscal year ended March 31, 2005, we had no revenues.
 
 ***Operating
        Expenses***
 
 For
        the
        fiscal year ended March 31, 2005, we had no meaningful operations and were
        exclusively focused on identifying and adopting a suitable business plan
        and
        securing appropriate financing for its execution. We expended $45,694 in
        our
        fiscal year ending March 31, 2005, as compared to $24,932 for fiscal year
        ending
        March 31, 2004. These expenses were comprised of management fees, professional
        and other fees and expenses associated with general corporate and securities
        regulatory compliance matters.
 
 Amounts
        paid to or accrued to related parties for rent and management were consistent
        with recent historical amounts.
 
 ***Net
        Loss***
 
 Our
        reported loss of $45,694 ($0.01 per share) for the fiscal year ended March
        31,
        2005 was in line with $23,647 ($0.01 per share) for the same period ending
        March
        31, 2004.
 
 ***Fluctuations
        in Operating Results***
 
 Our
        annual operating results are likely to fluctuate significantly in the future
        as
        a result of numerous factors, including, among others:
 
 ·
              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;
  -22-
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            of Contents
  **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 Because
        we are organized in Canada, our March 31, 2005 financial statements have
        been
        prepared in accordance with Canadian generally accepted accounting principles
        applicable to a going concern, which contemplates the realization of assets
        and
        the satisfaction of liabilities and commitments in the normal course of
        business.
  At
        March
        31, 2005, we had accumulated losses totaling $3,237,370, as compared to
        $3,191,676 at March 31, 2004, and a working capital deficiency of $237,950,
        as
        compared to $192,256 at March 31, 2004. As described in Note 2 to our March
        31,
        2005 financial statements, these conditions raise substantial doubt about
        our
        ability to continue as a going concern. The financial statements do not include
        any adjustment that might arise from uncertainty. However, had the audit
        been
        conducted in accordance with United States generally accepted auditing
        standards, the auditors would have been required to reflect these concerns
        in
        their audit report and would have included an explanatory paragraph in such
        report raising concern about our ability to continue as a going
        concern.
  We
        did
        not raise any net cash proceeds from the sale and issuance of common stock
        during either of the fiscal years ended March 31, 2004 or 2005. Our operating
        activities during the year ended March 31, 2005 generated $1,345 in cash,
        as
        compared with ($8,918) for the same period ending March 31, 2004.. We did
        not
        purchase any capital assets during either years ended March 31, 2005 or 2004.
 
 As
        at
        March 31, 2005, we had cash and term deposits of $222, compared with $-0-
        at
        March 31, 2004.
 
 As
        previously noted, in the period from July 25, 2005 through August 5, 2005,
        we
        consummated a series of related private offering transactions with and among
        a
        syndicated group of institutional and other investors pursuant to which we
        realized gross proceeds of USD $1,277,200. After deducting expenses associated
        with the offering, the net proceeds of this offering have been and continue
        to
        be applied to product development and general working capital purposes.
 
 ***Impact
        of Inflation***
 
 We
        do not
        believe that inflation has had a material effect on our business.
 
 **OFF-BALANCE
        SHEET ARRANGEMENTS**
 
 We
        do not
        have any off-balance sheet arrangements that have or are reasonably likely
        to
        have a current or future effect on our financial condition, changes in financial
        condition, revenues or expenses, results of operations, liquidity, capital
        expenditures, or capital resources that are material to investors.
 
 **CONTRACTUAL
        OBLIGATIONS**
 
 As
        of
        March 31, 2005, we had the following known contractual obligations:
 
 *Payments
                  Due By Period**Contractual
                  Obligations*
              
              Total
              
              Less
                  Than
                1
                  Year
              
              1-3
                Years
              
              3-5
                Years
              
              More
                  Than 5
                YearsLong-Term
                  Debt ObligationsOther
                  Contractual Obligations
              
              $
              158,359
                  (1
              )Total
              
              $
              158,359
 
 (1)
              This
                  obligation relates to aggregate loan proceeds received from several
                  of our
                  officers and directors. These loans were undocumented and made
                  without
                  oral agreement as to interest rate payable, terms of repayment,
                  security
                  or any other matter. On July 4, 2005, however, $153,349 of this
                  then-outstanding obligation was converted to 1,106,486 shares,
                  representing a price per share of
                  $0.14.
  -23-
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            of Contents
  **ITEM
        6. DIRECTORS, SENIOR MANAGEMENT AND
        EMPLOYEES**
 
 **DIRECTORS
        AND SENIOR MANAGEMENT**
 
 Our
        directors and executive officers and their ages as of October 13, 2005 were
        as
        follows:
 
 **Name**
              
              **Age**
              
              **Position**M.
                  Glen Kertz (1)
              
              52
              
              Acting
                  President, Chairman of the Board and DirectorF.
                  George Orr (2)(3)
              
              44
              
              Secretary
                  and DirectorDouglas
                  E. Ford
              
              42
              
              DirectorCarlton
                  Parfitt (2)
              
              38
              
              Director
 
 (1)
              Appointed
                  Acting President, Chairman of the Board and 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.
 (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.
  **M.
        Glen Kertz - Acting President, Chairman of the Board and
        Director**
 
 M.
        Glen
        Kertz founded, in October 1985, Gruppe Inc., a privately held tissue culture
        laboratory and growing operation, which he owned until January 1987. From
        October 1987 to May 1991, Mr. Kertz was the President of AgriStar, a publicly
        traded company that produced a gas permeable membrane for cell culture
        laboratories, and, from June 1999 to July 2004, Pagic, Inc., a consulting
        business management and development company. In addition, from June 1999
        to July
        2004 Mr. Kertz served as the President and a director of Nettron.com, Inc,
        predecessor to Valcent Products Inc., and in July of 2005 was appointed Acting
        President, Chairman of the Board and a director of Valcent Products
        Inc.
 
 **F.
        George Orr, C.A. - Secretary and Director**
 
 F.
        George
        Orr is a self-employed Chartered Accountant with over 15 years of accounting
        and
        consulting experience in private and public company administration, governance,
        audit procedures and reporting requirements. Mr. Orr holds a Bachelor of
        Commerce from St. Mary’s University, Halifax.
 
 **Douglas
        E. Ford** - **Director**
 
 Douglas
        Ford has acted as General Manager of Dockside Capital Group Inc., a private
        merchant banking and venture capital firm specializing in providing services
        to,
        and arranging funding for, emerging growth companies, since 1987. From October
        1998 through September 2000 Mr. Ford acted as Vice-President, Operations
        of
        Bugaboos Eyewear Corporation, a distributor of sport-specific eyewear in
        North
        America, before joining Valcent Products Inc., as our Secretary and a Director,
        in October 1996. Mr. Ford has also served on the board of directors of International
        Gemini Technology Inc. ,
        a
        Canadian shell company, from September 1992 to the present, and Rockgate
        Capital Corp. ,
        a
        Candian capital pool company, from January 2005 to present. Mr. Ford holds
        a
        Bachelors of Art, in political science, from the University of British
        Columbia.
  -24-
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            of Contents
  **Carlton
        Parfitt — Director**
 
 Mr.
        Parfitt founded Elgrande.com, an e-commerce company offering retailers and
        consumers direct access to manufactures and distributors, in April 1998,
        and has
        served as Vice President of Marketing and a director from April 1998 to October
        2000. Mr. Parfitt is presently, and has been since August 1998, President
        of Third Wave Consulting Inc., a private company specializing in digital
        media
        marketing, project management, public relations and corporate communications. Mr.
        Parfitt also serves on the board of directors and as Secretary of Golden
        Spirit
        Gaming Ltd., a company focusing on mineral exploration and development, from
        November 2004 to the present, and as the President and a director of Avalon
        Resources Inc. a company focusing on the acquisition and development on mineral
        properties and oil and gas interests, from November 2004 to the present.
        Mr.
        Parfitt received a Bachelors of Science in physics from Simon Fraser University,
        in 1991.
 
 Our
        directors and executive officers and their ages of the fiscal year ended
        March
        31, 2005 and through the period ended July 2005 were as follows:
 
 **Name**
              
              **Age**
              
              **Position**M.
                  Glen Kertz (1)
              
              52
              
              President
                  and DirectorDouglas
                  E. Ford (2)
              
              42
              
              Acting
                  President, Secretary and DirectorEdward
                  D. Ford (3)
              
              52
              
              DirectorGary
                  E. Read (4)
              
              64
              
              DirectorLarry
                  F. Robb (5)
              
              71
              
              DirectorMalcolm
                  E. Rogers Jr. (6)
              
              73
              
              Director
 
 (1)
              Resigned,
                  effective July 15, 2004, was reappointed Acting President, Chairman
                  of the
                  Board and 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.(2)
              Resigned,
                  effective July 31, 2005, from his role as Acting President and
                  Secretary,
                  but continued in his role as a Director.(3)
              Resigned,
                  effective July 23, 2005.(4)
              Resigned,
                  effective July 23, 2005.(5)
              Resigned,
                  effective June 27, 2005.(6)
              Resigned,
                  effective July 23, 2005.
 
 **Edward
        D. Ford, C.A. — Vice President, Finance and Director**
 
 Edward
        D.
        Ford served as a director of Nettron.com, Inc., predecessor to Valcent Products
        Inc., from June 1998, until his resignation in July 2005, he has also served,
        for the past twenty years, as a President of Dockside Capital Group Inc.,
        a
        private merchant banking and venture capital firm.
 
 **Gary
        E. Read — Director**
 
 Gary
        E.
        Read served as a director of Nettron.com, Inc., predecessor to Valcent Products
        Inc., from June 1998, until his resignation in July 2005, prior to which
        he
        served as Vice-President of Western Canada of Holiday House, a wholesale
        travel
        company, until his retirement in 1997.
 
 -25-
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            of Contents
  **Larry
        F. Robb — Director**
 
 Larry
        F.
        Robb served as a director of Nettron.com, Inc., predecessor to Valcent Products
        Inc., from March 2002, until his resignation in July 2005, prior to which
        he
        served as Branch Manager of Smith Barney from September 1974 to June
        1997.
 
 **Malcolm
        E. Rogers Jr. — Director**
 
 Malcolm
        E. Rogers served as a director of Nettron.com, Inc., predecessor to Valcent
        Products Inc., from March 2002, until his resignation in June 2005, prior
        to
        which he served as a financial consultant with Smith Barney, from February
        1994
        to March 2000, and Senior Executive Vice President of Lehman Brothers, from
        November 1991 to February 1994.
 
 **COMPENSATION**
 
 The
        following table sets forth the total compensation paid to each of our directors
        and executive officers for the year ended March 31, 2005.
 
 **Annual
                  Compensation**
              
              **Long
                  Term Compensation****Awards****Year**
              
              
              
              
              
              **Restricted**
              
              **Securities****Ended**
              
              
              
              
              
              **Stock**
              
              **Underlying****Name
                  and Principal Position**
              
              **March
                  31**
              
              **Salary**
              
              **Bonus**
              
              **Awards**
              
              **Options/SARs
                  (#)**M.
                  Glen Kertz
                President
                  and Director
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –Douglas
                  E. Ford (1)
                Acting
                  President, Secretary and Director
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –Edward
                  E. Ford (1)
                Director
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –Gary
                  E. Read
                Director
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –Larry
                  F. Robb
                Director
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –Malcolm
                  E. Rogers Jr.
                Director
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –
 
 (1)
              During
                  the year ended March 31, 2005, Dockside Capital Group Inc., a private
                  company of which Edward D. Ford and Douglas E. Ford are directors
                  and
                  officers, was paid a total of $6,000 in management and consulting
                  fees. No
                  formal agreements are in place for the provision of these
                  services.
 
 We
        do not
        presently have any pension, retirement or similar plans, and do not compensate
        our directors or officers by way of any material bonus or profit sharing
        plans.
 
 -26-
 Table
            of Contents
  **BOARD
        PRACTICES**
 
 In
        accordance with Section 106(3) of the *Business
        Corporations Act* (Alberta),
        each of our directors holds office for a term of one year, unless he is
        otherwise removed or resigns, with such term expiring at the succeeding annual
        shareholders’ meeting. Officers are appointed by, and serve at the discretion
        of, our board of directors.
 
