**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**Form
      10-KSB**





x
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





**For
      the fiscal year ended April 30, 2005**





 ̈
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





For
      the
      transition period from _______________ to _______________.








**Commission
      file number O-28557**








**Humatech,
      Inc.**


(Exact
      name of registrant as specified in its charter)





**Illinois**
            
            **36-3559839**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                No.)**1959
                South Val Vista Drive****Suite
                130****Mesa,
                Arizona**
            
            **85204**(Address
                of principal executive offices)
            
            (Zip
                Code)





**Registrant’s
      telephone number, including area code    (480)
      813-8484**





Securities
      registered under Section 12(g) of the Exchange Act:





**Common
      stock, no par value**


(Title
      of
      class)





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. x





Check
      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  ̈ No x .





Check
      if
      there is no disclosure of delinquent filers pursuant to Item 405 of Regulation
      S-B is not contained in this form, and no disclosure will be contained, to
      the
      best of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB. x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes  ̈ No x .





State
      issuer’s revenues for its most recent fiscal year.  $720,763
      for the year ended April 30, 2005.





State
      the
      aggregate market value of voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked prices of such common equity, as of a
      specified date within the past 60 days. (See definition of affiliate in rule
      12b-2 of the Exchange Act.) $2,056,094, based on the closing price of $0.10
      for
      the common stock on April 27, 2006.





State
      the
      number of shares outstanding of each of the issuer’s classes of common stock, as
      of the latest practicable date. As of April 27 2006, there were 34,304,848
      shares of common stock, no par value, issued and outstanding.





**DOCUMENTS
      INCORPORATED BY REFERENCE**










If
      the
      following documents are incorporated by reference, briefly describe them and
      identify the part of the form 10-KSB (e.g., Part I, Part II, etc.) into which
      the document is incorporated: (1) any annual report to security holders; (2)
      any
      proxy or information statement; and (3) any prospectus filed pursuant to rule
      424(b) or (c) of the Securities Act of 1933 (“Securities Act”). The listed
      documents should be clearly described for identification purposes (e.g., annual
      report to security holders for fiscal year ended December 24, 1990).
      None.





Transitional
      Small Business Disclosure Format (check one): Yes  ̈ No x





**HUMATECH,
        INC.**





**TABLE
      OF CONTENTS**




**PART
                  I**________
              ____ITEM
                  1
              —
              DESCRIPTION
                  OF BUSINESS
              1ITEM
                  2
              —
              DESCRIPTION
                  OF PROPERTY
              5ITEM
                  3
              —
              LEGAL
                  PROCEEDINGS
              5ITEM
                  4
              —
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY
                  HOLDERS
              6**PART
                  II**ITEM
                  5
              —
              MARKET
                  FOR COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERS
              7ITEM
                  6
              —
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATION
              9ITEM
                  7
              —
              FINANCIAL
                  STATEMENTS
              12ITEM
                  8
              —
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE
              13ITEM
                  8A
              —
              CONTROLS
                  AND PROCEDURES
              13ITEM
                  8B
              —
              OTHER
                  INFORMATION
              13**PART
                  III**ITEM
                  9
              —
              DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                  PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
                  ACT
              14ITEM
                  10
              —
              EXECUTIVE
                  COMPENSATION
              15ITEM
                  11
              —
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENTAND RELATED STOCKHOLDER MATTERS
              17ITEM
                  12
              —
              CERTAIN
                  RELATIONSHIPS AND RELATED
                  TRANSACTIONS
              17ITEM
                  13
              —
              EXHIBITS
              19ITEM
                  14
              —
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES
              20




*Table
          of Contents*




**PART
      I**





This
      Annual Report includes forward-looking statements within the meaning of the
      Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based
      on management’s beliefs and assumptions, and on information currently available
      to management. Forward-looking statements include the information concerning
      possible or assumed future results of operations of the Company set forth under
      the heading “Management’s Discussion and Analysis of Financial Condition or Plan
      of Operation.” Forward-looking statements also include statements in which words
      such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,”
“consider” or similar expressions are used.





Forward-looking
      statements are not guarantees of future performance. They involve risks,
      uncertainties and assumptions. The Company’s future results and shareholder
      values may differ materially from those expressed in these forward-looking
      statements. Readers are cautioned not to put undue reliance on any
      forward-looking statements.





**ITEM1
—
DESCRIPTION
      OF BUSINESS**





**History**





Humatech,
      Inc. was originally incorporated in the State of Illinois on February 2, 1988
      under the name of Midwest Enterprise Consultants, Inc. as a consulting and
      marketing services company. From our inception until April 1997, we were engaged
      primarily in the business of providing consulting services.





On
      April
      6, 1997, we acquired all of the assets and certain liabilities from
      International Humate Fertilizer Co., a Nevada corporation located in Mesa,
      Arizona and wholly-owned by our Chairman, David G. Williams. On May 5, 1997,
      we
      changed our name to Humatech, Inc. to more accurately reflect our new business
      of the development, manufacture, and sale of carbon-based animal feed
      supplements and fertilizer products.





**Business
      Overview**





Industry
      Overview





In
      1980,
      the United States Department of Agriculture released a report entitled Report
      and Recommendations on Organic Farming that cited the concerns expressed by
      farmers, environmental groups, and the general public about the adverse effects
      the petroleum-based U.S. agriculture production system has had on the productive
      capacity of U.S. soils. They were especially concerned about the extensive
      use
      of cash crops and agricultural chemicals, both fertilizers and pesticides.
      Among
      the major concerns were:





o
            Increased
                cost of, and dependence on, external inputs of chemicals and
                energy;





o
            Continued
                decline in soil productivity from excessive soil erosion and nutrient
                runoff losses;





o
            Contamination
                of surface and groundwater from fertilizers and
                pesticides;





o
            Hazards
                to human and animal health and to food quality and safety from
                agricultural chemicals;





o
            Demise
                of the family farm and localized marketing
                system.





As
      a
      result of these concerns and others, a new philosophical view of agriculture,
      termed “sustainable agriculture,” has developed. A sustainable agriculture
      system centers around the need to develop a more environmentally compatible
      agricultural system, one that has a long-term dimension, makes more
      efficient use of energy, does not destroy the ecological balance of the
      environment, is non-polluting, and is favorable for the survival of humans
      and
      all other species.


1
 *Table
          of Contents*




A
      brief
      discussion of several important terms will clarify the significance of humic
      substances, what we do and propose to do in the future, and what products and
      services will be marketed.





o
            ORGANIC
                MATTER: Organic matter is a grouping of carbon containing compounds
                which
                have originated from living beings and deposited on or within the
                earth’s
                structural components. Soil organic matter includes the remains of
                all
                plant and animal bodies that have fallen on the earth’s surface or
                purposely applied by man in the form of organically synthesized
                pesticides. When organic matter is burned, there remains a residual
                ash.
                The residual ash is composed of the minerals, trace elements required
                by
                plants and animals during their normal growth processes. Thus organic
                matter contains mineral elements required by plants and
                animals.





o
            HUMUS:
                Humus is a brown to black variable complex of carbon containing compounds
                not recognized under a light microscope as possessing cellular
                organization in the form of plant and animal bodies. Humus is separated
                from the non-humic substances such as carbohydrates (a major fraction
                of
                soil carbon), fats, waxes, alkanes, peptides, amino acids, proteins,
                lipids, and organic acids by the fact that distinct chemical formulae
                can
                be written for these non-humic substances. Microorganisms within
                the soil
                rapidly degrade most small molecules of non-humic substances. In
                contrast
                soil humus is slow to decompose (degrade) under natural soil conditions.
                When in combination with soil minerals, soil humus can persist in
                the soil
                for several hundred years. Humus is the major soil matter component,
                making up 65% to 75% of the total. Humus assumes an important role
                as a
                fertility component of all soils, far in excess of the percentage
                contribution it makes to the total soil
                mass.





o
            HUMIC
                SUBSTANCES: Humic substances are the components of humus and as such
                are
                high molecular weight compounds that together form the brown and
                black
                hydrophilic, molecularly flexible, polyelectrolytes called humus.
                They
                function to give the soil structure, porosity, water holding capacity,
                cation and anion exchange, and are involved in the chelation of mineral
                elements. Humic substances can be subdivided into three major fractions
                (1) humin, (2) humic acids, and (3) fulvic
                acids.





o
            HUMATES:
                Humates are metal (mineral) salts of humic or fulvic acids. Within
                any
                humic substance, there are a large number of complex humate molecules,
                and
                the humate composition of any one humic substance is specific for
                the
                substance. Thus there exists a large variability in the molecular
                composition of different humic
                substances.





The
      most
      biochemically active and plant responsive components of fertile soil are humic
      and fulvic acids. The decisions to replace and maintain adequate levels of
      humic/fulvic acids in the soil creates a positive economic and ecological
      impact. Humic acids are the end result of the decomposition of plant and animal
      matter, which exist in the final phase of the humification process of soils.
      Humification is the process wherein crop residues, leaves, stalks, cover crops,
      manure’s, etc., are first broken down by soil micro-organisms. Various enzymes,
      fungi and bacteria then break down the cellulose. Further activity and breakdown
      by very specific fungi and bacteria finally result in the mineralization of
      humic acids from the material that is commonly referred to as “humus”. Simply
      put, humic acids are derived from various organic materials that are commonly
      turned under by farmers throughout the world to derive well-known benefits.





Humic
      substances play a vital role in soil fertility and plant and animal nutrition.
      Plants grown on soils that contain adequate humin, humic acids, and fulvic
      acids
      are less subject to stress, are healthier, produce higher yields, and as a
      result the nutritional quality of harvested foods and feeds are superior. The
      value of humic substances in soil fertility and plant nutrition relates to
      the
      many functions these complex organic compounds perform as a part of the life
      cycle on earth. The life-death cycle involves a recycling of the carbon
      containing structural components of plants and animals — through the soil and
      air — and back into the living plant, and animal.