 We
        currently have no arrangements in place for the provision of benefits upon
        the
        termination of our directors or officers.
  **Board
        of Director Committees**
 
 We
        have
        one standing committee, the audit committee, comprised of members of our
        board
        of directors. Our audit committee was formed in 1996 and in March 2005 adopted
        a
        formal written charter. The current members of our audit committee include
        Douglas E. Ford, Carlton J. Parfitt and F. George Orr, and we presently have,
        and will continue to have, one members who is “financial experts” (as defined in accordance
        with Item 16A(b) of Form 20-F ),
        F.
        George Orr. Our audit committee meets with our external auditors annually,
        prior
        to completion of our audited financial statements, and with our management
        regularly throughout the fiscal year.
 
 We
        have
        no formal remuneration committee.
 
 **EMPLOYEES**
 
 For
        the
        fiscal year ended March 31, 2005, we had no salaried employees.
 
 **SHARE
        OWNERSHIP**
 
 The
        table
        below sets forth, as of September 26, 2005, information regarding the share
        ownership of our common stock for each of our directors and executive
        officers.
  **Name**
              
              **Amount
                  and**
                **Nature
                  of Ownership**
              
              **Percent
                  of Class***M.
                  Glen Kertz (1)
              
              
              3,000,000
              
              
              21.1
              %George
                  Orr (2)
              
              
              1,252,137
              
              
              8.8
              %Douglas
                  E. Ford (3)
              
              
              988,356
              
              
              7.0
              %Carlton
                  Parfitt
              
              
              --
              
              
              --All
                  officers and directorsas
                  a group (4 persons)
              
              
              5,240,493
              
              
              37.9
              %
 
 
 *
              No
                  director or executive officer has different voting rights from
                  any other
                  holder of our common stock.**
              Beneficially
                  owns less than one percent.(1)
              Consists
                  of 3,000,000 shares of common stock directly owned.(2)
              Consists
                    of 3,000,000 shares of common stock beneficially owned through
                    MK
                    Enterprises LLC. Voting and/or investment power over all of these
                    securities is held by M. Glen Kertz.(3)
              Consists
                  of 550,000 shares of common stock directly owned and 702,137 shares
                  of
                  common stock beneficially owned through a
                  spouse
  -27-
 Table
            of Contents
  The
        table
        below sets forth, as of September 26, 2005, information regarding the share
        ownership of our common stock for each of our directors and executive officers
        serving during the fiscal year ended March 31, 2005.
 
 **Name**
              
              **Amount
                  and**
                **Nature
                  of Ownership**
              
              **Percent
                  of Class***M.
                  Glen Kertz (1)
              
              
              3,000,000
              
              
              21.1
              %Douglas
                  E. Ford (2)
              
              
              1,008,532
              
              
              7.1
              %Edward
                  D. Ford (3)
              
              
              1,000,225
              
              
              7.0
              %Gary
                  E. Read (4)
              
              
              4,800
              
              
              **Larry
                  F. Robb (5)
              
              
              235,683
              
              
              1.7
              %Malcolm
                  E. Rogers Jr. (6)
              
              
              226,442
              
              
              1.6
              %All
                  officers and directorsas
                  a group (6 persons)
              
              
              5,435,330
              
              
              38.3
              %
 
 *
              No
                  director or executive officer has different voting rights from
                  any other
                  holder of our common stock.**
              Beneficially
                  owns less than one percent.(1)
              Consists
                    of 3,000,000 shares of common stock beneficially owned through
                    MK
                    Enterprises LLC. Voting and/or investment power over all of these
                    securities is held by M. Glen Kertz.(2)
              Consists
                  of 66,667 shares of common stock directly owned and 941,865 shares
                  of
                  common stock beneficially owned through Dockside Capital Group
                  Inc.,
                  issued in consideration of a settlement of a debt. Voting and/or
                  investment power over all of these securities is held by Douglas
                  E. Ford
                  and Edward D. Ford in equal portions.(3)
              Consists
                  of 58,360 shares of common stock directly owned and 941,865 shares
                  of
                  common stock beneficially owned through Dockside Capital Group
                  Inc.,
                  issued in consideration of a settlement of a debt. Voting and/or
                  investment power over all of these securities is held by Douglas
                  E. Ford
                  and Edward D. Ford in equal portions.(4)
              Consists
                  of 4,800 shares of common stock directly owned.(5)
              Consists
                  of 226,442 shares of common stock directly owned.(6)
              Consists
                  of 226,442 shares of common stock jointly owned with former
                  spouse.
  We
        presently have in effect two incentive stock option plans, our 2004 U.S.
        Stock
        Option Plan and our Amended 1996 Incentive Stock Option Plan (collectively
        our
“Stock Option Plans”), both are designed to encourage our directors, executive
        officers, consultants and other key employees to acquire a proprietary interest
        in the company. Our Stock Option Plans are administered by the Board of
        Directors, or a committee designated thereby, and reserve for issuance
        thereunder, in the aggregate, a total of ten percent (10%) of our issued
        and
        outstanding common shares, on a non-diluted basis, to be increased or decreased
        as the number of our issued and outstanding shares change. Our Stock Option
        Plans provide that the terms of the options and the option prices shall be
        fixed
        by the Board or committee and subject to the requirements of the exchange
        on
        which our common shares are traded, or any other governing regulatory body,
        at
        the time of exercise. Options granted shall expire after a period of five
        years
        or terminate three months after the recipient ceases to be our
        employee.
 
 There
        are, as of the date hereof, no options outstanding under our Stock Option
        Plans.
  -28-
 Table
            of Contents
  **ITEM
        7. MAJOR SHAREHOLDERS AND RELATED PARTY
        TRANSACTIONS**
 
 **MAJOR
        SHAREHOLDERS**
 
 As
        of
        September 26, 2005, there were 14,217,177 common shares issued and outstanding.
        The table below sets forth certain information, to the extent known or
        reasonably ascertainable, regarding our major shareholders, including beneficial
        owners of more than 5% of our common stock, as of September 26,
        2005.
 
 **Name**
              
              **Amount
                  and**
                **Nature
                  of Ownership**
              
              **Percent
                  of Class***MK
                  Enterprises LLC (1)
              
              
              3,000,000
              
              
              21.1
              %West
                  Peak Ventures of Canada Ltd. (2)
              
              
              2,200,000
              
              
              15.5
              %Dockside
                  Capital Group Inc. (3)
              
              
              941,865
              
              
              6.6
              %All
                  shareholders as a group (3
                  persons or entities)
              
              
              6,141,865
              
              
              43.2
              %
 
 *
              No
                  major shareholder has different voting rights from any other holder
                  of our
                  common stock.(1)
              Consists
                  of 3,000,000 shares of common stock directly owned.(2)
              Consists
                  of 2,200,000 shares of common stock directly owned.(3)
              Consists
                  of 941,865 shares of common stock directly owned. Voting and/or
                  investment
                  power over all of these securities is held by Douglas E. Ford and
                  Edward
                  D. Ford in equal portions.
 
 At
        of
        September 23, 2005, we had eighty-three shareholders of record, of which
        twenty-three were United States residents. These United States shareholders
        held
        4,162,033 shares of our common stock, representing approximately 29.3% of
        the
        issued and outstanding shares of our common stock.
 
 We
        are
        not directly or indirectly owned or controlled by another corporation, by
        any
        foreign government or by another natural or legal person, severally or jointly
        and we have no knowledge of any arrangements, the operation of which may
        at a
        subsequent date result in a change in our control.
 
 **RELATED
        PARTY TRANSACTIONS**
 
 The
        following information is provided in connection with all transactions or
        loans
        dating back to April 1, 2002 between us and (a) enterprises that directly
        or
        indirectly through one or more intermediaries, control or are controlled
        by , or
        are under common control with, us; (b) associates; (c) individuals owning,
        directly or indirectly, an interest in our voting power that gives them
        significant influence over us, and close members of any such individuals’
        families; (d) key management personnel including those persons having authority
        and responsibility for planning, directing, and controlling our activities,
        such
        as directors and senior management and close members of any such individuals’
        families; and (e) enterprises in which a substantial interest in the voting
        power is owned, directly or indirectly, by any person described in (c) or
        (d) or
        over which such a person is able to exercise significant influence:
 
 *Management
        Fees*
 
 In
        each
        of the Fiscal Years Ended March 31, 2003, 2004, and 2005, a management fee
        was
        paid to Dockside Capital Group Inc., a private company of which Edward D.
        Ford
        and Douglas E. Ford are directors and officers. No formal agreements are
        in
        place for the provision of these services. For the Fiscal Years Ended March
        31,
        2004 and 2005, the total amount of such management fee was $6,000, and for
        the
        Fiscal Year Ended march 31, 2003, it was $4,500. Although we believe that
        the
        management fees paid are as fair as those which could have been obtained
        in an
        arms length transaction with unaffiliated third parties, there can be no
        assurance of this.
 
 *Office
        Lease Rent*
 
 In
        each
        of the Fiscal Years Ended March 31, 2003, 2004, and 2005, rent was paid to
        Dockside Capital Group Inc., a private company of which Edward D. Ford and
        Douglas E. Ford are directors and officers. No formal agreements are in place
        for the provision of these services. For the Fiscal Years Ended March 31,
        2004
        and 2005, the total amount of such rent was $6,000, and for the Fiscal Year
        Ended march 31, 2003, it was $4,500. Although we believe that the rent paid
        has
        been as fair as that which could have been obtained in an arms length
        transaction with unaffiliated third parties, there can be no assurance of
        this.
   -29-
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  *Loans
        From Directors*
 
 As
        of
        March 31, 2005, we had obtained aggregate loan advances in an amount totaling
        $158,359 (2004 - $106,039 and 2003 - $15,378) from several of our officers
        and
        directors of the Company. These loan advances were without interest or specific
        terms of repayment.
 
 On
        July
        4, 2005, after having obtained shareholder authorization on April 14, 2005
        to
        settle certain outstanding obligations of the company by way of common stock
        conversions at a rate equal to $0.05 per share, $153,349 of the then outstanding
        indebtedness under these loans was converted to 1,106,486 shares of our common
        stock, representing a price per share of $0.14 (the balance of the obligation
        having been paid in cash). Although we believe that the ratio applied for
        purposes of the conversion to common stock was as fair as that which could
        have
        been obtained in an arms length transaction with unaffiliated third parties,
        there can be no assurance of this. ******
 
 *MK
        Enterprises License and Related Transactions*
  On
        March
        17, 2005, we reached an agreement in principal with MK Enterprises LLC (“MK”),
        an entity controlled by Glen Kertz, our current Chairman, director and acting
        president to obtain or otherwise secure the following:
 
 (i)
              A
                  license for a period lasting so long as royalty payments continue
                  to be
                  made as required, for the exclusive worldwide marketing and distribution
                  rights to three unrelated and proprietary consumer retail products
                  that
                  had previously been developed by MK, including the Ultrasonic Skincare
                  System, the Dust Wolf, and the Tomorrow Garden (collectively, and
                  together
                  with any improvements thereon, the “Initial
                  Products”);
 
 (ii)
              A
                  license for a period lasting 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 (“Initial
                  Ancillaries”);
 
 (iii)
              A
                  right for an initial period of five years to acquire a license
                  for a
                  period lasting 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 MK (collectively, “Additional Products”);
 
 (iv)
              A
                  license for a period lasting 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 (“Additional Ancillaries”);
                  and
 
 (v)
              A
                  related services agreement pursuant to which MK would provide consulting
                  support in connection with the Initial Products, the Initial Ancillaries,
                  the Additional Products and the Additional
                  Ancillaries.
  On
          July
          29, 2005, we entered into a series of related definitive agreements with
          MK
          (collectively, the “MK Agreements”), including (i) a master license agreement
          for a period lasting so long as royalty payments continue to be made as
          required, for the exclusive worldwide marketing and distribution rights
          to the
          Initial Products and the Initial Ancillaries (the “MK Master License”), (ii) 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 period lasting
          so long
          as royalty payments continue to be made as required, for the exclusive
          worldwide
          marketing and distribution rights to any Additional Products and any Additional
          Ancillaries (the “MK Product Development Agreement”), and (iii) a consulting
          agreement pursuant to which we will receive consulting support from MK
          in
          connection with each of the Initial Products, the Initial Ancillaries,
          the
          Additional Products and the Additional Ancillaries (the “MK Consulting
          Agreement”), in exchange for the following:
 ·
              20,000,000
                  shares of our common stock;
 
 ·
              A
                  one-time USD $125,000 license fee;
 
 ·
              Reimbursement
                  for USD $125,000 in development costs associated with each of the
                  Initial
                  Products since March 17, 2005;
  -30-
 Table
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  ·
              The
                  greater of the following, payable
                  annually:
 
 (i)
              USD
                  $400,000; or
 
 (ii)
              The
                  aggregate of the following:
 
 ·
              Subject
                  to a minimum amount of USD $37,500 per Initial Product during the
                  second
                  year of the MK Master License, and USD $50,000 each year thereafter,
                  continuing royalties payable quarterly at a rate
                  of:
 
 :
              USD
                  $10.00 per Ultrasonic Skincare System unit sold;
 
 :
              USD
                  $2.00 per Dust Wolf unit sold;
 
 :
              4.5%
                  of annual net sales of the Tomorrow Garden Kit; and
 
 :
              3%
                  of annual net sales of Initial
                  Ancillaries.
 