2
 *Table
          of Contents*




Humates
      are commercially obtained from large layers of oxidized leonardite deposits
      in
      the earth formed by decomposition of organic material. In their natural state,
      humic acids are acidic in nature, and completely insoluble. Humatech has
      developed a process whereby humic acids are extracted in a manner that will
      produce a viable, efficacious product that consistently exhibits the attributes
      expected by all concerned.





Our
      Animal Feed Supplements Products





We
      manufacture and distribute organic based animal feed supplements to the animal
      feeding industry. The bulk of our business has developed in this product line
      and the sales of our animal feed supplements accounted for approximately 92%
      of
      our sales for the year ended April 30, 2005.





Our
      animal feed supplement products consist of:





o
            PROMAX
                MaxAppetin, Nutr-Hume, and Bentonita. All are organic, non-toxic
                animal
                feed ingredients used for ruminant and/or non-ruminant animals that
                provides an all-natural source of nutritional
                iron.





Our
      Fertilizer Products





We
      also
      manufacture and distribute organic based fertilizer products to two primary
      groups: (A) commercial growers of agricultural crops, and (B) mass merchandisers
      and independent nurseries in the retail lawn and garden market. Our fertilizer
      products accounted for approximately 8% of our sales last year, with 6% coming
      from sales to commercial growers and 2% coming from sales to merchandisers
      and
      nurseries in the retail lawn and garden market.





Distribution
      of Our Products





In
      general, we utilize three formal channels of distribution. The first is a
      network of agriculture dealers who
      represent our products in the agricultural crops market segment. The second
      is
      distributors who focus on selected markets such as the lawn and garden and
      home
      improvement markets, and the animal feed supplement markets throughout the
      world. The third channel is the use of executive sales on strategic key accounts
      including the international segment





The
      small
      firms that do exist in the humate industry do not have established, specific,
      and formal channels of distribution. The competition uses direct sales by
      executives and owners in regional areas where the product is produced. Market
      penetration is very difficult beyond their sphere of influence.





Several
      channels are necessary due to the type, nature, and number of customer profiles,
      geography, seasonal variations, and efficient use of funds. The current sales
      and marketing strategy is to maximize market coverage and efficiency with a
      minimum amount of cost to optimize sales revenues. As we grow in revenues and
      geographical size, it is anticipated that the distribution channels and the
      sales and marketing organization will change to meet market demands. Our
      distribution channels outlined by market segment are summarized as
      follows:




Market
                  Segments
              Executive
                  Sales
              Direct
                  Sales
              Distributors/DealersAgriculture—Row
                  Crop
              
              XX
              XXAnimal
                  Feed Ingredient
              XX
              XX
              XXLawn/Garden/Home
                  Improvement
              
              XX
              XXBioremediation
              
              XX
              XXInternational
              XX
              
              XX


3
 *Table
            of Contents*




Raw
      Materials and Manufacturing Our Products





We
      purchase a significant amount of chemicals and raw materials from the open
      market. The majority of our humates are purchased from a single supplier,
      RAMMSCO, Inc., an entity controlled by our Chairman David G. Williams, because
      the product is made to specific formulation not known to other suppliers and
      at
      a significantly lower price than other suppliers. The Company made purchases
      of $23,058
      and $13,429 from this entity in the years ended April 30, 2005 and 2004,
      respectively.





Competition





We
      are
      not aware of any significant competitors, with respect to size, financial
      strength, and market distribution, that manufacture humate-based trace element
      products and animal feed ingredients. The financial and market strengths of
      competitive firms do not present any major competitive factors. Although some
      of
      our competitors have been in business a long time, they are regional in scope
      and their experience limits their sales to the local client and type of crops
      grown. Most of the companies are small, independent, and geographically
      restricted which manufacture and market a very limited type of dry product
      or
      liquid humic acid into the agricultural crops arena. We try to assist our
      distributors that are established in that same area, through technical support,
      and customer service.





We
      intend
      to establish ourselves in the market by providing a high quality product at
      a
      reasonable cost to the customer, and by providing exceptional personal service
      through our distribution channels. We believe that, given the choice, most
      consumers of our products would choose to use environmentally friendly products
      over chemical-based products.





Patents
      and Trademarks





We
      have
      applied for and received trademark protection for most of our product names.
      We
      have applied for two patents, one was
      denied and the other has been granted. The granted patent is for a “Positive
      Displacement Pump”, applied for in 2001. For the patent that was denied we have
      no plans to re-apply for a patent at this time.





We
      rely
      on intellectual property laws and confidentiality and license agreements with
      key customers and others to protect our intellectual property rights. Because
      of
      the complexity and growing importance of intellectual property rights, there
      can
      be no assurance that we will be able to protect our proprietary rights on a
      global basis. Moreover, the expense of enforcing our rights may limit or
      prohibit us from effective protection.





Research
      and Development





During
      the last two fiscal years, we have spent approximately 5% of our personnel
      resources, and approximately 5% of our financial resources, on research and
      development activities. These costs are borne primarily by us, and are not
      directly passed on to our customers except in the appropriate pricing of our
      products. Over the course of the last two
      years
      we have required our larger international distributors to conduct product
      benefits research at their own expense as part of our joint ongoing efforts
      to
      better understand our product benefits and our place in the
      marketplace





Environmental
      Matters





We
      currently are, and will continue to be, subject to extensive and frequently
      changing federal, state and local laws and substantial regulation under these
      laws by governmental agencies, including the United States Environmental
      Protection Agency (EPA), the Occupational Safety and Health Administration
      (OSHA), various state agencies and county and local authorities. Among other
      things, these regulatory bodies impose requirements to control air, soil, and
      water pollution, to protect against occupational exposure to chemicals,
      including health and safety risks, and to require notification or reporting
      of
      the storage, use and release of certain hazardous chemicals and substances.
      There can be no assurance that we will not be subject to claims of employees
      relating to future exposure to hazardous chemicals and substances, which could
      have a material adverse effect on our results of operations. If we fail to
      comply with applicable laws and regulations, we could be subject to civil
      remedies, including fines and injunctions as well as potential criminal
      sanctions, which could have a material adverse effect on our results of
      operations.


4
 *Table
          of Contents*




Federal
      and state authorities regulate the manufacture and sale of some of our specific
      products. Compliance with regulatory authorities is not a material expense,
      nor
      does it currently have a material impact on our potential profitability. We
      have
      obtained required general state permits and licenses to operate our facilities.
      There can be no assurance that our operations and profitability will not be
      subject to more restrictive regulation or increased taxation by federal, state,
      or local agencies.





Inflation





Inflation
      has not historically been a material factor in our operations and is not
      expected to have a material impact on our operations in the future.





Foreign
      Operations





In
      November 1998, we entered into a letter of intent for the purpose of
      establishing a joint venture to promote and sell our products into the European
      Union of Countries. On November 12, 1998, we formed a new entity named Humatech,
      Ltd., of which we currently own a 19.9% interest, with the remaining interest
      owned by European-based investors. We sell product to Humatech, Ltd. under
      equal
      terms and conditions to those of domestic sales to unrelated third parties.
      We
      recognize revenue and cost of sales to Humatech, Ltd. upon shipment. We sold
      product to Humatech, Ltd. in the amount of approximately $28,000, and $45,000
      for the years ended April 30, 2005 and 2004 respectively.





Employees





As
      of April
      30,
      2005, we employed a total of 11 full-time employees, two (2) of which were
      officers, eight (8) of which were engaged in manufacturing activities, and
      one
      (1) engaged in administrative activities.





**ITEM2
—
DESCRIPTION
      OF PROPERTY** ****





Our
      main
      office is located in Mesa, Arizona under the terms of a three (3) year lease
      terminating on July 14, 2006 at a rate of $1,512.83 per month.





We
      lease
      approximately four (4) acres of land in the Albuquerque, New Mexico area from
      RAMMSCO, INC., an entity controlled by our officers and directors. The lease
      is
      for a period of five (5) years, terminating on April 30, 2007, at a rate of
      $1,100 per month.





**ITEM3
—
LEGAL
      PROCEEDINGS** ****





On
      or
      about February 28, 2005, a Civil Complaint was filed by the Securities and
      Exchange Commission against us, David G. Williams, our Chief Executive Officer
      and a Director, and John D. Rottweiler, our Chief Financial Officer, Secretary,
      and a Director, in The United States District Court for the Southern District
      of
      Texas, Houston Division, as Civil Action No. H-05-0665. The lawsuit alleges
      that
      we, along with Mr. Williams and Mr. Rottweiler, violated various securities
      laws
      in the way we reported our assets, sales, and revenues related to our business
      dealings with Humatech, Ltd., a United Kingdom company, and in the way we
      corrected these alleged violations. The Civil Complaint seeks to enjoin us,
      Mr.
      Williams, and Mr. Rottweiler from violating any of the provisions of law listed
      in the Civil Complaint, as well as seeks to have Mr. Williams and Mr. Rottweiler
      disgorge any ill-gotten gains, pay civil penalties, and bar them from serving
      as
      an officer or director of a publicly traded company. We have negotiated the
      terms of an agreement in principal to settle this matter with the Securities
      and
      Exchange Commission, but no settlement can be finalized until we are current
      in
      our reporting requirements under the Securities Exchange Act of 1934 and the
      terms of the settlement have been approved by the Commissioners.


5
 *Table
          of Contents*




In
      the
      ordinary course of business, we are from time to time involved in various
      pending or threatened legal actions. The litigation process is inherently
      uncertain and it is possible that the resolution of such matters might have
      a
      material adverse effect upon our financial condition and/or results of
      operations. However, in the opinion of our management, other than as set forth
      herein, matters currently pending or threatened against us are not expected
      to
      have a material adverse effect on our financial position or results of
      operations.