 ·
              A
                  one-time USD $50,000 license fee for each Additional Product licensed
                  (except for a one pre-identified
                  product);
 
 ·
              Subject
                  to a minimum amount of USD $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;
                  and
 
 ·
              Consulting
                  fees of USD $156,000 per year, payable monthly in advance.
 
 Although
        Mr. Kertz was neither an officer nor a director at the time we entered into
        the
        MK Agreements, he was both an officer and a director prior to July 2004 and
        assumed his current positions immediately following our entering into these
        agreements. Although we believe that the terms of the MK Transactions are
        as
        fair as that which could have been obtained in an arms length transaction
        with
        unaffiliated third parties, there can be no assurance that the conflict of
        interest which existed as a result of Mr. Kertz prior involvement with us
        did
        not result in borrowing terms less favorable to us than would otherwise have
        been the case.
 
 *Finder’s
        Fees*
 
 In
        connection with our July/August 2005 syndicated private offering transactions
        in
        the aggregate amount of USD $1,277,200, aggregate compensation in the form
        of
        investor finder’s fees consisting of the following were paid:
 
 ·
              USD
                  $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 USD $0.50 per share; and
 
 ·
              Three
                  year warrants to purchase up to 425,733 shares of our common stock
                  at a
                  price of USD $0.75 per share.
 
 -31-
 Table
            of Contents
  From
        the
        aggregate finder’s fee compensation identified above, West Peak Ventures of
        Canada, Inc.,, an entity beneficially owned 100% by Timothy Brock, received
        USD
        $73,271 in cash, 241,667 shares of our common sock, a three year warrant
        to
        purchase up to 145,000 shares of our common stock at a price of USD $0.50
        per
        share, and a three year warrant to purchase up to 241,667 shares of our common
        stock at a price of USD $0.75 per share.
 
 **INTERESTS
        OF EXPERTS AND COUNSEL**
 
 Not
        applicable.
 
 **ITEM
        8. FINANCIAL INFORMATION**
 
 **CONSOLIDATED
        STATEMENTS AND OTHER FINANCIAL INFORMATION**
 
 See
        Item
        17 and our financial statement and accompanying notes beginning on page
        F-1.
 
 ***Legal
        proceedings***
 
 There
        are
        no pending, and we are not aware of any contemplated, legal, governmental
        or
        arbitration proceedings, including those related to bankruptcy, receivership
        or
        those involving a third party which have, or may have, significant effects
        on
        our financial position or profitability.
 
 ***Dividend
        Policy***
  We
        have
        never paid a dividend and have no intentions of doing so in the foreseeable
        future.
 
 **SIGNIFICANT
        CHANGES**
  On
          July
          29, 2005, we entered into a series of related definitive agreements with
          MK
          (collectively, the “MK Agreements”), including (i) a master license agreement
          for a period lasting so long as royalty payments continue to be made as
          required, for the exclusive worldwide marketing and distribution rights
          to the
          Initial Products and the Initial Ancillaries (the “MK Master License”), (ii) 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 period lasting
          so long
          as royalty payments continue to be made as required, for the exclusive
          worldwide
          marketing and distribution rights to any Additional Products and any Additional
          Ancillaries (the “MK Product Development Agreement”), and (iii) a consulting
          agreement pursuant to which we will receive consulting support from MK
          in
          connection with each of the Initial Products, the Initial Ancillaries,
          the
          Additional Products and the Additional Ancillaries (the “MK Consulting
          Agreement”), in exchange for the following:
 
 ·
              20,000,000
                  shares of our common stock;
 
 ·
              A
                  one-time USD $125,000 license fee;
 
 ·
              Reimbursement
                  for USD $125,000 in development costs associated with each of the
                  Initial
                  Products since March 17, 2005;
  -32-
 Table
            of Contents
  ·
              The
                  greater of the following, payable
                  annually:
 
 (i)
              USD
                  $400,000; or
 
 (ii)
              The
                  aggregate of the following:
 
 ·
              Subject
                  to a minimum amount of USD $37,500 per Initial Product during the
                  second
                  year of the MK Master License, and USD $50,000 each year thereafter,
                  continuing royalties payable quarterly at a rate
                  of:
 
 :
              USD
                  $10.00 per Ultrasonic Skincare System unit sold;
 
 :
              USD
                  $2.00 per Dust Wolf unit sold;
 
 :
              4.5%
                  of annual net sales of the Tomorrow Garden Kit; and
 
 :
              3%
                  of annual net sales of Initial
                  Ancillaries.
 
 ·
              A
                  one-time USD $50,000 license fee for each Additional Product licensed
                  (except for a one pre-identified
                  product);
 
 ·
              Subject
                  to a minimum amount of USD $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;
                  and
 
 ·
              Consulting
                  fees of USD $156,000 per year, payable monthly in advance.
 
 Subsequent
        to March 31, 2005, we changed our name to Valcent Products Inc. to reflect
        our
        newly adopted business plan. Effective May 3, 2005, and in order to render
        our
        capital structure more amenable to contemplated financing, we effected a
        consolidation of our common shares on a basis of one new share for each three
        old shares.
  To
        finance obligations arising under the MK Agreements, and to provide working
        capital to pursue our business plan, during the period July 25, 2005 through
        August 5, 2005, we consummated a series of related private offering transactions
        with and among a syndicated group of institutional and other investors pursuant
        to which we issued, in the aggregate, USD $1,277,200 in 8% per annum convertible
        notes and three year warrants to acquire (i) up to 1,702,924 shares of common
        stock at a price per share of USD $0.50, and (ii) up to an additional 1,702,924
        shares of common stock at a price per share of USD $1.00. Subject to certain
        limitations on amount, 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 the common
        stock for the ten trading days prior to conversion, or (ii) USD $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 the amount being redeemed,
        but
        only in the event that our common shares have a closing price of USD $1.50
        per
        share for at least twenty consecutive trading days and there has otherwise
        been
        no default.
  In
        connection with the financing described above, compensation in the form of
        finder’s fees was paid which consisted in the aggregate of the
        following:
 
 ·
              USD
                  $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 USD $0.50; and
 
 ·
              Three
                  year warrants to purchase up to 425,733 shares of our common stock
                  at a
                  price of USD $0.75.
  -33-
 Table
            of Contents
  As
        part
        of these private offering transactions, we also agreed to certain registration
        rights for each of the investors and finders pursuant to which we became
        committed to registering all of the shares issued as part of such transactions,
        by filing a registration statement on Form F-1 covering the shares underlying
        the convertible notes and the warrants within sixty days of the closing date,
        or
        by September 27, 2005. Under the terms of these private offering transactions,
        we have until January 25, 2006 to cause such registration statement to be
        declared effective by the SEC. Furthermore, in accordance with the terms
        of
        these private offering transactions, any delays in meeting this obligation
        subjects us to liability in an amount, payable in cash, at a rate of 2% of
        the
        outstanding amount on the convertible notes per thirty day period for the
        duration of any such delay.
 
 As
        of the
        date of the filing of this annual report on Form 20-F, the registration
        statement on Form F-1 has not yet been filed and penalties continue to accrue
        as
        we have experienced ongoing delays. Although there can be no assurance,
        management is hopeful that we will be able to cause the registration statement
        to be filed within the next several weeks and that, because of their interest
        in
        our financial prosperity, we will be able to obtain an agreement with the
        syndicated group of institutional and other investors with respect to accruing
        penalties such that any amounts owed by us as of the time the registration
        statement is filed can be paid by us in installments over time on the basis
        of a
        schedule that we will be able to meet without undue financial
        hardship.
 
 **ITEM
        9. THE OFFER AND LISTING**
 
 **OFFERING
        AND LISTING DETAILS**
 
 The
        table
        below sets forth certain information regarding the price history of our common
        shares, including (i) annual high and low market prices for each of the five
        most recent fiscal years, (ii) quarterly high and low market prices for each
        full quarter of the two most recent fiscal years, and (iii) monthly high
        and low
        market prices for each month of the six most recent months. The prices have
        been
        adjusted to reflect a one-for-three common share consolidation effective
        May 3,
        2005.
 
 Our
        common shares are presently quoted on the United States OTC Bulletin Board,
        under the symbol “VCTPF” (formerly “NTTRF”). Effective May 3, 2005, we changed
        our name from Nettron.com, Inc. to Valcent Products Inc. and delisted our
        common
        shares from the TSX-Venture Exchange, Inc. (formerly The Canadian Venture
        Exchange), where we had been trading under the symbol “NTT.H”, maintaining only
        our listing only on the United States OTC Bulletin Board. Prior to our delisting
        from the TSX-Venture Exchange we had been quoted thereon under the symbol
        “NTT.H” from August 18, 2003 though May 2, 2005, “NTT.T” from February 18, 2003
        to August 17, 2003 and “NTT” prior to February 18, 2003.
 **Period**
                
                
                **OTC
                    Bulletin Board**
                  **(U.S.
                    Dollars)**
                
                
                **TSX-Venture
                    Exchange**
                  **(Canadian
                    Dollars)****High**
                
                
                **Low**
                
                
                **High**
                
                
                **Low****Fiscal
                    year ended March 31,**2001
                
                $
                9.000
                
                $
                0.600
                
                $
                13.5
                
                $
                0.1262002
                
                $
                0.750
                
                $
                0.033
                
                $
                1.35
                
                $
                0.0602003
                
                $
                0.300
                
                $
                0.009
                
                $
                1.17
                
                $
                0.0302004
                
                $
                0.075
                
                $
                0.0144
                
                $
                0.090
                
                $
                0.0302005*
                
                $
                0.60
                
                $
                0.030
                
                $
                0.555
                
                $
                –**Quarter
                    ended**March
                    31, 2003
                
                $
                0.060
                
                $
                0.030
                
                $
                0.060
                
                $
                0.030June
                    30, 2003
                
                $
                0.075
                
                $
                0.075
                
                $
                0.060
                
                $
                0.030September
                    30, 2003
                
                $
                0.075
                
                $
                0.030
                
                $
                0.060
                
                $
                0.030December
                    31, 2003
                
                $
                0.075
                
                $
                0.030
                
                $
                0.090
                
                $
                0.060March
                    31, 2004
                
                $
                0.060
                
                $
                0.0144
                
                $
                0.090
                
                $
                0.090June
                    30, 2004
                
                $
                0.030
                
                $
                0.030
                
                $
                0.090
                
                $
                0.075September
                    30, 2004*
                
                $
                0.033
                
                $
                0.030
                
                $
                –
                
                $
                –December
                    31, 2004*
                
                $
                0.060
                
                $
                0.033
                
                $
                –
                
                $
                –March
                    31, 2005*
                
                $
                0.600
                
                $
                0.033
                
                $
                –
                
                $
                –June
                    30, 2005
                
                $
                0.650
                
                $
                0.360
                
                $
                –
                
                $
                –September
                    30, 2005
                
                $
                0.57
                
                $
                0.40
                
                $
                –
                
                $
                –**Month
                    ended**April
                    30, 2005*
                
                $
                0.405
                
                $
                0.360
                
                $
                –
                
                $
                –May
                    31, 2005
                
                $
                0.500
                
                $
                0.410
                
                $
                –
                
                $
                –June
                    30, 2005
                
                $
                0.650
                
                $
                0.410
                
                $
                –
                
                $
                –July
                    31, 2005
                
                $
                0.570
                
                $
                0.400
                
                $
                –
                
                $
                –August
                    31, 2005
                
                $
                0.500
                
                $
                0.400
                
                $
                –
                
                $
                –September
                    30, 2005
                
                $
                0.53
                
                $
                0.42
                
                $
                –
                
                $
                –
 
 *
              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 then TSX-Venture Exchange
                  on May 3,
                  2005.
 
 -34-
 Table
            of Contents
 
 **MARKETS**
 
 At
        present, and since May 3, 2005, our common shares are quoted solely on the
        OTC
        Bulletin Board, under the symbol “VCTPF”.
 
 **ITEM
        10. ADDITIONAL INFORMATION**
 
 **SHARE
        CAPITAL**
 
 Not
        applicable.
  **MEMORANDUM
        AND ARTICLES OF ASSOCIATION**
 
 **Organization,
        Object and Purpose**
 
 We
        were
        incorporated in Canada on January 19, 1996, in accordance with the provision
        of
        the *Business
        Corporations Act* (Alberta).
        Article 5 of our articles of incorporation provides that we are neither
        restricted from carrying on any business nor required to carry on a certain
        business.
 
 **Directors**
 
 ***Voting
        Powers***
 
 In
        accordance with Sections 4.19 of our bylaws 120 of the *Business
        Corporations Act* (Alberta)
        if one our directors is party to or has a material interest in a material
        contract or proposed material contract with us, or one of our subsidiaries,
        that
        director must disclose the nature and extent of their interest at the first
        meeting at which the proposed material contract is considered, or at the
        first
        meeting after which the director becomes an interested party, either in writing
        or, at the director’s request, entered into the meeting minutes. All material
        contracts or proposed material contracts in which one of our directors has
        a
        material interest must be referred to our board or shareholders for approval,
        even if not one which, in the ordinary course of business, would otherwise
        require approval. A director who is party to or has a material interest in
        a
        material contract or proposed material contract, shall refrain from voting
        on
        any resolution to approve the material contract unless it is one for (i)
        an
        arrangement by way of security for money lent to or obligations undertaken
        by
        the director for our benefit, (ii) a transaction relating primarily to the
        director’s remuneration, (iii) a contract for indemnity insurance, or (iv) a
        contract with an affiliate.
 
 In
        accordance with our bylaws and the *Business
        Corporations Act* (Alberta)
        there are no limitations on the power of our directors, in the absence of
        an
        independent quorum, to vote compensation to themselves.
 
 ***Borrowing
        Powers***
 
 In
        accordance with Sections 3.01 of our bylaws and 103 of the *Business
        Corporations Act* (Alberta)
        our directors may, without shareholder authorization, (i) borrow money on
        our
        credit, (ii) issue, reissue, sell or pledge debt obligations, (iii) give
        a
        guarantee on our behalf to secure performance of an obligation, and (iv)
        mortgage, hypothecate, pledge or otherwise create a security interest in
        all or
        any of our property, owned or subsequently acquired, to secure any of our
        obligations. These powers can be modified by means of an amendment to our
        articles of incorporation or bylaws, or by unanimous shareholder
        agreement.
 
 ***Qualifications***
 
 There
        is
        no mandatory retirement age required by our bylaws or the *Business
        Corporations Act* (Alberta)
        and no requirement that our directors be shareholders of the
        Company.
 
 **Common
        Shares**
 
 In
        accordance with Article 2 and Schedule A of our articles of incorporation
        filed
        January 19, 1996, and as amended, there are authorized an unlimited number
        of
        common shares which our directors may issue without nominal or par
        value.
 
 ***Dividends***
 
 Holders
        of shares of our common stock are entitled, subject to the rights privileges,
        restrictions and conditions attached to our preferred shares, to receive
        such
        dividends as our directors may from time to time, by resolution,
        declare
 
 ***Voting
        Rights***
 
 Holders
        of shares of our common stock are entitled to receive notice of and vote,
        on the
        basis of one vote for each common share so held, at every meeting of the
        shareholders of Valcent Products Inc.
 
 ***Liquidation
        Rights***
 
 Holders
        of shares of our common stock are entitled, subject to the rights privileges,
        restrictions and conditions attached to our preferred shares, to receive,
        in the
        event of liquidation, dissolution or winding up or upon the distribution
        of any
        of our assets among the holders of shares of our common stock, other than
        by way
        of dividends, their pro rata share of such distribution.
  -35-
 Table
            of Contents
  **Preferred
        Shares**
 
 In
        accordance with Article 2 and Schedule B of our articles of incorporation
        filed
        January 19, 1996, and as amended, there are authorized an unlimited number
        of
        preferred shares, which our directors may, from time to time, issue without
        nominal or par value in one or more series consisting of such number of shares
        as our directors may determined. Our directors, by resolution, may fix the
        designation, rights, privileges, restrictions and conditions attached to
        the
        preferred shares of each series, including without limiting the generality
        of
        the foregoing, the rate, form, entitlement and payment of preferential
        dividends, the redemption price, terms, procedure and conditions for redemption,
        if any, voting rights and conversion rights, if any and sinking fund, purchase
        fund or other provisions attaching to the preferred shares of such
        series.
 
 ***Dividends***
 
 Holders
        of shares of our preferred stock shall be entitled to preference over holders
        of
        shares of our common stock and any other of our shares ranking junior with
        respect to the payment of dividends as our directors may from time to time,
        by
        resolution, declare. No dividend shall at any time be declared or paid or
        set
        apart for payment on any shares ranking junior to shares of our preferred
        stock
        unless all dividends up to and including the dividends payable for the last
        completed period for which such dividends were payable on each series of
        preferred shares then issued and outstanding shall have been declared and
        paid
        or set apart for payment at the date, nor shall we call for redemption or
        redeem
        or purchase for cancellation or reduce or otherwise pay off any of our shares
        of
        preferred stock or any shares ranking junior to shares of our preferred stock
        unless all dividends up to and including the dividends payable for the last
        completed period for which such dividends were payable on each series of
        preferred shares then issued and outstanding shall have shall have been declared
        and paid or set apart for payment as of the date of such call for redemption,
        purchase, reduction or other payment.
 
 Holders
        of shares our of preferred stock shall rank on parity with holders of shares
        of
        all other series of our preferred stock with respect to payment of dividends,
        exclusive of any conversion rights, and if cumulative dividends are not paid
        in
        full in respect of a series of our preferred stock, the holders of shares
        of all
        series of our preferred stock shall participate ratably.
 
 ***Voting
        Rights***
 
 Holders
        of shares of our preferred stock shall be entitled to those voting rights
        which
        our directors may, by resolution, designate with respect thereto.
 
 ***Liquidation
        Rights***
 
 Holders
        of shares of our preferred stock shall be entitled to preference over holders
        of
        shares of our common stock and any other of our shares ranking junior with
        respect to the distribution of our assets in the event of liquidation,
        dissolution or winding up, whether voluntary or involuntary, and may also
        be
        given such other preferences as our directors may fix, by resolution, prior
        to
        issuance.
 
 Holders
        of shares our of preferred stock shall rank on parity with holders of shares
        of
        all other series of our preferred stock with respect to distribution of assets
        in the event of liquidation, dissolution or winding up, whether voluntary
        or
        involuntary, exclusive of any conversion rights, and if return of capital
        is not
        paid in full in respect of a series of our preferred stock, the holders of
        shares of all series of our preferred stock shall participate
        ratably.
 
 **Shareholder
        Action**
 
 In
        accordance with the provisions of the *Business
        Corporations Act* (Alberta)
        ordinary resolutions, such as those adopting amendments to our bylaws, must
        be
        passed by a majority of shareholders voting thereon, whereas special resolutions
        require a majority of not less than 2/3 of the votes cast by shareholders
        voting
        thereon. Special resolutions are required in (i) authorizing share splits
        where
        more than one class of shares exist, (ii) increasing stated capital with
        respect
        to a class or series of shares where the amount to be added is not received
        in
        consideration for the issuance of shares and where more than one class of
        shares
        exist, (iii) decreasing stated capital for any purpose, (iv) making certain
        amendments to or restating our articles of incorporation, (v) approving an
        amalgamation agreement, (vi) approving a continuance into another jurisdiction,
        (vii) selling, leasing or exchanging of all or substantially all of our
        property, other than in the ordinary course of business, or (viii) liquidating
        our assets and dissolving the Company.
 
 **Shareholders
        Meetings**
 
 ***Annual
        Meetings***
 
 We
        normally hold our annual shareholders’ meeting shortly after completion of the
        preceding fiscal year at the our principal executive offices in Canada with
        the
        record date begin set and notice provided to our shareholders not less than
        twenty-one nor more than fifty days prior to the meeting. Only those shareholder
        entitled to vote at the meeting, the directors, auditors and any other persons
        required to attend under any provision of our articles of incorporation,
        bylaws,
        or the *Business
        Corporations Act* (Alberta)
        are entitled to attend the meeting.
  -36-
 Table
            of Contents
  ***Special
        Meetings***
 
 Our
        board, the chairman of the board, managing director or president, have the
        power
        to call a special meeting at anytime, and notice of any special meeting shall
        state the text of any special resolutions to be submitted at the
        meeting.
 
 **Share
        Ownership**
 
 There
        are
        no provisions in our bylaws governing the ownership threshold above which
        shareholder ownership must be disclosed.
 
 With
        the
        exception of the *Investment
        Canada Act* ,
        as
        amended, and the potential application of the *Competition
        Act* there
        are no limitations on the ability or right of persons to own our securities,
        including the rights of non-resident or foreign shareholders to hold or exercise
        voting rights on our securities imposed by the *Business
        Corporations Act* (Alberta)
        or by our articles of incorporation or bylaws.
 
 ***Investment
        Canada Act***
 
 The *Investment
        Canada Act* ,
        as
        amended, generally prohibits implementation of any of a number of enumerated
        reviewable investments by an individual, government or agency thereof,
        corporation, partnership, trust or joint venture that is non-Canadian, as
        defined in the *Investment
        Canada Act* ,
        unless
        the Minister responsible for administration of the *Investment
        Canada Act* is
        satisfied that the investment is likely to be of a net benefit to
        Canada.
 
 In
        accordance with the provisions of the *Investment
        Canada Act* ,
        an
        investment or series of investments to directly or indirectly acquire control
        of
        a Canadian company by a non-Canadian that is a “WTO Investor” or a Canadian
        company which was immediately prior to the investment controlled by a WTO
        Investor, is reviewable if the value of the assets of the company equal or
        exceed $250 million, the threshold established for the year 2005. In succeeding
        years, the threshold amount may be increased or decreased in accordance with
        the
        provisions of Section 14.1 of the *Investment
        Canada Act* .
        A WTO
        Investor is one who is a member of the World Trade Organization, currently
        comprised of one hundred forty-eight member countries, including the United
        States, or a WTO Investor-controlled entity, as defined in the *Investment
        Canada Act* .
 
 An
        investment or series of investments to directly or indirectly acquire control
        of
        a Canadian company by a non-Canadian, other than a WTO Investor, is reviewable
        if the value of the assets of the company equal or exceed $5 million, or
        if an
        order for review is made by the Governor in Council on grounds that the
        investment is related to Canada’s cultural heritage or national
        identity.
 
 Procedurally,
        the *Investment
        Canada Act* requires
        a non-Canadian who is establishing a new Canadian business or making an
        investment that will result in the acquisition of an existing Canadian business,
        to, depending on the transaction, file with the Director of Investments either
        notification of the transaction or an application for review.
 
 The
        notification procedure involves filing a brief statement of information at
        any
        time up to thirty days following implementation of the investment, in response
        to which the non-Canadian investor will receive a receipt bearing a certified
        date and advising the non-Canadian investor that the proposal is either
        unconditionally non-reviewable or that it will not be reviewed provided there
        is
        no additional notice of review issued within twenty-one days following the
        certified date.
 
 -37-
 Table
            of Contents
  Where
        an
        investment is reviewable in accordance with the provisions of the *Investment
        Canada Act* an
        application for review must be filed prior to implementation of the investment,
        in response to which the non-Canadian investor will receive a receipt bearing
        a
        certified date. Within forty-five days following certified date the Minister
        responsible for administering the *Investment
        Canada Act* must
        either notify the non-Canadian investor that he is satisfied that the investment
        is likely to be of a net benefit to Canada or, if the Minister is unable
        to
        complete the review, notify the non-Canadian investor that the Minister shall,
        within thirty days, unless a further period is agreed upon, complete
        consideration of the investment. Once the thirty period has elapsed, the
        Minister will be deemed to be satisfied that the investment is likely to
        be of a
        net benefit to Canada and the investment may thereafter be
        implemented.
 