**ITEM4
—
SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
      HOLDERS**





No
      matters were submitted to a vote of the security holders during the fourth
      quarter of the last fiscal year.


6
 *Table
            of Contents*




**PART
      II**





**ITEM5
—
MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





**Market
      Information**





Our
      common stock is currently quoted on the Pink Sheets under the symbol “HUMT.”
Historically, our stock has been quoted on the OTC Bulletin Board of the
      National Association of Securities Dealers, Inc. (“OTCBB”), under the same
      symbol. On September 6, 2005, the OTCBB de-listed our common stock because
      of
      our failure to stay current with our reporting obligations under the Securities
      Exchange Act of 1934 (the “’34 Act”), and on that same day our common stock was
      quoted on the Pink Sheets. After we complete all of our delinquent ’34 Act
      filings we plan to apply to get our common stock re-listed on the OTCBB. Our
      common stock is only traded on a limited or sporadic basis and should not be
      deemed to constitute an established public trading market. There is no assurance
      that there will be liquidity in the common stock.





Below
      is
      a table indicating the range of high and low transaction price for the common
      stock for each quarterly period within the most recent two fiscal years. The
      information reflects prices between dealers, and does not include retail markup,
      markdown, or commission, and may not represent actual transactions.




**Fiscal
                  Year Ended**
                **April
                  30,**
              
              
              
              **Prices****Period**
              
              **High**
              
              **Low**2004
              
              First
                  Quarter
              
              $0.79
              
              $0.51Second
                  Quarter
              
              $0.62
              
              $0.20Third
                  Quarter
              
              $0.35
              
              $0.18Fourth
                  Quarter
              
              $0.44
              
              $0.052005
              
              First
                  Quarter
              
              $0.32
              
              $0.09Second
                  Quarter
              
              $0.40
              
              $0.15Third
                  Quarter
              
              $0.25
              
              $0.12Fourth
                  Quarter
              
              $0.17
              
              $0.062006
              
              First
                  Quarter
              
              $0.15
              
              $0.06Second
                  Quarter
              
              $0.10
              
              $0.04Third
                  Quarter
              
              $0.10
              
              $0.04Close
                  on April 27, 2006
              
              
              $0.10





The
      Securities Enforcement and Penny Stock Reform Act of 1990 requires additional
      disclosure relating to the market for penny stocks in connection with trades
      in
      any stock defined as a penny stock. The Commission has adopted regulations
      that
      generally define a penny stock to be any equity security that has a market
      price
      of less than $5.00 per share, subject to a few exceptions that we do not meet.
      Unless an exception is available, the regulations require the delivery, prior
      to
      any transaction involving a penny stock, of a disclosure schedule explaining
      the
      penny stock market and the risks associated therewith.


7
 *Table
            of Contents*




**Holders**





As
      of
      April 30, 2005 and April 27, 2006 there were 33,682,348 and 34,304,848 shares,
      respectively, of our common stock issued and outstanding and held by
      approximately 179 holders of record.





**Dividend
      Policy**





We
      have
      not paid any dividends on our common stock and do not expect to do so in the
      foreseeable future. We intend to apply our earnings, if any, in expanding our
      operations and related activities. The payment of cash dividends in the future
      will be at the discretion of the Board of Directors and will depend upon such
      factors as earnings levels, capital requirements, our financial condition and
      other factors deemed relevant by the Board of Directors.





**Recent
      Issuance of Unregistered Securities**





On
      February 1, 2005 ,
      we
      issued 180,000 shares of common stock valued at $9,000 to an unrelated
      consultant for services performed for the company. The issuance was exempt
      from
      registration pursuant to Section 4(2) of the Securities Act of 1933, and the
      investor was a sophisticated investor.


8
 *Table
            of Contents*




**ITEM6
—
MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**




Except
      for historical information, the materials contained in this Management's
      Discussion and Analysis are forward-looking (within the meaning of Section
      27A
      of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
      of
      1934) and involve a number of risks and uncertainties. These include
      international, national and local general economic and market conditions;
      demographic changes; the ability of the Company to sustain, manage or forecast
      its growth; the ability of the Company to successfully make and integrate
      acquisitions; raw material costs and availability; new product development
      and
      introduction; existing government regulations and changes in, or the failure
      to
      comply with, government regulations; adverse publicity; competition; the loss
      of
      significant customers or suppliers; fluctuations and difficulty in forecasting
      operating results; changes in business strategy or development plans; business
      disruptions; the ability to attract and retain qualified personnel; the ability
      to protect technology; and other risks detailed from time to time in the
      Company's filings with the Securities and Exchange Commission.





Although
      forward-looking statements in this Annual Report reflect the good faith judgment
      of management, such statements can only be based on facts and factors currently
      known by the Company. Consequently, forward-looking statements are inherently
      subject to risks and uncertainties, actual results and outcomes may differ
      materially from the results and outcomes discussed in the forward-looking
      statements. Readers are urged to carefully review and consider the various
      disclosures made by the Company in this Annual Report, as an attempt to advise
      interested parties of the risks and factors that may affect the Company's
      business, financial condition, and results of operations and
      prospects.





**Summary
      Overview**





We
      currently are divided into two main business units: animal feed products and
      fertilizer. Our animal feed division manufactures and distributes organic based
      animal feed supplements to the animal feed industry. Sales of our animal feed
      supplements accounted for approximately 92% of our total sales last year. Our
      fertilizer division manufactures and distributes organic based fertilizer
      products to two primary groups: (A) commercial growers of agricultural crops,
      and (B) retail mass merchandisers and independent nurseries in the lawn and
      garden market. Our fertilizer products accounted for approximately 8% of our
      total sales last year, with 6% coming from sales to commercial growers of
      agricultural crops and 2% from sales to retail mass merchandisers and
      independent nurseries in the lawn and garden market.





**Qualified
      Report of Independent Certified Public Accountants**





From
      inception through April 30, 2005, the Company has generated negative operating
      cash flows, has a working capital deficit and a retained earnings deficit.
      Therefore, the Company’s auditors have expressed substantial doubt about the
      Company’s ability to continue as a going concern. Management believes that it
      can maintain its status as a going concern based on expected future positive
      operating cash flows and, to a lesser extent, cash flows from debt and or equity
      transactions.





**Results
      of Operations**





Introduction




During
      the fiscal year ended April 30, 2005, we focused the growth of our business
      around our animal feed supplement products. These products have generated
      significant increases in net revenues from 2004 both internationally and
      domestically. We believe we have a competitive advantage with respect to these
      products and expect to see continued revenue growth in the future as we expand
      our sales, production and distribution infrastructure.


9
 *Table
          of Contents*


**Year
      ended April 30, 2005 compared to year ended April 30, 2004**





Revenues,
      Expenses and Loss from Operations




Our
      revenues, cost of goods sold, general and administrative expenses, and net
      loss
      for the years ended April 30, 2005 and 2004, respectively, are as
      follows:




Year
                Ended
              April
                30, 2005
            
            Year
                Ended
              April
                30, 2004
            
            Percentage
                ChangeRevenue
            
            $
            720,765
            
            $
            275,918
            
            
            161.2
            %Cost
                of Goods Sold
            
            
            524,905
            
            
            314,992
            
            
            66.6Operating
                Expenses
            
            
            1,091,439
            
            
            1,594,376
            
            
            (31.5
            )Net
                Loss
            
            $
            (1,031,686
            )
            $
            (1,879,589
            )
            
            (45.1
            )%





Revenues





Revenues
      for the year ended April 30, 2005 were $720,765 compared to $275,918 for the
      same period in 2004 . Our
      revenues increased in 2005 primarily due to an increase in sales of Promax
      domestically and in the U.K. Our product mix has shifted in fiscal 2005 toward
      our animal feed supplement product line, with approximately 92% of revenues
      coming from this product line in fiscal 2005, as compared to 26% in fiscal
      2004.





Cost
      of Goods Sold





Cost
      of
      goods sold for the year ended April 30, 2005 were $524,905, compared to $314,992
      for the same period in 2004. Our cost of goods sold was higher primarily as
      a
      result of increased sales, partially offset by increased manufacturing
      efficiencies from a new manufacturing line. We also benefited from economies
      of
      scale as our fixed cost of sales were spread over a larger volume of production.





Operating
      Expenses





Total
      operating expenses were $1,091,439 for the year ended April 30, 2005 as compared
      to $1,594,376 for the year ended April 30, 2004. These expenses decreased due
      primarily to a reduction in third-party consulting and marketing expenses,
      as a
      significant amount of stock-based compensation was issued for such services
      in
      fiscal 2004. During 2005, we transitioned many of these functions to full-time
      personnel.





Net
      Loss





We
      experienced a net loss of $1,031,686 for the year ended April 30, 2005 as
      compared to a net loss of $1,879,589 for the year ended April 30, 2004. This
      decrease is attributable to increased gross profit of approximately $235,000
      and
      decreased operating expenses of approximately $503,000. Additionally, our
      interest expense decreased by approximately $97,000 as we recognized less
      interest expense from the amortization of debt discounts associated with
      beneficial conversion features and warrants issued with our convertible
      debt.


10
 *Table
          of Contents*


**Liquidity
      and Capital Resources**





Introduction




During
      fiscal year 2004 and 2005, we did not generate positive operating cash flows.
      Cash totaled $166 and $1,235 at April 30, 2005 and 2004, respectively.





Our
      cash,
      current assets, total assets, current liabilities, and total liabilities as
      of
      April 30, 2005 and
      2004, respectively, are as follows:





April
                30, 2005
            
            April
                30, 2004
            
            Percentage
                ChangeCash
            
            $
            166
            
            $
            1,235
            
            
            (86.6
            %)Total
                Current Assets
            
            
            53,314
            
            
            60,254
            
            
            (11.5
            )Total
                Assets
            
            
            300,578
            
            
            206,315
            
            
            45.7Total
                Current Liabilities
            
            
            871,214
            
            
            514,936
            
            
            69.2Total
                Liabilities
            
            $
            1,271,459
            
            $
            987,171
            
            
            28.8
            %




Sources
      and Uses of Cash





For
      the
      year ended April 30, 2005 our net cash used in operating activities was $300,236
      as compared to $604,379 for the year ended April 30, 2004. This decrease in
      negative operating cash flows was due primarily to a reduced net loss of
      approximately $848,000 offset by a reduction in non-cash interest and consulting
      expenses of $355,000 from fiscal 2005 to fiscal 2004.




Net
      used
      in investing activities were $33,427 for the year ended April 30, 2005 as
      compared to net cash provided by investing activities of $4,500 for the year
      ended April 30, 2004. During fiscal 2005, the Company made significant
      investments in production equipment to increase its manufacturing capacity.
      These net cash outflows were partially offset by proceeds received from the
      partial sale of an investment in an unconsolidated entity in fiscal 2005. Sales
      of equipment exceeded purchases of such equipment in fiscal 2004, accounting
      for
      the net cash inflow of $4,500.





Net
      cash
      provided by financing activities was $316,750 for the year ended April 30,
      2005
      as compared to $394,404 for the year ended April 30, 2004. Net cash flows from
      debt financing activities were approximately $247,000 and $324,000 in fiscal
      2005 and 2004, respectively. Net cash flows from equity financing activities
      were approximately $86,000 and $75,000 in fiscal 2005 and 2004,
      respectively.





The
      Company’s cash requirements have historically consisted of raw material
      production costs, salaries and wages for employees, expenditures for
      production-related fixed assets and cash interest expense. The Company’s sources
      of cash include cash received from product sales and cash inflows from financing
      activities, which have historically consisted of equity and convertible debt
      transactions.





The
      Company has approximately $148,000 and $276,000 in principal debt maturities
      due
      in fiscal 2006 and 2007. To the extent that the Company does not generate
      sufficient operating cash flows to fund these maturities, the Company will
      need
      to engage in additional financing activities.





**Debt
      Instruments, Guarantees, and Related Covenants**





We
      have
      total notes payable of $577,836 (net of discount of $208,647) as of April 30,
      2005. Of this amount, $147,969 is the current portion, with the remaining
      $429,867 considered long-term. We are not in default on any of these notes,
      and
      none of our debt instruments contain restrictive financial
      covenants.


11
 *Table
          of Contents*




We
      are a
      party to three agreements that contain contingent royalty payment obligations.
      Under a Product Development and Funding Agreement with one of our shareholders,
      we are committed to repay advances and additional amounts up to a total amount
      not to exceed $450,000, at a rate of 6% of the gross revenue from the product
      which is the subject of the agreement. As of April 30, 2004, there have not
      been
      any revenues from that product.





Finally,
      we have a license agreement with our President to use copyrights, trademarks,
      patents, and other proprietary information. Under the agreement, we are required
      to pay him a royal of 1% of gross sales generated from the covered properties.
      Under this agreement we paid or accrued $7,361 and $2,389 in the years ended
      April 30, 2005 and April 30, 2004, respectively.





**Off
      Balance Sheet Contracts**





At
      April
      30, 2005 and 2004, there were no “off balance sheet” contracts or items to
      record.





**Critical
      Accounting Issues**





The
      preparation of our financial statements in conformity with accounting principles
      generally accepted in the United States of America requires our management
      to
      make certain estimates and assumptions that affect the reported amounts of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period. As such, in accordance with the use of
      accounting principles generally accepted in the United States of America, our
      actual realized results may differ from management’s initial estimates as
      reported. A summary of our significant accounting policies are detailed in
      the
      notes to the financial statements which are an integral component of this
      filing.





The
      following summarizes critical estimates and policies made by management in
      the
      preparation of the financial statements.





*Revenue
      Recognition.* Revenue
      from sales to customers is recorded upon shipment of the related product. We
      make estimates of sales allowances, such as discounts, and accrue such amounts
      when the related revenue is recognized. We have not made any provisions for
      product returns or uncollectible accounts because historically such amounts
      have
      been immaterial.





*Stock-Based
      Compensation.* We
      issue
      equity instruments, including common stock and stock options, to employees
      and
      consultants as consideration for services rendered. For stock-based compensation
      to employees, we use the intrinsic value method as permitted under generally
      accepted accounting principles. Because such grants are typically issued with
      the exercise price equal to the fair market value on grant date, there is no
      compensation expense. For stock based compensation to nonemployees, we record
      expense related to the fair value of the award. The fair value is estimated
      based on quoted market prices for stock grants and option pricing models for
      option grants.




*Debt
      Discount.* We
      have
      historically utilized convertible debt instruments as a means of financing
      our
      operations. Such instruments are often issued with detachable warrants. Under
      such arrangements, we allocate the proceeds received to the warrants and the
      convertible debt based on their estimated fair values. We then calculate the
      effective conversion price based on the allocation of the proceeds to the
      convertible debt to determine if a beneficial conversion feature exists. The
      value assigned to the warrants and the beneficial conversion feature give rise
      to a debt discount that is amortized over the stated maturity of the convertible
      debt instrument.




*Income
      Taxes.* We
      evaluate the probability of the utilization of the deferred income tax asset
      related to the net operating loss carry forwards.  Because we have yet to
      generate taxable income and that the generation of taxable income in the short
      term is uncertain, we have recorded a valuation allowance for the total deferred
      income tax asset associated with our net operating loss carryforwards.


12
 *Table
            of Contents*




**ITEM7
—
FINANCIAL
      STATEMENTS**





Index
      to
      Consolidated Financial Statements





**Humatech,
      Inc.**




Report
                of Epstein, Weber & Conover, PLC
            A-2Balance
                Sheet as of April 30, 2005
            A-3Statements
                of Operations for the years ended
                April 30, 2005 and 2004
            A-4Statement
                of Stockholders’ Deficit for years ended April
                30, 2005 and 2004
            A-5Statements
                of Cash Flows for the years ended April
                30, 2005 and 2004
            A-6Notes
                to Consolidated Financial Statements
            A-8
                to A-17





**ITEM8
—
CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL DISCLOSURE**





There
      have been no events required to be reported by this Item 8





**ITEM8A
—
CONTROLS
      AND PROCEDURES**





As
      indicated in Item 3, Legal Proceedings, on or about February 28, 2005, a Civil
      Complaint was filed by the Securities and Exchange Commission related to the
      way
      the Company has reported its assets, sales, and revenues related to our business
      dealings with Humatech, Ltd., a United Kingdom company, and in the way it
      corrected these alleged violations. While the Company has negotiated the terms
      of an agreement in principal to settle this matter with the Securities and
      Exchange Commission without admitting or denying the allegations of the
      Complaint, the Company acknowledges that it had deficiencies in its internal
      controls during the period covered by this Civil Complaint.





The
      Company’s Chief Executive Officer and Chief Financial Officer (or those persons
      performing similar functions), after evaluating the effectiveness of the
      Company’s disclosure controls and procedures (as defined in Rules 13a-14(c) and
      15d-14(c) under the Securities Exchange Act of 1934, as amended) as of a date
      within 90 days of the filing of this quarterly report (the “Evaluation Date”),
      have concluded that, as of the Evaluation Date, the Company’s internal controls
      still contained control deficiencies, including a lack of segregation of duties
      and lack of technical accounting expertise among its personnel. Prior to the
      filing of this report, the Company has made improvements in its internal
      controls system, including the engagement of third-party accountants to assist
      with technical accounting issues and to perform a review function on the
      Company’s financial reporting processes. However, given the current size and
      nature of its operations, the Company believes it is cost prohibitive to
      implement significant new control procedures with additional staff at this
      time.
      The Company intends to strengthen the nature of top level controls through
      more
      in-depth review processes including
      those performed by a third party accounting firm.





**ITEM8B
—
OTHER
      INFORMATION**





There
      have been no events required to be reported by this Item 8 B.


13
 *Table
          of Contents*


**PART
      III**





**ITEM9
—
DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT**





**Directors
      and Executive Officers**





The
      following table sets forth the names and ages of our current directors and
      executive officers, the principal offices and positions held by each person
      and
      the date such person became a director or executive officer. Our executive
      officers are elected annually by the Board of Directors. The directors serve
      one-year terms until their successors are elected. The executive officers serve
      terms of one year or until their death, resignation or removal by the Board
      of
      Directors. Unless described below, there are no family relationships among
      any
      of the directors and officers.





Name
            
            Age
            
            Position(s)David
                G. Williams
            
            56
            
            President,
                CEO, and DirectorJohn
                D. “J.D.” Rottweiler
            
            61
            
            Secretary,
                CFO, and Director





**David
      G. Williams** has been
      with us since our inception in 1996. He has more than two decades experience
      in
      the humate industry and as an entrepreneur involved in the broad and extensive
      management of financial responsibilities, staffing, manufacturing and
      production, and developing sales worldwide. He has completed major product
      development projects through years of research and development, field trials
      and
      tests that have produced the company’s current and future product lines.
      Currently responsible for the developing and maintaining the vision of the
      company, overseeing sales and marketing, product development, production, and
      customer service. Mr. Williams continues to develop business opportunities
      and
      strategic alliances with other companies and organizations.