 Exempt
        from the notice and review provisions of the *Investment
        Canada Act* are,
        among other transactions, those acquisitions carried out (i) in the ordinary
        course of one’s business; (ii) in connection with the realization of security
        granted for a loan; (iii) for the purpose of facilitating financing, provided
        the acquirer divest himself of control within two years; and (iv) by reason
        of
        an amalgamation, merger, consolidation, or corporate reorganization, following
        which the ultimate control remains unchanged.
 
 Exempt
        from the review provisions of the *Investment
        Canada Act* are
        investments to acquire control of Canadian businesses that (i) engage in
        the
        production of uranium; (ii) provide any financial services; (iii) provide
        transportation services; or (iv) constitute a cultural business.
 
 ***Competition
        Act***
 
 The *Competition
        Act* ,
        as
        amended, is designed to maintain and encourage competition while promoting
        efficiency and adaptability in the local Canadian economy, as well as to
        expand
        opportunities for Canadian participation in the world markets. **
 
 In
        accordance with the provisions of the *Competition
        Act* an
        investment giving rise to the acquisition or establishment, directly or
        indirectly, by one or more persons of control over or a significant interest
        in
        the whole or part of a business of a competitor, supplier, customer or other
        person may be subject to substantive review by the Commissioner of Competition,
        the officer responsible for administering the *Competition
        Act* .
 
 Pre-investment
        notification must be made to the Commissioner of Competition by parties of
        a
        proposed transaction where certain party and transaction size thresholds
        are
        satisfied. The party size threshold requires that parties of a proposed
        transaction, together with their affiliates, have total assets in Canada
        or
        gross revenues from sales in, from or into Canada that exceed CAD $400 million
        in the aggregate. The transaction size threshold requirements vary depending
        on
        the nature of the investment.
 
 Transactions
        subject to pre-investment notification may not be completed until (i) the
        applicable statutory waiting periods have expired or been earlier terminated
        by
        the Commissioner of Competition without his having taken action to prohibit
        the
        transaction’s implementation; or (ii) the Commissioner of Competition has issued
        an advance ruling certificate, or has waived the parties obligation to notify.
        Transactions involving only affiliates or those in the public interest, among
        others, are exempt from pre-investment notification requirements.
  Regardless
        of whether pre-investment notification is required, the Commissioner of
        Competition may apply to the Competition Tribunal, a specialized tribunal
        established by Section 3 if the *Competition
        Tribunal Act* and
        empowered with the authority to hear and dispose of certain matters arising
        under the *Competition* ** *Act* ,
        for
        substantive review of a transaction.
  Where
        either the Competition Tribunal finds the transaction likely to prevent or
        lessen competition substantially it may order the investment not proceed
        or, if
        it has been completed, order its dissolution or the disposition of some of
        the
        assets or shares involved.
 
 -38-
 Table
            of Contents
 
 **Change
        in Control**
 
 There
        are
        no provisions in our articles of incorporation or bylaws that would have
        an
        effect of delaying, deferring or preventing a change in our control with
        respect
        to a mergers, acquisition or corporate restructuring.
 
 **MATERIAL
        CONTRACTS**
 
 The
        following is a summary of certain key economic and related provisions of
        all
        material contracts that we have entered into since October 2003, which only
        include those relating to our July 29 th ,
        2005
        license and related transactions with MK Enterprises, LLC, on the one hand,
        and
        our July/August 2005 private offering transaction, on the other.
 
 ***MK
        Enterprises License and Related Transactions***
 
 On
        March
        17, 2005, we reached an agreement in principal with MK Enterprises LLC (“MK”),
        an entity controlled by Glen Kertz, our current Chairman, director and acting
        president to obtain or otherwise secure the following:
 
 (i)
                A
                      license for a period lasting so long as royalty payments continue
                      to be
                      made as required, for the exclusive worldwide marketing and
                      distribution
                      rights to three unrelated and proprietary consumer retail products
                      that
                      had previously been developed by MK, including the Ultrasonic
                      Skincare
                      System, the Dust Wolf, and the Tomorrow Garden (collectively,
                      and together
                      with any improvements thereon, the “Initial
                      Products”);
 (ii)
              A
                  license for a period lasting 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 (“Initial
                  Ancillaries”);
 
 (iii)
              A
                  right for an initial period of five years to acquire a license
                  for a
                  period lasting 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 MK (collectively, “Additional Products”);
 
 (iv)
              A
                  license for a period lasting 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 (“Additional Ancillaries”);
                  and
 
 (v)
              A
                  related services agreement pursuant to which MK would provide consulting
                  support in connection with the Initial Products, the Initial Ancillaries,
                  the Additional Products and the Additional
                  Ancillaries.
  On
          July
          29, 2005, we entered into a series of related definitive agreements with
          MK
          (collectively, the “MK Agreements”), including (i) a master license agreement
          for a period lasting so long as royalty payments continue to be made as
          required, for the exclusive worldwide marketing and distribution rights
          to the
          Initial Products and the Initial Ancillaries (the “MK Master License”), (ii) 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 period lasting
          so long
          as royalty payments continue to be made as required, for the exclusive
          worldwide
          marketing and distribution rights to any Additional Products and any Additional
          Ancillaries (the “MK Product Development Agreement”), and (iii) a consulting
          agreement pursuant to which we will receive consulting support from MK
          in
          connection with each of the Initial Products, the Initial Ancillaries,
          the
          Additional Products and the Additional Ancillaries (the “MK Consulting
          Agreement”), in exchange for the following:
 ·
              20,000,000
                  shares of our common stock;
 
 ·
              A
                  one-time USD $125,000 license fee;
 
 ·
              Reimbursement
                  for USD $125,000 in development costs associated with each of the
                  Initial
                  Products since March 17, 2005;
  -39-
 Table
            of Contents
  ·
              The
                  greater of the following, payable
                  annually:
 
 (i)
              USD
                  $400,000; or
 
 (ii)
              The
                  aggregate of the following:
 
 ·
              Subject
                  to a minimum amount of USD $37,500 per Initial Product during the
                  second
                  year of the MK Master License, and USD $50,000 each year thereafter,
                  continuing royalties payable quarterly at a rate
                  of:
 
 :
              USD
                  $10.00 per Ultrasonic Skincare System unit sold;
 
 :
              USD
                  $2.00 per Dust Wolf unit sold;
 
 :
              4.5%
                  of annual net sales of the Tomorrow Garden Kit; and
 
 :
              3%
                  of annual net sales of Initial
                  Ancillaries.
 
 ·
              A
                  one-time USD $50,000 license fee for each Additional Product licensed
                  (except for a one pre-identified
                  product);
 
 ·
              Subject
                  to a minimum amount of USD $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;
                  and
 
 ·
              Consulting
                  fees of USD $156,000 per year, payable monthly in advance.
 
 The
        MK
        Agreements contain considerably more detail than the summary of key economic
        and
        related provisions set forth above. This summary does not purport to be a
        complete description of these agreements, and is qualified in is entirety
        by
        reference to the MK Master License, the MK Product Development Agreement,
        and
        the MK Consulting Agreement respectively, copies of which are included as
        Exhibits to this filing. Prospective investors in our common stock are strongly
        encouraged to read these agreements in their entirety.
 
 ***July/August
        2005 Private Offering Transaction***
 
 During
          the period July 25, 2005 through August 5, 2005, we consummated a series
          of
          related private offering transactions with and among a syndicated group
          of
          institutional and other investors (United States, Canadian and other) pursuant
          to which we issued, in the aggregate, USD $1,277,200 in 8% per annum convertible
          notes and three year warrants to acquire (i) up to 1,702,924 shares of
          common
          stock at a price per share of USD $0.50, and (ii) up to an additional 1,702.924
          shares of common stock at a price per share of USD $1.00. Subject to certain
          limitations on amount, 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 the
          common
          stock for the ten trading days prior to conversion, or (ii) USD $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 the amount being redeemed,
          but
          only in the event that our common shares have a closing price of USD $1.50
          per
          share for at least twenty consecutive trading days and there has otherwise
          been
          no default.
  The
          agreements involved in the July/August 2005 private offering transactions
          consisted, for each investor, of a subscription agreement, a convertible
          note, a
          Class A common stock purchase warrant, and a Class B common stock purchase
          warrant (the “July/August 2005 Subscription Agreements”). All individual
          transactions utilized the same forms of July/August 2005 Subscription
          Agreements, except that certain of the representations contained in certain
          of
          the agreements differed in minor ways depending on the country of domicile
          of
          the particular investors involved.
 
 -40-
 Table
            of Contents
  In
        connection with the financing described above, compensation in the form of
        finder’s fees was paid which consisted in the aggregate of the
        following:
 
 ·
              USD
                  $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 USD $0.50; and
 
 ·
              Three
                  year warrants to purchase up to 425,733 shares of our common stock
                  at a
                  price of USD $0.75.
 
 As
        part
        of the subscription agreement that was part of the July/August 2005 Subscription
        Agreements, we agreed to grant certain registration rights to each of the
        investors and the finders, pursuant to which we became obligated to registering
        all of the shares issuable upon conversion of the promissory notes and under
        the
        warrants. Under the terms of the Subscription Agreement a registration statement
        must have been filed on Form F-1 no later than sixty days following the close
        of
        the transaction and must be declared effective not later than one hundred
        fifty
        days following the close of the transaction. Thereafter, on one occasion,
        for a
        period commencing one hundred fifty-one days following the close of the
        transaction and not later than two years following the close of the transaction,
        any record holder or holders of more than fifty percent (50%) of the shares
        of
        our common stock issued or issuable upon conversion of the promissory notes
        or
        exercise of the warrants may, upon written request, demand that we prepare
        and
        file a registration statement registering shares issuable upon conversion
        of all
        sums due under the convertible promissory notes and exercisable under the
        warrants.
 
 The
        July/August 2005 Subscription Agreements contain considerably more detail
        than
        the summary of key economic and related provisions set forth above. This
        summary
        does not purport to be a complete description of these agreements, and is
        qualified in its entirety by reference to the actual form of subscription
        agreement, convertible notes, Class A common stock purchase warrants, and
        Class
        B common stock purchase warrants, respectively, copies of which are included
        as
        Exhibits to this filing. Prospective investors in our common stock are strongly
        encouraged to read these agreements in their entirety.
 
 **EXCHANGE
        CONTROLS**
 
 There
        are
        no governmental laws, decrees, regulations or other legislation in Canada
        which
        restrict the import or export of capital, including the availability of cash
        and
        cash equivalents. With the exception of withholding tax requirements, there
        are
        no governmental laws, decrees, regulations or other legislation in Canada
        which
        affect the remittance of dividends, interest or other payments, to non-Canadian
        resident holders of shares of our securities.
 
 **TAXATION**
 
 **Material
        Canadian Federal Income Tax Consequences**
 
 The
        summary below is restricted to the case of a holder of one or more common
        shares
        who for purposes of the *Income
        Tax Act* (Canada), as amended, is 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.
 
 The
        following is a general discussion of certain possible Canadian federal income
        tax consequences, under current laws, rules and regulations, generally
        applicable to non-residents of Canada who hold shares of our common stock.
        This
        discussion does not address all potentially relevant Canadian federal income
        tax
        matters and it does not address consequences peculiar to persons subject
        to
        special provisions of the Canadian federal income tax law. In addition this
        summary does not take into account or anticipate changes in the governing
        law,
        whether by judicial, executive or legislative action, nor does it take into
        account any provincial, local or foreign tax consequences.
 
 -41-
 Table
            of Contents
  **Dividends**
 
 A
        non-resident of Canada who holds shares of our common stock will be subject
        to a
        Canadian withholding tax equal to 25%, or such lower rate as may be available
        under an applicable tax treaty, of the gross amount of any dividend paid
        or
        deemed to be paid on the common shares held.
 
 In
        accordance with the 1995 Protocol amending the Canada-US Income Tax Convention
        (1980) the rate of withholding tax applicable to a dividend on common shares
        paid to a holder who is non-resident of Canada and a resident of the United
        States is, if the holder of the common shares is a company that beneficially
        owns at least 10% of the our voting stock, 5% and in any other case 15% of
        the
        gross amount of the dividend. We will be required to withhold the applicable
        amount from each dividend so paid and remit the withheld amount directly
        to the
        Receiver General for Canada for the account of the non-resident holder.
 
 In
        accordance with the 1995 Protocol amending the Canada-US Income Tax Convention
        (1980), certain tax-exempt entities residing in the United States may be
        exempt
        from Canadian withholding taxes, including any withholding taxes levied in
        respect of dividends received on our common shares.
 