**John
      D. Rottweiler** has
      been
      with us since our inception in 1996. He has over 25 years of experience
      providing extensive management and operational consulting in the planning,
      organizing, and directing of businesses in several industries. Served as officer
      and director of both private and public companies in the finance, insurance,
      real estate, and manufacturing industries. Owner and founder of investment
      banking business that provided capital financing, as principal and agent, for
      private and public ventures. He is a graduate from the University of Utah with
      a
      Bachelor of Science in Management, Bachelor of Science in Marketing, and Masters
      of Business Administration.





**Compliance
      with Section 16(a) of the Securities Exchange Act of 1934**





Section
      16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
      and executive officers and persons who own more than ten percent of a registered
      class of the Company’s equity securities to file with the SEC initial reports of
      ownership and reports of changes in ownership of Common Stock and other equity
      securities of the Company. Officers, directors and greater than ten percent
      shareholders are required by SEC regulations to furnish the Company with copies
      of all Section 16(a) forms they file.





To
      the
      Company’s knowledge, none of the required parties are delinquent in their 16(a)
      filings.





**Board
      Meetings and Committees**





During
      the fiscal year ended April 30, 2005, the Board of Directors met on a weekly
      basis and took written action on numerous other occasions. All the members
      of
      the Board attended the meetings. The written actions were by unanimous
      consent.


14
 *Table
          of Contents*


We
      presently have no executive committee, nominating committee or audit committee
      of the Board of Directors.





**ITEM10
—
EXECUTIVE
      COMPENSATION**





**Executive
      Officers and Directors**





Effective
      July 1, 1996, we entered into an employment agreement with David G. Williams
      to
      serve as our President and CEO. The agreement originally covered the term from
      July 1, 1996 through June 30, 2001, but has automatically renewed for a two
      (2)
      year term pursuant to its renewal terms. At the end of any renewal term, and
      upon sixty (60) days’ written notice, either party may terminate the agreement
      without penalty. The agreement provided for annual compensation of $128,000
      during its first year, $150,000 during its second year, and $175,000 for all
      successive years, including the renewal term.





Effective
      July 1, 1996, we entered into an employment agreement with John D. Rottweiler
      to
      serve as our Executive Vice President and CFO. The agreement originally covered
      the term from July 1, 1996 through June 30, 2001, but has automatically renewed
      for a two (2) year term pursuant to its renewal terms. At the end of any renewal
      term, and upon sixty (60) days’ written notice, either party may terminate the
      agreement without penalty. The agreement provided for annual compensation of
      $80,000 during its first year, $100,000 during its second year, and $125,000
      for
      all successive years, including the renewal term.





*2002
      Omnibus Securities Plan*





On
      April
      19, 2002, our Board of Directors approved the Humatech, Inc. 2002 Omnibus
      Securities Plan. The Plan offers selected employees, directors, and consultants
      an opportunity to acquire our common stock, and serves to encourage such persons
      to remain employed by us and to attract new employees. The plan allows for
      the
      award of stock and options, up to 1,500,000 shares of our common stock. On
      May 1
      of each year, the number of shares in the 2002 Securities Plan shall
      automatically be adjusted to an amount equal to ten percent (10%) of the
      outstanding stock of the Company on April 30 of the immediately preceding year.
      As of May 1, 2004, we can issue a total of 2,680,000 shares under the 2002
      Securities Plan. As of September 3, 2004, a total of 1,511,817 shares of our
      common stock, or options to acquire shares of our common stock, had been issued
      under the 2002 Securities Plan.





*Board
      Compensation*





A
      director who is an employee does not receive any cash compensation as a
      director. There is no plan in place for compensation of persons who are
      directors who are not our employees.





*Summary
      Compensation Table*





The
      Summary Compensation Table shows certain compensation information for services
      rendered in all capacities for the fiscal years ended April 30, 2005 and 2004.
      Other than as set forth herein, no executive officer’s salary and bonus exceeded
      $100,000 in any of the applicable years. The following information includes
      the
      dollar value of base salaries, bonus awards, the number of stock options granted
      and certain other compensation, if any, whether paid or deferred.




15
 *Table
          of Contents*


**Annual
                Compensation**
            
            **Long
                Term Compensation****Awards**
            
            **Payouts****Name
                and**
              **Principal
                Position**
            **Year**
            **Salary**
              **($)**
            **Bonus**
              **($)**
            **Other
                Annual**
              **Compensation**
              **($)**
            
            **Restricted
                Stock**
              **Awards**
              **($)**
            **Securities
                Underlying Options SARs**
              **(#)**
            
            **LTIP
                Payouts**
              **($)**
            **All
                Other**
              **Compensation**
              **($)**David
                G. Williams
            2005
            175,000(1)
            -0-
            -0-
            
            -0-
            -0-
            
            -0-
            7,362
                (2)President
                and CEO
            2004
            175,000(1)
            -0-
            -0-
            
            170,000
            -0-
            
            -0-
            2,927
                (2)John
                D. Rottweiler
            2005
            125,000(1)
            -0-
            -0-
            
            -0-
            -0-
            
            -0-
            -0-Secretary
                and CFO
            2004
            125,000(1)
            -0-
            -0-
            
            170,000
            -0-
            
            -0-
            -0-





(1)
            Some
                amounts accrued but not paid during the fiscal
                year.





(2)
            Represents
                payments received pursuant to a royalty agreement. Mr. Williams also
                received certain payments pursuant to contractual agreement for various
                equipment leases.








**OPTION/SAR
                GRANTS IN LAST FISCAL YEAR**
              **(Individual
                Grants)****Name**
            **Number
                of Securities**
              **Underlying**
              **Options/SARs
                Granted**
              **(#)**
            **Percent
                of Total**
              **Options/SARs
                Granted**
              **to
                Employees In Fiscal**
              **Year**
            **Exercise
                or Base Price**
              **($/Sh)**
            **Expiration
                Date**David
                G. Williams
            -0-
            N/A
            N/A
            N/AJohn
                D. Rottweiler
            -0-
            N/A
            N/A
            N/A








**AGGREGATED
                OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR**
              **AND
                FY-END OPTION/SAR VALUES****Name**
            **Shares
                Acquired On**
              **Exercise**
              **(#)**
            **Value
                Realized**
              **($)**
            **Number
                of Unexercised**
              **Securities
                Underlying**
              **Options/SARs
                at FY-End**
              **(#)**
              **Exercisable/Unexercisable**
            **Value
                of Unexercised**
              **In-The-Money**
              **Option/SARs**
              **at
                FY-End**
              **($)**
              **Exercisable/Unexercisable**David
                G. Williams
            -0-
            N/A
            N/A
            N/AJohn
                D. Rottweiler
            -0-
            N/A
            N/A
            N/A




16
 *Table
          of Contents*




**ITEM11
—
SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT** **AND RELATED STOCKHOLDER MATTERS**





The
      following table sets forth, as of April 27, 2006, certain information with
      respect to the Company’s equity securities owned of record or beneficially by
      (i) each Officer and Director of the Company; (ii) each person who owns
      beneficially more than 5% of each class of the Company’s outstanding equity
      securities; and (iii) all Directors and Executive Officers as a
      group.





COMMON
                STOCKTitle
                of Class
            
            Name
                and Address ofBeneficial
                Owner (1)
            
            Amount
                and Nature ofBeneficial
                Ownership
            
            Percent
                ofClass (2)Common
                Stock
            
            David
                G. Williams
            
            9,268,255
                (3)
            
            27%Common
                Stock
            
            John
                D. Rottweiler
            
            4,475,658
            
            13%Common
                Stock
            
            All
                officers and directors as a group(2
                persons)
            
            13,743,913
                (3)
            
            40%





(1)
            Unless
                otherwise noted, the address of each beneficial owner is c/o Humatech,
                Inc., 1959 South Val Vista Drive, Suite 130, Mesa, Arizona
                85204.





(2)
            Based
                on 34,304,848 shares outstanding as of March 2,
                2006.





(3)
            Includes
                1,000,000 shared held directly by Mr. Williams. Also includes 8,268,255
                shares held by Willow Capital, L.P., over which Mr. Williams does
                not have
                voting or disposition power, however, he does have a pecuniary interest
                in
                that he is the beneficiary of proceeds that may be received from
                the sale
                of the shares. Voting and disposition power over the shares held
                by Willow
                Capital, L.P. is held by the adult children of Mr.
                Williams.





**ITEM12
—
CERTAIN
      RELATIONSHIPS AND RELATED
      TRANSACTIONS**





**Certain
      Relationships and Related Transactions**





License
      Agreement





In
      February 1996, we entered into a License Agreement with David G. Williams,
      our
      President and a director. Under the terms of the agreement, we obtained the
      right to use all copyrights, trademarks, patents, trade secrets, product
      formulas, customer lists, and other proprietary information owned by Mr.
      Williams. The agreement requires that we pay to Mr. Williams a royalty
      payment equal to 1% of our total gross sales.





Employment
      Agreements




Effective
      July 1, 1996, we entered into an employment agreement with David G. Williams
      to
      serve as our President and CEO. The agreement originally covered the term from
      July 1, 1996 through June 30, 2001, but has automatically renewed for a two
      (2)
      year term pursuant to its renewal terms. At the end of any renewal term, and
      upon sixty (60) days written notice, either party may terminate the agreement
      without penalty. The agreement provided for annual compensation of $128,000
      during its first year, $150,000 during its second year, and $175,000 for all
      successive years, including the renewal term.





Effective
      July 1, 1996, we entered into an employment agreement with John D. Rottweiler
      to
      serve as our Executive Vice President and CFO. The agreement originally covered
      the term from July 1, 1996 through June 30, 2001, but has automatically renewed
      for a two (2) year term pursuant to its renewal terms. At the end of any renewal
      term, and upon sixty (60) days written notice, either party may terminate the
      agreement without penalty. The agreement provided for annual compensation of
      $80,000 during its first year, $100,000 during its second year, and $125,000
      for
      all successive years, including the renewal term.




17
 *Table
            of Contents*


As
      of
      April 30, 2005 and 2004, total cumulative amounts unpaid under these agreements
      are as follows:





2005
            
            2004Officer
                compensation
            
            $
            263,578
            
            $
            122,948Royalty
                Fees
            
            
            -
            
            
            -$
            263,578
            
            $
            122,948





Humatech,
      Ltd.





We
      own an
      interest in an entity that primarily distributes our products in the United
      Kingdom. We formed this entity, Humatech, Ltd., as a joint venture with one
      of
      our United Kingdom distributors. We owned approximately 19%
      and
      36% of this entity at April 30, 2005 and 2004, respectively. During the year
      ended April 30, 2005, we sold a portion of its investment for $20,000, resulting
      in a gain of $20,000 on the sale of this investment. We currently account for
      this investment using the cost basis as our ownership percentage has been
      reduced below 20%.





RAMMSCO,
      Inc.





We
      purchase certain raw materials from RAMMSCO, Inc., an entity owned by our
      President and Chief Financial Officer. We made
      purchases of $23,058 and $13,429 from this entity in the years ended April
      30,
      2005 and 2004, respectively. Additionally, we lease our Albuquerque, New Mexico
      property from this entity whereby we paid $12,100 and $13,896 during the years
      ended April 30, 2005 and 2004, respectively. This lease, which expires April
      30,
      2006, calls for monthly lease payments of $1100 per month, with the lease term
      extending on a month-to-month basis thereafter.


18
 *Table
          of Contents*


**ITEM13
—
EXHIBITS**





**(a)**
            **Exhibits**








**Item
                No.**
            
            **Description**2.1(1)
            
            Asset
                purchase agreement by and between International Humate Fertilizer
                Co. and
                Midwest Enterprise Consultants, Inc.3.1(1)
            
            Articles
                of Incorporation of Midwest Enterprise Consultants,
                Inc.3.2(1)
            
            Amendment
                to the Articles of Incorporation of Midwest Enterprise Consultants,
                Inc.3.3(1)
            
            Amendment
                to the Articles of Incorporation of Midwest Enterprise Consultants,
                Inc.3.4(6)
            
            Amendment
                to the Articles of Incorporation of Humatech, Inc.3.5(6)
            
            Restated
                Articles of Incorporation of Humatech, Inc.3.4(1)
            
            Bylaws
                of Humatech, Inc.4.1(2)
            
            Humatech,
                Inc. 2002 Omnibus Securities Plan10.1(5)
            
            Assignment
                of Promissory Note and Consent Thereto.10.2(1)
            
            Employment
                agreement by and between International Humate Fertilizer Co. and
                David G.
                Williams10.3(1)
            
            Employment
                agreement by and between International Humate Fertilizer Co. and
                John D.
                Rottweiler10.4(1)
            
            Royalty
                agreement by and between International Humate Fertilizer Co. and
                David G.
                Williams10.5(1)
            
            Joint
                venture agreement for Humatech, Ltd.10.6(1)
            
            Lease
                of Premises located in Houston, Texas.10.7(1)
            
            Lease
                of Premises located in Katy, Texas.10.8(3)
            
            Mining
                Minerals Purchase Agreement with RAMMSCO, Inc.10.9(4)
            
            Mutual
                Rescission Agreement with RAMMSCO, Inc.10.10(6)
            
            Lease
                of Premises located in Mesa, Arizona.10.11(6)
            
            Lease
                of land in Albuquerque, New Mexico.31.1
            
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Executive
                Officer31.2
            
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Financial
                Officer




19
 *Table
          of Contents*


32.1
            
            Chief
                Executive Officer Certification Pursuant to 18 USC, Section 1350,
                as
                Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.32.2
            
            Chief
                Financial Officer Certification Pursuant to 18 USC, Section 1350,
                as
                Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.








(1)
            Incorporated
                by reference to our Current Report on Form 8-K filed with the Commission
                on June 12, 2002.





(2)
            Incorporated
                by reference to our Registration Statement on Form S-8 filed with
                the
                Commission on June 3, 2002.





(3)
            Incorporated
                by reference from our Current Report on Form 8-K dated and filed
                with the
                Commission on April 3, 2003





(4)
            Incorporated
                by reference from our Current Report on Form 8-K dated July 24, 2003
                and
                filed with the Commission on July 28,
                2003.





(5)
            Incorporated
                by reference from our Current Report on Form 8-K dated October 13,
                2003
                and filed with the Commission on October 28,
                2003.





(6)
            Incorporation
                by reference from our Annual Report on Form 10-KSB dated December
                8, 2003
                filed with the Commission on December 12, 2003.





**ITEM14
—
PRINCIPAL
      ACCOUNTANT FEES AND
      SERVICES**





. **Audit
      Fees**





The
      aggregate fees billed in each of th e
      fiscal
      years ended April 30, 2005 and 2004 for professional services rendered by the
      principal accountant for the audit of our annual financial statements and review
      of the financial statements included in our Form 10-KSB or services that are
      normally provided by the accountant in connection with statutory and regulatory
      filings or engagements for those fiscal years were $38,885 and $32,562,
      respectively.





**Audit
      - Related Fees**





There
      were no fees billed for services reasonably related to the performance of the
      audit or review of the financial statements outside of those fees disclosed
      above under “Audit Fees” for fiscal years 2005 and 2004.





**Tax
      Fees**





For
      th e
      fiscal
      years ended April 30, 2005 and, 2004, our principal accountants did not render
      any services for tax compliance, tax advice, and tax planning work.





**All
      Other Fees**





None.


20
 *Table
            of Contents*





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.







Dated:  May
                5, 2006
            Humatech,
                Inc./s/
                David G. WilliamsBy:    
                      David G. WilliamsIts:   
                       Chairman, President, CEO,
                and
              Director








In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.






Dated:  May
                5, 2006
            /s/
                David G. WilliamsBy:      
                    David G. WilliamsIts:      
                    Chairman, President, CEO, and
              Director







Dated:  May
                5, 2006
            /s/
                John D. RottweilerBy:John
                D. RottweilerIts:Secretary,
                Chief Financial Officer, and
              Director


21




**HUMATECH,
      INC.**







**Financial
      Statements as of**


**April
      30, 2005**


**And
      Report of Independent Registered**


**Public
      Accounting Firm**







**HUMATECH,
      INC.**







**TABLE
                OF CONTENTS****Page**REPORT
                OF INDEPENDENT REGISTERED PUBLICACCOUNTING
                FIRM
            
            A-2FINANCIAL
                STATEMENTS:Balance
                Sheet at April 30, 2005
            
            A-3Statements
                of Operations for the years endedApril
                30, 2005 and April 30, 2004
            
            A-4Statements
                of Stockholders’ Deficit for theyears
                ended April 30, 2005 and April 30, 2004
            
            A-5Statements
                of Cash Flows for theyears
                ended April 30, 2005 and April 30, 2004
            
            A-6NOTES
                TO FINANCIAL STATEMENTS
            
            A-8  *Table
            of Contents*




**REPORTOF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING
      FIRM**








To
      the
      Stockholders and Board of


Directors
      of Humatech, Inc.:





We
      have
      audited the accompanying balance sheet of Humatech, Inc. as of April 30, 2005
      and the related statements of operations, stockholders’ deficit and cash flows
      for each of the two years in the period ended April 30, 2005. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.




We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Standards Board (United States). Those standards require that we
      plan
      and perform the audits to obtain reasonable assurance about whether the
      financial statements are free of material misstatement. 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. We believe our audits
      provide a reasonable basis for our opinion.





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





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. The Company continued to incur operating
      losses and incurred a net loss of $1,031,686 for the year ended April 30, 2005.
      The Company has a working capital deficit of $786,900 at April 30, 2005. In
      addition, the Company has not yet generated significant revenue needed to
      achieve management’s plans and support its operations and there is no assurance
      that the Company will be able to generate such volume or raise financing
      sufficient to cover cash flow deficiencies. These factors raise substantial
      doubt about the Company’s ability to continue as a going concern. Management’s
      plans with regard to these matters are discussed in Note 1. The financial
      statements do not include any adjustments relating to the recoverability and
      classification of asset carrying amounts or the amount and classification of
      liabilities that might result should the Company be unable to continue as a
      going concern.








/s/EPSTEIN
      WEBER & CONOVER, P.L.C.





Scottsdale,
      Arizona


April
      27,
      2006


A-2
 *Table
            of Contents*
  **HUMATECH,
                  INC.****BALANCE
                  SHEET****APRIL
                  30, 2005****Assets**Cash
              
              $
              166Accounts
                  receivable
              
              
              38,886Inventories
              
              
              2,708Prepaid
                  expenses and other assets
              
              
              11,554Total
                  current assets
              
              
              53,314Property
                  and equipment, net
              
              
              247,264Total
                  assets
              
              $
              300,578**Liabilities
                  and Stockholders' Equity**Accounts
                  payable
              
              $
              286,839Accrued
                  liabilities
              
              
              109,548Due
                  to affiliates
              
              
              39,500Notes
                  payable - current portion
              
              
              147,969Due
                  to officers
              
              
              256,358Total
                  current liabilities
              
              
              840,214Notes
                  payable (net of discount of $208,647)
              
              
              429,867Capital
                  lease obligation
              
              
              1,378Total
                  liabilities
              
              
              1,271,459Common
                    stock, no par value, 50,000,000 shares authorized,33,862,348
                    shares issued and outstanding
              
              
              8,307,831Paid
                  in capital
              
              
              1,634,846Accumulated
                  deficit
              
              
              (10,913,558
              )Total
                  stockholders' deficit
              
              
              (970,881
              )Total
                  liabilities and stockholders' deficit
              
              $
              300,578




The
      accompanying notes are an integral part of these financial
      statements.