 **Capital
        Gains (Losses)**
 
 A
        non-resident of Canada who disposes of shares of our common stock, including
        by
        deemed disposition upon death, will not be subject to Canadian federal income
        tax on any capital gain (or capital loss) thereby realized unless the common
        shares constitute “taxable Canadian property” as defined by the *Income
        Tax Act* (Canada)
        and no relief is afforded under any applicable tax treaty. Generally, our
        common
        shares will not constitute taxable Canadian property of a non-resident of
        Canada
        unless the common shares are held as capital property used in carrying on
        a
        business (other than an insurance business) in Canada, or the non-resident
        of
        Canada or persons with whom the non-resident of Canada did not deal at
        arm’s-length alone or together held or held options to acquire, at any time
        within the five years preceding the disposition, 25% or more of the shares
        of
        any class of our capital stock.
 
 A
        non-resident of Canada who is resident of the United States and realizes
        a
        capital gain on disposition of common shares that are taxable Canadian property
        will nevertheless, by virtue of the Canada-US Income Tax Convention (1980),
        generally be exempt from Canadian tax thereon unless (a) more than 50% of
        the
        value of the common shares are derived from, or forms an interest in, Canadian
        real estate, including Canadian mineral resource properties, (b) the common
        shares formed part of the business property of a permanent establishment
        that
        the non-resident of Canada has or had in Canada within the twelve months
        preceding disposition, or (c) the non-resident of Canada (i) was a resident
        of
        Canada at any time within the ten years immediately preceding the disposition
        and for a total of 120 months during the twenty years, preceding the
        disposition, and (ii) owned the common share when he ceased to be a resident
        of
        Canada.
 
 A
        non-resident of Canada who is subject to Canadian tax in respect of a capital
        gain on disposition of common shares must include one-half of the capital
        gain
        in computing his taxable income earned in Canada. The non-resident of Canada
        may, subject to certain limitations, deduct one half of any capital loss
        arising
        on disposition of taxable Canadian property from taxable capital gains realized
        in the year of disposition in respect of taxable Canadian property and, to
        the
        extent not so deductible, from such taxable capital gains of any of the three
        preceding years or any subsequent year.
 
 **DOCUMENTS
        ON DISPLAY**
 
 All
        documents referred to in this annual report on Form 20-F may be inspected
        at our
        offices during regular business hours located #420 - 475 Howe Street, Vancouver,
        British Columbia V6C 2B3, telephone (604) 606-7979.
 
 **ITEM
        11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
        RISK**
 
 Not
        applicable .
 
 **ITEM
        12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY
        SECURITIES**
 
 Not
        applicable.
 
  -42-
 Table
            of Contents
  **PART
        II**
 
 
 **ITEM
        13. DEFAULTS, DIVIDEND ARREARAGES AND
        DELINQUENCIES**
 
 Not
        applicable .
 
 **ITEM
        14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
        AND USE OF PROCEEDS**
 
 Not
        applicable.
 
 **ITEM
        15. CONTROLS AND PROCEDURES**
 
 **DISCLOSURE
        CONTROLS AND PROCEDURES**
 
 Our
        Acting President and Secretary, performing the function of principal executive
        and principal financial officer, respectively, have evaluated the effectiveness
        of the design and operation of our disclosure controls and procedures (as
        defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended)
        as of the end of the fiscal year covered by this annual report on Form 20-F
        (in
        accordance with Rule 13a-15(b) under the Securities Exchange Act of 1934,
        as
        amended). Based on this evaluation, our Acting President and Secretary have
        concluded that these disclosure controls and procedures are effective and
        designed to ensure that the information required to be disclosed in our reports
        filed or submitted under the Securities Exchange Act of 1934, as amended,
        is
        recorded, processed, summarized and reported within the requisite time periods.
 
 **MANAGEMENT’S
        ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**
 
 Our
        Acting President and Secretary, performing the function of principal executive
        and principal financial officer, respectively, have evaluated the effectiveness
        of the design and operation of our internal control over financial reporting
        (as
        defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended)
        as of the end of the fiscal year covered by this annual report on Form 20-F.
        Based on this evaluation, our Acting President and Secretary have concluded
        that
        these internal controls over financial reporting are effective and provide
        reasonable assurance regarding the reliability of our financial reporting
        and
        the preparation of our financial statements for external purposes in accordance
        with generally accepted accounting principles.
 
 During
        the course of their evaluation, our Acting President and Secretary did not
        discover any fraud involving management or any other personnel who play a
        significant role in our disclosure controls and procedures or internal controls
        over financial reporting. Furthermore, because there were no significant
        deficiencies and/or material weaknesses discovered no remedial measures were
        necessary or taken during the period covered by this report to correct any
        such
        deficiencies.
  **ATTESTATION
        REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM**
 
 Not
        applicable.
 
 **CHANGES
        IN INTERNAL CONTROL OVER FINANCIAL REPORTING**
 
 No
        changes in our disclosure controls and procedures or other factors have occurred
        during the fiscal year covered by this annual report on Form 20-F that would
        materially affect or be reasonably likely to materially affect our disclosure
        controls and procedures.
 
 **ITEM
        16A. AUDIT COMMITTEE FINANCIAL
        EXPERT**
 
 We
        presently have, and will continue to have, one audit committee members who
        is
“financial experts” (as defined in accordance
        with Item 16A(b) of Form 20-F ),
        F.
        George Orr.
  -43-
 Table
            of Contents
  **ITEM
        16B. CODE OF ETHICS**
 
 As
        of the
        date of the filing of this annual report on Form 20-F we have not adopted
        a code
        of ethics (as defined in accordance with Item 16B(a) of Form 20-F), however,
        we
        intend to, as soon as practicable, form a committee to advise on the content
        and
        adoption of a code of ethics.
 
 **ITEM
        16C. PRINCIPAL ACCOUNTING FEES AND
        SERVICES**
 
 Our
        independent auditors for the fiscal year ended March 31, 2004 were Charlton
        & Company, Chartered Accountants. At our request, effective June 24, 2005,
        Charlton & Company, Chartered Accountants, resigned as our auditors and we
        have appointed Smythe Ratcliffe, Chartered Accountants, as successor auditors
        for the fiscal year ended March 31, 2005.
 
 **AUDIT
        FEES**
 
 The
          aggregate audit fees billed for the fiscal years ended March 31, 2004 and
          March
          31, 2005 for professional services rendered by Charlton & Company and Smythe
          Ratcliffe, Chartered Accountants, for the audit of our annual financial
          statements were $4,000 and $5,000, respectively.
 **AUDIT
        COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES**
 
 Our
        audit
        committee charter requires us to request the prior approval of our audit
        committee on every occasion for which we engage our principal accountants
        or
        their associated entities to render any audit or non-audit
        services.
 
 **ITEM
        16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
        COMMITTEES**
 
 Not
        applicable.
 
 **ITEM
        16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND
        AFFILIATED PURCHASERS**
 
 Not
        applicable.
  -44-
 Table
            of Contents
  **PART
        III**
 
 **ITEM
        17. FINANCIAL STATEMENTS**
 
 
 **VALCENT
        PRODUCTS INC.**
 **(Formerly
        Nettron.Com, Inc.)**
 
 **March
        31, 2005 and 2004**
 
 **(Expressed
        in Canadian Dollars)**
 
 **Index**
  Page**REPORT****OF
                    INDEPENDENT****REGISTERED
                    PUBLIC ACCOUNTING FIRM**
              F-2**FINANCIAL
                  STATEMENTS**Balance
                  Sheets
              F-3Statements
                  of Operations and
                  Deficit
              F-4Statements
                  of Cash Flows
              F-5Notes
                  to the Financial Statements
              F-6
                  - F-12
 
 
 F-1
 Table
            of Contents
  **SmytheRatcliffe.com**
 
 7th
        Floor, Marine Building
  355
        Burrard Street
  Vancouver,
        B.C. V6C 2G8
  
  facsimile: 
        604.688.4675
  telephone: 
        604.687.1231
  **REPORT** **OF
          INDEPENDENT REGISTERED PUBLIC ACCOUNTING** **FIRM**
 To
        the
        Shareholders of Valcent Products Inc. (Formerly Nettron.Com, Inc.)
 
 We
          have
          audited the balance sheet of Valcent Products Inc. (Formerly Nettron.Com,
          Inc.)
          as at March 31, 2005 and the statements of operations and deficit and cash
          flows
          for the year ended March 31, 2005. These financial statements are the
          responsibility of the Company’s management. Our responsibility is to express an
          opinion on these financial statements based on our audit. The financial
          statement as at March 31, 2004 and 2003, and for the two years then ended
          were
          audited by another auditor who expressed an opinion without reservation
          on those
          statements in his report dated July 15, 2004.
  We
          conducted our audit in accordance with generally accepted auditing standards
          in
          Canada and the standards of the Public Company Accounting Oversight Board
          (PCAOB) in the United States. Those standards require that we plan and
          perform
          an audit to obtain reasonable assurance whether the financial statements
          are
          free of material misstatement. An audit includes examining, on a test basis,
          evidence supporting the amounts and disclosures in the financial statements.
          An
          audit also includes assessing the accounting principles used and significant
          estimates made by management, as well as evaluating the overall financial
          statement presentation.
  In
            our
            opinion, these financial statements present fairly, in all material respects,
            the financial position of the Company as at March 31, 2005 and the results
            of
            its operations and its cash flows for the year then ended in accordance
            with
            Canadian generally accepted accounting principles.
  *“Smythe
        Ratcliffe” (signed)*
 
 Chartered
        Accountants
 
 Vancouver,
        Canada
 July
          18,
          2005, except as to Note 10,
 which
          is
          as of October 13, 2005
 
 Comments
        by Auditor for US Readers on Canada - US Reporting Difference
 
 In
        the
        United States, reporting standards for auditors require the addition of an
        explanatory paragraph (following the opinion paragraph) when the financial
        statements are affected by conditions and events that cast substantial doubt
        on
        the company’s ability to continue as a going-concern, such as those described in
        Note 2 to the financial statements. Our report to the shareholders dated
        July
        18, 2005 is expressed in accordance with Canadian reporting standards, which
        do
        not permit a reference to such events and conditions in the auditors’ report
        when these are adequately disclosed in the financial statements.
 
 *“Smythe
        Ratcliffe” (signed)*
 
 Chartered
        Accountants
 July
        18,
        2005, except as to Note 10,
 which
          is
          as of October 13, 2005
 
  F-2
 Table
            of Contents
  **Valcent
        Products Inc.**
 **(Formerly
        Nettron.Com, Inc.)**
 **Balance
        Sheets**
 **As
        at March 31**
 **(Expressed
        in Canadian Dollars)**
 **2005**
                    
                    **2004****ASSETS****Current**Cash
                        and term deposits
                    
                    $
                    222
                    
                    $
                    –Accounts
                        receivable
                    
                    
                    714
                    
                    
                    2,059$
                    936
                    
                    $
                    2,059**LIABILITIES
                        AND SHAREHOLDERS’
                        DEFICIT**
  **Current******Bank
                        indebtedness
                    
                    $
                    –
                    
                    $
                    1,132****Accounts
                        payable and accrued liabilities
                    
                    
                    80,527
                    
                    
                    87,144****Related
                        party advances
                    
                    
                    158,359
                    
                    
                    106,039238,886
                    
                    
                    194,315**Shareholders’
                        deficit**Share
                        capital (Note 4)
                    
                    
                    2,999,420
                    
                    
                    2,999,420**Deficit**
                    
                    
                    (3,237,370
                    )
                    
                    (3,191,676
                    )(237,950
                    )
                    
                    (192,256
                    )$
                    936
                    
                    $
                    2,059
 **Nature
          of Operations (Note 2)**
 **Subsequent
        Events (Note 10)**
 
 Approved
        by the Board:
 ***“Douglas
                  E. Ford”***
              Director
 Douglas
        E. Ford
 
 ***See
        accompanying notes.***
  F-3
 Table
            of Contents
  **Valcent
        Products Inc.**
 **(Formerly
        Nettron.Com, Inc.)**
 **Statement
        of Operations and Deficit**
 **Years
        Ended March 31**
 **(Expressed
        in Canadian Dollars)**
 **2005**
                
                **2004**
                
                **2003****Expenses**Advertising
                    and promotion
                
                $
                –
                
                $
                1,045
                
                $
                289Amortization
                
                
                –
                
                
                –
                
                
                4,500Filing
                    and transfer agent fees
                
                
                10,600
                
                
                9,310
                
                
                8,260Foreign
                    exchange (gain) loss
                
                
                (1,228
                )
                