A-3
 *Table
          of Contents*




**HUMATECH,
                  INC.****STATEMENTS
                  OF OPERATIONS****Year
                  ended April 30,****2005**
              
              **2004**Net
                  revenues
              
              $
              720,765
              
              $
              275,918Cost
                  of goods sold
              
              
              524,905
              
              
              314,992Gross
                  profit/(loss)
              
              
              195,860
              
              
              (39,074
              )Operating
                  expenses:General
                  and administrative expenses
              
              
              1,060,173
              
              
              1,416,073Sales
                  and marketing expenses
              
              
              24,689
              
              
              162,721Research
                  and development
              
              
              224
              
              
              12,447Depreciation
                  and amortization
              
              
              6,353
              
              
              3,135Total
                  operating expenses
              
              
              1,091,439
              
              
              1,594,376Operating
                  loss
              
              
              (895,579
              )
              
              (1,633,450
              )Other
                  income (expense):Interest
                  expense and other financing costs
              
              
              (156,107
              )
              
              (253,139
              )Gain
                  on sale of asset
              
              
              20,000
              
              
              7,000Total
                  other expense
              
              
              (136,107
              )
              
              (246,139
              )Loss
                  before income taxes
              
              
              (1,031,686
              )
              
              (1,879,589
              )Income
                  tax provision
              
              
              -
              
              
              -Net
                  loss
              
              $
              (1,031,686
              )
              $
              (1,879,589
              )Net
                  loss per share:Basic
              
              $
              (0.03
              )
              $
              (0.08
              )Diluted
              
              $
              (0.03
              )
              $
              (0.08
              )Weighted
                  average common shares outstanding:Basic
              
              
              31,913,472
              
              
              23,015,785Diluted
              
              
              31,913,472
              
              
              23,015,785
  The
        accompanying notes are an integral part of these financial
        statements.


A-4
 *Table
            of Contents*


**HUMATECH,
                  INC.****STATEMENT
                  OF STOCKHOLDERS' DEFICIT****Common
                  Stock**
              
              **Paid-in**
              
              **Accumulated****Shares**
              
              **Amount**
              
              **Capital**
              
              **Deficit**
              
              **Total**Balances
                  at April 30, 2003
              
              
              18,294,733
              
              $
              5,457,326
              
              $
              1,083,607
              
              $
              (8,002,283
              )
              $
              (1,461,350
              )Common
                    stock issued forconsulting
                    and employee services
              
              
              3,415,000
              
              
              578,650
              
              
              
              
              
              
              
              
              578,650Common
                    stock issued foraccrued
                    officers' salary
              
              
              7,698,658
              
              
              1,604,042
              
              
              
              
              
              
              
              
              1,604,042Common
                  stock issued for cash
              
              
              280,882
              
              
              70,000
              
              
              
              
              
              
              
              
              70,000Imputed
                    value of beneficialconversion
                    feature of debt
              
              
              
              
              
              
              
              
              227,244
              
              
              
              
              
              227,244Imputed
                    value of commonstock
                    warrants granted
              
              
              
              
              
              
              
              
              80,147
              
              
              
              
              
              80,147Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              (1,879,589
              )
              
              (1,879,589
              )Balances
                  at April 30, 2004
              
              
              29,689,273
              
              
              7,710,018
              
              
              1,390,998
              
              
              (9,881,872
              )
              
              (780,856
              )Common
                    stock issued forconsulting
                    and employee services
              
              
              2,039,112
              
              
              353,500
              
              
              
              
              
              
              
              
              353,500Common
                  stock issued for cash
              
              
              545,833
              
              
              85,500
              
              
              
              
              
              
              
              
              85,500Common
                    stock issued forconversion
                    of note payable
              
              
              1,588,130
              
              
              158,813
              
              
              
              
              
              
              
              
              158,813Imputed
                    value of beneficialconversion
                    feature of debt
              
              
              
              
              
              
              
              
              152,623
              
              
              
              
              
              152,623Imputed
                    value of commonstock
                    warrants granted
              
              
              
              
              
              
              
              
              91,225
              
              
              
              
              
              91,225Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              (1,031,686
              )
              
              (1,031,686
              )Balances
                  at April 30, 2005
              
              
              33,862,348
              
              $
              8,307,831
              
              $
              1,634,846
              
              $
              (10,913,558
              )
              $
              (970,881
              )


The
      accompanying notes are an integral part of these financial
      statements.


A-5
 *Table
          of Contents*


**HUMATECH,
                INC.****STATEMENTS
                OF CASH FLOWS****Year
                ended April 30,****2005**
            
            **2004**Cash
                flows from operating activities:Net
                loss
            
            $
            (1,031,686
            )
            $
            (1,879,590
            )Adjustments
                  to reconcile net loss to net cashprovided by (used in) operating
                  activities:Loss
                (gain) on disposition of assets
            
            
            -
            
            
            (7,000
            )Gain
                on sale of investment in unconsolidated entity
            
            
            (20,000
            )
            
            -Depreciation
                and amortization
            
            
            51,517
            
            
            45,592Issuance
                of common stock as compensation for services
            
            
            353,500
            
            
            578,650Amortization
                of beneficial conversion feature of debt and related
                warrants
            
            
            102,553
            
            
            232,039Provision
                for uncollectible accounts
            
            
            (20,167
            )
            
            -Value
                of common stock warrants granted to consultants
            
            
            -
            
            
            8,000Changes
                in assets and liabilities:Trade
                and other accounts receivable
            
            
            (1,782
            )
            
            26,587Inventories
            
            
            38,766
            
            
            10,272Prepaid
                and other current assets
            
            
            (10,946
            )
            
            587Due
                to/from affiliates
            
            
            (4,385
            )
            
            (19,374
            )Accounts
                payable
            
            
            73,686
            
            
            90,049Accrued
                liabilities
            
            
            43,392
            
            
            61,203Due
                to officers
            
            
            133,410
            
            
            292,092Customer
                deposits
            
            
            -
            
            
            (51,580
            )Deferred
                revenue
            
            
            (8,094
            )
            
            8,094Net
                cash used in operating activities
            
            
            (300,236
            )
            
            (604,379
            )Cash
                flows from investing activities:Proceeds
                on sale of equipment
            
            
            -
            
            
            7,000Proceeds
                from sale of investment in unconsolidated entity
            
            
            20,000
            
            
            -Purchases
                of equipment
            
            
            (53,427
            )
            
            (2,500
            )Net
                cash provided by (used in) investing activities
            
            
            (33,427
            )
            
            4,500Cash
                flows from financing activities:Principal
                repayments on notes payable and capital leases
            
            
            (69,656
            )
            
            (32,359
            )Proceeds
                from issuances of debt
            
            
            316,750
            
            
            356,763Proceeds
                from sale of common stock
            
            
            85,500
            
            
            70,000Net
                cash provided by financing activities
            
            
            332,594
            
            
            394,404Decrease
                in cash
            
            
            (1,069
            )
            
            (205,475
            )Cash,
                beginning of year
            
            
            1,235
            
            
            206,710Cash,
                end of year
            
            $
            166
            
            $
            1,235





The
      accompanying notes are an integral part of these financial
      statements.


A-6
 *Table
            of Contents*
  **HUMATECH,
                  INC.****STATEMENTS
                  OF CASH FLOWS (continued)****Year
                  ended April 30,****2005**
              
              **2004**Supplemental
                  cash flow info:Cash
                  paid for interest
              
              $
              12,826
              
              $
              10,544Cash
                  paid for income taxes
              
              $
              -
              
              $
              -Supplemental
                  schedule of noncash investing and financing activities:Imputed
                    value of beneficial conversion feature and warrantsissued
                    with debt
              
              $
              243,848
              
              $
              307,391Issuance
                  of common stock upon conversion of note payable
              
              $
              158,813
              
              $
              -Capital
                  equipment and vehicle acquired with debt
              
              $
              99,293
              
              $
              75,209Company
                    debt assumed by officer and offset by amountsdue to the
                    officer
              
              $
              -
              
              $
              336,000




The
      accompanying notes are an integral part of these financial
      statements.


A-7
 *Table
          of Contents*


**Note1:  Organization
      and Basis of
      Presentation**





Humatech,
      Inc. (the “Company”), produces and distributes humate-based trace element
      fertilizers and animal feed products. The Company’s products are sold to
      agriculture products’ dealers/distributors, retail customers as well as
      livestock feedlot operators, ranchers and other agricultural customers
      throughout the United States and the United Kingdom.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern, which contemplates the realization of assets
      and the satisfaction of liabilities in the normal course of business. The
      Company faces many operating and industry challenges. The Company has not yet
      generated adequate volume in the sale of its products to meet operating cash
      flow requirements and has incurred significant operating losses. Future
      operating losses for the Company are anticipated and the proposed plan of
      operations, even if successful, may not result in cash flow sufficient to
      finance the continued expansion of its business. These factors raise substantial
      doubt about the Company’s ability to continue as a going concern. Realization of
      assets is dependent upon continued operations of the Company, which in turn
      is
      dependent upon management’s plans to meet its financing requirements, as
      discussed below, and the success of its future operations. The financial
      statements do not include any adjustments that might result from this
      uncertainty.





The
      Company is attempting to raise capital to allow it to expand its marketing
      and
      distribution capabilities. Management believes that, in addition to being
      successful in raising sufficient capital for operations, the sales volumes
      have
      been increasing and will continue to do so at a level that will, in the short
      term, be sufficient to continue as a going concern.





**Note
      2:  Summary of Significant Accounting Policies**





Cash includes
      all short-term highly liquid investments that are readily convertible to known
      amounts of cash and have original maturities of three months or less. At times
      cash deposits may exceed government insured limits. At April 30, 2004, cash
      deposits did not exceeded those insured limits.