                953
                
                
                –Management
                    fees
                
                
                6,000
                
                
                6,000
                
                
                4,500Office
                    and miscellaneous
                
                
                919
                
                
                217
                
                
                477Professional
                    fees (recovery)
                
                
                23,403
                
                
                2,360
                
                
                (104,163
                )Rent
                
                
                6,000
                
                
                6,000
                
                
                4,500**Loss
                    (income) from continuing operations**
                
                
                45,694
                
                
                25,885
                
                
                (81,637
                )**Foreign
                    exchange gain**
                
                
                –
                
                
                –
                
                
                (796
                )**Gain
                    on disposal of discontinued operations (note 3)**
                
                
                –
                
                
                (2,238
                )
                
                –**Net
                    loss (income)**
                
                
                **45,694**
                
                
                **23,647**
                
                
                **(82,433**
                **)****Deficit,
                    beginning of year**
                
                
                3,191,676
                
                
                3,168,029
                
                
                3,250,462**Deficit,
                    end of year**
                
                $
                3,237,370
                
                **$**
                **3,191,676**
                
                $
                3,168,029**Net
                    loss (income) per share - basic and diluted**
                
                **$**
                **0.01**
                ****
                **$**
                **0.01**
                ****
                **$**
                **(0.01**
                **)****Weighted
                    average shares outstanding**
                
                
                6,435,374
                
                
                6,435,374
                
                
                6,435,374
 ***See*** **ac** ***companying
        notes.***
  F-4
 Table
            of Contents
  **Valcent
        Products Inc.**
 **(Formerly
        Nettron.Com, Inc.)**
 **Statements
        of Cash Flows**
 **Years
        Ended March 31**
 **(Expressed
        in Canadian Dollars)** 
 **2005**
                  
                  **2004**
                  
                  **2003****Cash
                      flows provided by (used in)****Operating
                      activities**Income
                      (loss) from operations
                  
                  $
                  (45,694
                  )
                  $
                  (23,647
                  )
                  $
                  81,637Items
                      not involving cashAmortization
                      of property and equipment indiscontinued
                      operations
                  
                  
                  –
                  
                  
                  (2,238
                  )
                  
                  4,500(45,694
                  )
                  
                  (25,885
                  )
                  
                  86,137Changes
                      in non-cash working capital balancesAccounts
                      receivable
                  
                  
                  1,345
                  
                  
                  (1,384
                  )
                  
                  8,018Accounts
                      payable and accrued liabilities
                  
                  
                  (6,617
                  )
                  
                  (72,310
                  )
                  
                  (103,472
                  )Foreign
                      exchange gain
                  
                  
                  –
                  
                  
                  –
                  
                  
                  796(5,272
                  )
                  
                  (73,694
                  )
                  
                  (94,658
                  )**Cash
                      used in continued operations**
                  
                  
                  (50,966
                  )
                  
                  (99,579
                  )
                  
                  (8,521
                  )**Financing
                      activity**Related
                      party advances
                  
                  
                  52,320
                  
                  
                  90,661
                  
                  
                  –Proceeds
                      on issuance of shares and share subscriptions
                  
                  
                  –
                  
                  
                  –
                  
                  
                  15,378**Cash
                      provided by financing activities**
                  
                  
                  52,320
                  
                  
                  90,661
                  
                  
                  15,378**Increase
                      (decrease) in cash**
                  
                  
                  1,354
                  
                  
                  (8,918
                  )
                  
                  6,857Cash
                      (bank indebtedness), beginning of year
                  
                  
                  (1,132
                  )
                  
                  7,786
                  
                  
                  929**Cash
                      (bank indebtedness), end of year**
                  
                  $
                  222
                  
                  $
                  (1,132
                  )
                  $
                  7,786
 ***See
          accompanying notes.***
   F-5
 Table
            of Contents
  **Valcent
        Products Inc.**
 **(Formerly
        Nettron.Com, Inc.)**
 **Notes
        to the Financial Statements**
 **Years
        Ended March 31, 2005 and 2004**
 **(Expressed
        in Canadian Dollars)**
  **1.**
              **Significant
                  Accounting Policies**
 
 (a)
              **Principles
                  of consolidation**
 
 These
        financial statements are stated in Canadian dollars and have been prepared
        in
        accordance with Canadian generally accepted accounting principles. On April
        19,
        2005 Nettron.Com, Inc. changed its name to Valcent Products Inc. (the
“Company”). Effective March 24, 2004 the Company disposed of its wholly-owned
        subsidiary, Nettron Media Group, Inc. and recorded a gain on disposal of
        discontinued operations.
 
 (b)
              **Foreign
                  currency transactions and
                  translation**
 
 Amounts
        denominated in US dollars have been translated into Canadian dollars as
        follows:
 
 (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 during each
                  year.
 
 All
        exchange gains and losses are charged to operations.
 
 (c)
              **Use
                  of estimates**
 
 The
        preparation of these financial statements in accordance with Canadian generally
        accepted accounting principles requires management to make estimates and
        assumptions that affect the reported amounts of assets and liabilities at
        the
        date of the financial statements, and the reported amounts of revenues and
        expenses during the reporting period. Actual results could differ from
        management’s best estimates as additional information becomes available in the
        future.
 
 (d)
              **Loss
                  per share**
 
 The
        Company uses the “Treasury Stock Method” to calculate loss per common share.
        Under this method, the basic loss per share is calculated based on the weighted
        average aggregate number of common shares outstanding during each period.
        The
        diluted earnings per share assumes that the outstanding stock options and
        share
        purchase warrants had been exercised at the beginning of the period to the
        extent they are dilutive. The assumed conversion of stock options has an
        anti-dilutive impact on both 2005 and 2004 and has not been
        recorded.
 
 (e)
              **Stock-based
                  compensation**
 
 The
        Company has adopted the Canadian Institute of Chartered Accountants (“CICA”)
        Handbook Section 3870, *Stock-Based
        Compensation and Other Stock-Based Payments* ,
        which
        recommends the fair value-based methodology for measuring compensation costs.
        The new section also permits, and the Company has adopted, the use of the
        intrinsic value-based method, which recognizes compensation cost for awards
        to
        employees only when the market price exceeds the exercise price at date of
        grant, but requires pro-forma disclosure of earnings and earnings per share
        as
        if the fair value method had been adopted. Any consideration paid the option
        holders is credited to capital stock. There is no effect for the years
        presented **.**
   F-6
 Table
            of Contents
  **Valcent
        Products Inc.**
 **(Formerly
        Nettron.Com, Inc.)**
 **Notes
        to the Financial Statements**
 **March
        31, 2005 and 2004**
 **(Expressed
        in Canadian Dollars)**
  **1.**
              **Significant
                  Accounting Policies**(continued)
 
 (f)
              **Income
                  taxes**
 
 The
        Company has adopted the recommendations of CICA Handbook Section 3465, *Income
        Taxes,* which
        requires use of the liability method. Under this method, income taxes reflect
        the deferral of such taxes to future years. The deferral is a result of
        temporary differences, which arise when certain costs are claimed for tax
        purposes in different time periods than the related amounts are amortized
        in the
        accounts.
 
 **2.**
              **Nature
                  of Business and Ability to Continue as a
                  Going-Concern**
 
 The
        Company was incorporated under the Alberta Business Corporations Act on January
        19, 1996 and was in the business of marketing its interactive dating service
        “Cupid’s Web” until March 24, 2004 when these operations were discontinued due
        to difficulties encountered in raising financing. During the year ended March
        31, 2005 the Company reached an agreement in principle, subject to due diligence
        and entering into formal documentation, to acquire a license to certain
        proprietary technology owned by arms-length parties (see License Acquisition
        and
        Private Placement Note 9).
 
 These
        financial statements have been prepared in accordance with Canadian generally
        accepted accounting principles applicable to a going-concern, which contemplates
        the realization of assets and the satisfaction of liabilities and commitments
        in
        the normal course of business. As at March 31, 2005, the Company has accumulated
        losses totaling $3,237,370 and had a working capital deficiency of $237,950.
        The
        continuation of the Company is dependent upon the financial support of
        shareholders as well as obtaining long-term financing. The Company has been
        exploring business opportunities that might allow the Company to restart
        commercial operations. Management is currently seeking new sources of equity
        financing. While the Company is expending its best efforts to achieve the
        above
        plans, there is no assurance that any such activity will generate funds that
        will be available for operations.
 
 These
        conditions raise substantial doubt about the Company’s ability to continue as a
        going-concern. These financial statements do not include any adjustments
        that
        might arise from this uncertainty.
 
 **3.**
                **Disposition**
 On
        March
        24, 2004, the Company made the decision to abandon and therefore discontinue
        the
        operations of its wholly owned subsidiary, Nettron Media Group. The financial
        results of Nettron Media Group have been segregated and presented as a
        discontinued operation on the statements of operations and deficit and cash
        flows. The results of discontinued operations are summarized as
        follows:
 
 **2004**Revenue
              
              $
              –Loss
                  from operations
              
              
              (4,500
              )Loss
                  on write-off of property and equipment
              
              
              (5,905
              )Forgiveness
                  of debt
              
              
              12,643Gain
                  on disposal of discontinued operations
              
              $
              2,238
 
 **The
        balance sheets do not include any net assets related to the discontinued
        operations.**
  F-7
 Table
            of Contents
  **Valcent
        Products Inc.**
 **(Formerly
        Nettron.Com, Inc.)**
 **Notes
        to the Financial Statements**
 **March
        31, 2005 and 2004**
 **(Expressed
        in Canadian Dollars)**
  **3.**
              **Disposition**(continued)
 
 **2004**Loss
                    per share from discontinued operations is summarizedas
                    follows:From
                  operations
              
              $
              –On
                  disposal of net property
              
              
              –$
              –
 
 **4.**
              **Share
                  Capital**
 
 (a)
              **Authorized**
 
 Unlimited
        number of common shares without par value
 Unlimited
        number of preferred shares without par value
 
 (b)
              **Issued**
 
 The
        Company had issued share capital of 6,435,374 common shares representing
        $2,999,420 as at March 31, 2003, 2004 and March 31, 2005.
 
 Subsequent
        to March 31, 2005 the Company consolidated its common shares three for one
        and
        issued 1,605,000 post-consolidated common shares, for the settlement of $221,407
        of debt, resulting in the issued share capital being 3,750,125 common shares.
        Pursuant to an agreement in principle the Company may also issue additional
        common shares in conjunction with a license acquisition agreement and a private
        placement (see Note 9)
 
 (c)
              **Stock
                  options**
 
 Pursuant
        to the Company’s 1996 Incentive Stock Option Plan (the “Plan”), a total of 10%
        of the Company’s issued common shares are reserved for the granting of stock
        options. The Plan provides that the terms of the options and the option price
        shall be fixed by the Directors and subject to the price restrictions and
        other
        requirements imposed by the TSX Venture Exchange or any other exchange that
        the
        Company lists its common shares. The Plan also provides that no option shall
        be
        granted to any person except on recommendations of the Directors of the Company.
        Stock options granted under the Plan may not be for a period longer than
        five
        years.
  As
        at
        March 31, 2004 the Company had outstanding stock options whereby 612,500
        shares
        could be acquired as to 512,500 shares at $0.44 until September 10, 2004
        and
        100,000 shares at $2.00 until March 27, 2005. All of these options expired
        unexercised and no options remained outstanding as at March 31, 2005.
  Subsequent
        to March 31, 2005 the Company amended the Plan and instituted a new stock
        option
        plan (the “US Plan”). The US Plan is applicable to residents of the United
        States and options may be issued under this plan to acquire up to an aggregate
        number of shares, which when combined with options granted under the Plan
        equal
        to 10% of the issued number of common shares. The terms of the options and
        the
        option price of the US Plan are to be fixed by the Directors, subject to
        a
        limitation that no one individual may be granted options to receive greater
        than
        5% of the issued number of common shares. The amended terms of the Plan call
        for
        the total aggregate number of options that can be granted under both the
        Plan
        and the US Plan be no more than 10% of the issued number of common
        shares.
  F-8
 Table
            of Contents
  **Valcent
        Products Inc.**
 **(Formerly
        Nettron.Com, Inc.)**
 **Notes
        to the Financial Statements**
 **March
        31, 2005 and 2004**
 **(Expressed
        in Canadian Dollars)**
  **5.**
              **Income
                  taxes**
 
 The
        tax
        effects of the temporary differences that give rise to the Company’s future tax
        assets and liabilities are as follows:
  **2005**
              
              **2004**Net
                  operating losses
              
              $
              798,392
              
              $
              877,170Net
                  capital losses
              
              
              255,705
              
              
              270,063Valuation
                  allowance
              
              
              (1,054,097
              )
              
              (1,147,233
              )Future
                  tax assets (liability)
              
              $
              –
              
              $
              –
 
 The
        Company evaluates its valuation allowance requirements based on projected
        future
        operations. When circumstances change and this causes a change in management’s
        judgment about the recoverability of future tax assets, the impact of the
        change
        in the valuation allowance is reflected in current income.
 
 The
        Company has non-capital losses available for income tax purposes in Canada
        and
        the United States totaling $2,241,414 (2004 - $2,331,660), which expire in
        various amounts from 2006 to 2013. This amount can be used to reduce taxable
        income of future years. Additionally, the Company has capital losses of
        $1,435,740, which are available to reduce capital gains in future
        periods.
 
 **6.**
              **Financial
                  Instruments**
 
 The
        Company’s financial instruments consist of cash, receivables and accounts
        payable and accrued liabilities. Unless otherwise noted, it is management’s
        opinion that the Company is not exposed to significant interest or credit
        risks
        arising from these financial instruments. As at March 31, 2005 and 2004 the
        fair
        values of cash, receivables and accounts payable and accrued liabilities
        approximate their carrying values due to the immediate short-term maturity
        of
        these instruments.
 
 **7.**
              **Related
                  Party Transactions**
 
 Related
        party transactions not disclosed elsewhere in these financial statements
        are as
        follows:
 
 (a)
              Included
                  in accounts payable and accrued liabilities is $158,359 (2004 -
                  $106,039)
                  due to directors and companies controlled by directors. Subsequent
                  to
                  March 31, 2005 $153,349 of this balance was settled by way of the
                  issuance
                  of 1,106,486 common shares.
 
 (b)
              The
                  Company paid fees to directors and companies controlled by directors
                  for
                  the following services:
  **2005**
                
                **2004**
                
                **2003**Management
                    fees
                
                $
                6,000
                
                $
                6,000
                
                $
                4,500Rent
                
                $
                6,000
                
                $
                6,000
                
                $
                4,500
 These
        transactions have been recorded at the exchange amount being the consideration
        established and agreed to by the related parties.
 
  F-9
 Table
            of Contents
  **Valcent
        Products Inc.**
 **(Formerly
        Nettron.Com, Inc.)**
 **Notes
        to the Financial Statements**
 **March
        31, 2005 and 2004**
 **(Expressed
        in Canadian Dollars)**
  **8.**
              **United
                  States****Accounting****Principles**
  The
          financial statements have been prepared in accordance with Canadian generally
          accepted accounting principles, which conform in all material respects
          with
          accounting principles generally accepted in the United States of
          America.
 
 **9.**
              **License
                  Acquisition and Private
                  Placement**
 
 The
        Company has reached an agreement in principle with certain arms-length parties
        whereby it may acquire an exclusive worldwide license to the licensor’s
        technologies for 20,000,000 common shares, post-consolidated, the payment
        of a
        license fee of $125,000, the payment of costs associated with developing
        the
        underlying technologies since March 17, 2005 and the payment of ongoing
        royalties from the sale of related products. To finance the license acquisition
        and the ongoing development and marketing of the underlying technologies
        the
        Company has received shareholder approval to issue US $1,500,000 debentures
        convertible into common shares plus warrants to acquire additional common
        shares
        and pay finders’ fees, which would include cash, common shares and warrants to
        acquire additional common shares.
 **10.**
                **Subsequent
                    Event**


On
      July
      29, 2005, the Company entered into a series of related definitive agreements
      with MK Enterprises LLC (“MK”, collectively the “MK Agreements”), including (i)
      a master license agreement for a period lasting so long as royalty payments
      continue to be made as required, for the exclusive worldwide marketing and
      distribution rights to the Initial Products and the Initial Ancillaries (the
“MK
      Master License”), (ii) a product development agreement which granted the Company
      a right for an initial period of five years to acquire a license, for a period
      lasting so long as royalty payments continue to be made as required, for the
      exclusive worldwide marketing and distribution rights to any Additional Products
      and any Additional Ancillaries (the “MK Product Development Agreement”), and
      (iii) a consulting agreement pursuant to which the Company will receive
      consulting support from MK in connection with each of the Initial Products,
      the
      Initial Ancillaries, the Additional consulting support from MK in connection
      with each of the Initial Ancillaries, the Additional Products and the Additional
      Ancillaries (the “MK Consulting Agreement”), in exchange for the
      following:


·
              20,000,000
                  shares of post-consolidated common
                  stock;
 
 ·
              A
                  one-tine US $125,000 license fee;
 
 ·
              Reimbursement
                  for US $125,000 in development costs associated with each of the
                  Initial
                  Products since March 17,
                  2005;







F-10
 Table
          of Contents


**Valcent
        Products Inc.**
 **(Formerly
        Nettron.Com, Inc.)**
 **Notes
        to the Financial Statements**
 **March
        31, 2005 and 2004**
 **(Expressed
        in Canadian Dollars)**


10.
              **Subsequent
                  Event**(continued)
 
 In
        connection with the financing described above, compensation in the form of
        finder’s fees was paid which consisted in the aggregate of the
        following:
 
 ·
              US
                  $127,720 in cash, representing 10% of the gross proceeds
                  realized;
 
 ·
              425,735
                  shares of common stock;
 
 ·
              Three
                  year warrants to purchase up to 255,440 shares of common stock
                  at a price
                  of US $0.50; and
 
 ·
              Three
                  year warrants to purchase up to 425,733 shares of common stock
                  at a price
                  of US $0.75.
 
 The
        Company is obligated to register all of the shares issuable upon conversion
        of
        the promissory notes and under the warrants.
   F-11
 Table
            of Contents


**Valcent
          Products Inc.**
 **(Formerly
          Nettron.Com, Inc.)**
 **Notes
          to the Financial Statements**
 **March
          31, 2005 and 2004**
 **(Expressed
          in Canadian Dollars)**
 **10.**
                  **Subsequent
                      Event**(continued)
 
 ·
                  The
                      greater of the following, payable
                      annually:
 
 (i)
                  USD
                      $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 MK Master License, and US $50,000 each year thereafter,
                      continuing royalties payable quarterly at a rate
                      of:
 
 :
                  US
                      $10.00 per Ultrasonic Skincare System unit sold;
 
 :
                  US
                      $2.00 per Dust Wolf unit sold;
 
 :
                  4.5%
                      of annual net sales of the Tomorrow Garden Kit; and
 
 :
                  3%
                      of annual net sales of Initial
                      Ancillaries.
 
 ·
                  A
                      one-time US $50,000 license fee for each Additional Product
                      licensed
                      (except for a one pre-identified
                      product);
 
 ·
                  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;
                      and
 
 ·
                  Consulting
                      fees of US $156,000 per year, payable monthly in advance.
 
 During
            the period July 25, 2005 through August 5, 2005, the Company consummated
            a
            series of related private offering transactions with and among a syndicated
            group of institutional and other investors pursuant to which were issued,
            in the
            aggregate, US $1,277,200 in 8% per annum convertible notes and three
            year
            warrants to acquire (i) up to 1,702,924 shares of common stock at a price
            per
            share of US $0.50, and (ii) up to an additional 1,702,924 shares of common
            stock
            at a price per share of US $1.00. Subject to certain limitations on amount,
            the
            principal amount of the notes, together with any accrued interest may
            be
            converted into shares of common stock at the lesser of (i) 70% of the
            average of
            the five lowest closing bid prices for the common stock for the ten trading
            days
            prior to conversion, or (ii) US $0.55. The convertible notes carry a
            redemption
            feature which allows for their retirement, in whole or in part, for an
            amount
            equal to 130% of the amount being redeemed, but only in the event the
            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.




F-12
 Table
          of Contents




**ITEM
      18. FINANCIAL STATEMENTS.**





Not
      applicable.





**ITEM
      19. EXHIBITS****.**





**No.**
            
            **Description
                of Exhibit**1(a)(i)
            
            Articles
                of Incorporation of Valcent Products Inc., dated January 19, 1996,
                FILED
                HEREWITH.1(a)(ii)
            
            Amendment
                to Articles of Incorporation of Valcent Products Inc., dated March
                12,
                1996, FILED HEREWITH.1(a)(iii)
            
            Amendment
                to Articles of Incorporation of Valcent Products Inc., dated August
                19,
                1996, FILED HEREWITH.1(a)(iv)
            
            Amendment
                to Articles of Incorporation of Valcent Products Inc., dated June
                30,
                1998, FILED HEREWITH.1(a)(v)
            
            Amendment
                to Articles of Incorporation of Valcent Products Inc., dated July
                8, 1999,
                FILED HEREWITH.1(a)(vi)
            
            Amendment
                to Articles of Incorporation of Valcent Products Inc., dated September
                28,
                1999, FILED HEREWITH.1(a)(vii)
            
            Amendment
                to Articles of Incorporation of Valcent Products Inc., dated April
                15,
                2005, FILED HEREWITH.1(b)
            
            By-laws
                of Valcent Products Inc., dated March 26, 1996, FILED
                HEREWITH.2(b)(i)
            
            Form
                of United States Convertible Note Purchase Agreement, including Warrant
                Agreements between Valcent Products Inc., and United States Note
                Holders,
                dated July 31, 2005, FILED HEREWITH.2(b)(ii)
            
            Form
                of Canadian Convertible Note Purchase Agreement, including Warrant
                Agreements between Valcent Products Inc., and Canadian Note Holders,
                dated
                July 31, 2005, FILED HEREWITH2(b)(iii)
            
            Form
                of Finders' Warrant between Valcent Products Inc., and Viscount Investment
                Ltd., dated July 31, 2005, FILED HEREWITH4(a)(i)
            
            Master
                License Agreement between Valcent Products Inc. and MK Enterprises
                LLC,
                dated July 29, 2005, FILED HEREWITH.4(a)(ii)
            
            Product
                Development Agreement between Valcent Products Inc. and MK Enterprises
                LLC, dated July 29, 2005, FILED HEREWITH.4(a)(iii)
            
            Invention
                License Agreement between Valcent Products Inc. and MK Enterprises
                LLC,
                dated July 29, 2005, FILED HEREWITH.4(a)(iv)
            
            Consulting
                Agreement between Valcent Products Inc. and Malcolm Glen Kertz, dated
                July
                29, 2005, FILED HEREWITH.4(a)(v)
            
            Consulting
                Agreement between Valcent Products Inc. and MK Enterprises LLC, dated
                July
                29, 2005, FILED HEREWITH.4(a)(vi)
            
            Further
                Agreement between Valcent Products Inc. and Malcolm Glen Kertz, dated
                July
                29, 2005, FILED HEREWITH.12(a)(i)
            
            Certification
                of Valcent Products Inc. Acting President, M. Glen Kertz, required
                by Rule
                13a-14(a) or Rule 15d-14(a), and dated October 13, 2005, FILED
                HEREWITH.12(a)(ii)
            
            Certification
                of Valcent Products Inc. Secretary, F. George Orr, required by Rule
                13a-14(a) or Rule 15d-14(a), and dated October 13, 2005, FILED
                HEREWITH.13(a)(i)
            
            Certification
                of Valcent Products Inc. Acting President, M. Glen Kertz, required
                by Rule
                13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title
                18 of
                the United States Code (18 U.S.C. 1350), and dated October 13, 2005,
                FILED
                HEREWITH.13(a)(ii)
            
            Certification
                of Valcent Products Inc. Secretary, F. George Orr, required by Rule
                13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title
                18 of
                the United States Code (18 U.S.C. 1350), and dated October 13, 2005,
                FILED
                HEREWITH.15(a)
            
            Audit
                Committee Charter, adopted by Board of Directors March 2005, FILED
                HEREWITH.








-45-
 Table
          of Contents





**SIGNATURES**





The
      registrant here certifies that it meets all of the requirements for filing
      on
      Form 20-F and that it has duly caused and authorized the undersigned to sign
      this annual report on its behalf.




**VALCENT
              PRODUCTS, INC.**Date: October
              13, 2005
            By:
            /s/ M.
              Glen KertzM.
                Glen Kertz
              Acting President








-46-