Property
      and equipment is
      stated at cost less accumulated depreciation. Depreciation is recorded on a
      straight-line basis over the estimated useful lives of the assets ranging from
      5
      to 10 years. Depreciation expense was $51,517 and $45,592 for the years ended
      April 30, 2004 and 2003 respectively.





Revenue
      recognition :
      The
      Company recognizes revenue when product is shipped FOB shipping point and
      collection is reasonably assured. Until November 1, 2004, sales, and the
      associated cost of sales, to the Company’s equity investee in the United Kingdom
      were not recognized until the product had been sold and shipped to third party
      customers. Effective as of November 1, 2004, the Company no longer defers such
      recognition of sales and related cost of sales. See Note 4.





Advertising :
      The
      Company expenses advertising costs as incurred. Advertising expense was $16,953
      and $9,932 for the years ended April 30, 2005 and 2004,
      respectively.





Inventories :
      Inventories consist of raw materials such as mined humate material, finished
      goods and packaging materials. Inventories are accounted for at the lower of
      cost or market in a first-in first-out basis.





Income
      Taxes :
      The
      Company provides for income taxes based on the provisions of Statement of
      Financial Accounting Standards No. 109, *Accounting for Income Taxes,* which,
      among other things, requires that recognition of deferred income taxes be
      measured by the provisions of enacted tax laws in effect at the date of
      financial statements.





Financial
      Instruments :
      Financial instruments consist primarily of cash, accounts receivable, and
      obligations under accounts payable, accrued expenses, capital lease obligations
      and notes payable. The carrying amounts of cash, accounts receivable, accounts
      payable and accrued expenses approximate fair value because of the short
      maturity of those instruments. The capital lease obligation approximates fair
      value because the principal amount the obligation was determined based on the
      fair value of the underlying assets and the Company estimated incremental
      borrowing rate. The bank notes payable relate to vehicle loans and are
      considered to approximate fair value. The notes payable to individuals
      approximate fair value after discounting the notes as required for the
      convertible instruments involved. The fair value of the note payable to
      affiliate cannot be determined because of the related party nature of that
      instrument. The Company has applied certain assumptions in estimating these
      fair
      values. The use of different assumptions or methodologies m ay have a material
      effect on the estimates of fair values.


A-8
 *Table
          of Contents*




Net
      Loss Per Share is
      calculated using the weighted average number of shares of common stock
      outstanding during the year. The Company has adopted the provisions of SFAS
      No.
      128 *Earnings
      Per Share* .





Use
      of
      Estimates :
      The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates.





Stock-Based
      Compensation :
      Statements of Financial Accounting Standards No. 123, Accounting for Stock-Based
      Compensation, (“SFAS 123”) established accounting and disclosure requirements
      using a fair-value based method of accounting for stock-based employee
      compensation. In accordance with SFAS 123, the Company has elected to continue
      accounting for stock based compensation using the intrinsic value method
      prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock
      Issued to Employees." The proforma effect of the fair value method is discussed
      in Note 14.





Debt
      Discount: The
      Company has issued convertible instruments, many of which contained detachable
      warrants. Under such arrangements, the Company allocates the proceeds received
      to the warrants and the convertible debt based on their estimated fair values.
      The effective conversion price is then computed based on the allocation of
      the
      proceeds to the convertible debt to determine if a beneficial conversion feature
      exists. The value assigned to the warrants and the beneficial conversion feature
      give rise to a debt discount that is amortized over the stated maturity of
      the
      convertible debt instrument.





Recently
      Issued Accounting Pronouncements :
      In May
      2005, the Financial Accounting Standards Board (“FASB”) issued Statement of
      Financial Accounting Standards (“SFAS”) No. 154, “Accounting Changes and Error
      Corrections”. SFAS No. 154 replaces Accounting Principles Board (“APB”) No. 20,
“Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim
      Financial Statements” and establishes retrospective application as the required
      method for reporting a change in accounting principle. SFAS No. 154 provides
      guidance for determining whether retrospective application of a change in
      accounting principle is impracticable and for reporting a change when
      retrospective application is impracticable. The reporting of a correction of
      an
      error by restating previously issued financial statements is also addressed.
      SFAS No. 154 is effective for accounting changes and corrections of errors
      made
      in fiscal years beginning after December 15, 2005. The Company does not
      anticipate that the adoption of SFAS No. 154 will have a material impact on
      its
      financial condition or results of operations.





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      123R, “Share-Based Payment” (“SFAS 123R”). Under this new standard, companies
      will no longer be able to account for share-based compensation transactions
      using the intrinsic method in accordance with APB 25. Instead, companies will
      be
      required to account for such transactions using a fair-value method and to
      recognize the expense over the service period. This new standard also changes
      the way in which companies account for forfeitures of share-based compensation
      instruments. SFAS 123R will be effective for fiscal years beginning after April
      30, 2006 and allows for several alternative transition methods. The Company
      is
      currently evaluating the effects of adoption of this pronouncement.





Impairment
      of Long-Lived
      Assets: Long-lived assets are assessed by the Company for impairment
      whenever there is an indication that the carrying amount of the asset may not
      be
      recoverable. Recoverability of these assets is determined by comparing the
      forecasted undiscounted cash flows generated by those assets to the assets’ net
      carrying value. The amount of impairment loss, if any, is measured as the
      difference between the net book value of the assets and the estimated fair
      value
      of the related assets.




A-9
 *Table
            of Contents*





**Note
      3:  Balance Sheet Information**





The
      Company’s entire inventory consisted of finished goods inventory which is
      produced by the Company’s manufacturing plant using raw materials, substantially
      all of which are purchased from an affiliated entity.





The
      following table sets forth additional balance sheet information at April 30,
      2005:




Property
                  and equipment, net:Manufacturing
                  equipment
              
              $
              338,467Leasehold
                  improvements
              
              
              23,742Furniture
                  and fixtures
              
              
              15,416Vehicles
              
              
              92,610Total
              
              
              470,235Less:
                  accumulated depreciaton
              
              
              (222,971
              )Total,
                  net
              
              $
              247,264Accrued
                  expenses:Accrued
                  payroll, including payroll taxes payable
              
              $
              47,893Accrued
                  interest
              
              
              54,775Other
                  liabilities
              
              
              6,880Total
              
              $
              109,548





**Note
      4:  Equity Investee**





The
      Company owns an interest in an entity that primarily distributes the Company’s
      products in the United Kingdom. The Company formed this entity, Humatech, Ltd.,
      as a joint venture with its United Kingdom distributor. The Company owned
      approximately 19% and 36% of this entity at April 30, 2005 and 2004,
      respectively. During fiscal 2004, the Company accounted for its investment
      under
      the equity method. The Company made no monetary investment in Humatech, Ltd.
      Humatech, Ltd has incurred net losses since inception. However, the Company’s
      portion of the net losses of Humatech, Ltd. were not reflected in the
      accompanying statements of operations because, under the equity method of
      accounting, the investment balance is not reduced below zero. Also, the Company
      had deferred recognition of sales and related cost of sales on product sold
      to
      Humatech, Ltd. until product had been sold and shipped to a third party
      customer. During fiscal 2005, the Company’s ownership of Humatech, Ltd. was
      reduced to less than twenty percent; as such, the Company now accounts for
      its
      investment in Humatech, Ltd, under the cost method. In addition, effective
      as of
      November 1, 2004, the Company no longer defers recognition of sales and related
      cost of sales made to Humatech, Ltd.




During
      the year ended April 30, 2005, the Company sold a portion of its investment
      for
      $20,000. Because the Company’s carrying value was $0, the Company recognized a
      gain of $20,000 on the sale of this investment.


A-10
 *Table
          of Contents*


**Note
      5:  Notes Payable**




Notes
      payable at April 30, 2005, are comprised of the following:




Vehicle
                    and equipment loans payable to institutions. Original principal
                    balances
                    of $201,650. Monthly installments of principal and interest of
                    $5,703 with
                    maturities between fiscal 2006 andfiscal 2008. Interest rates
                    from 6.3% to
                    14.3% per annum. Collateralized by vehicles and equipment.
                
                $
                117,283Note
                    payable under Product Development and Funding Agreement with
                    stockholder.
                    The creditor originally provided funding of $150,000. The obligation
                    has
                    no set repayment terms other than it is to be repaid at a rate
                    of 6% of
                    gross revenue earned on sales of the product underlying the Product
                    Development Agreement. In addition to the repayment of the principal
                    amount funded the Company is required to pay the creditor an
                    additional
                    $300,000 as a royalty, also to be repaid at a rate of 6% of gross
                    revenue
                    earned on sales of the product underlying the Product Development
                    Agreement. At April 30, 2004, there had not yet been any sales
                    of this
                    product.
                
                
                150,000Various
                    convertible notes - see details in table below.
                
                
                464,200Note
                    payable to individual. This unsecured note bears interest at
                    10% per annum
                    and is due in June 2005.
                
                
                55,000Totals
                
                
                786,483Less
                    discount on convertible debt
                
                
                (208,647
                )Less
                    current portion
                
                
                (147,969
                )Long-term
                    portion
                
                $
                429,867


The
      Company has several convertible notes outstanding, many of which were issued
      together with detachable warrants. The conversion features and allocation of
      a
      portion of the proceeds to the warrants gave rise to the recognition of a debt
      discount on each of these notes. These debt discounts are recognized on a
      straight-line basis over the respective life of each of note. The following
      table sets forth specifics with respect to the convertible notes outstanding
      at
      April 30, 2005:




**Counterparty**
              
              **Loan**
                **Amount**
              
              **Interest**
                **Rate**
              
              **Maturity**
                **Date**
              
              **Conversion**
                **Price**
              
              **Warrants**
                **Issued**
              
              **Warrant**
                **Exercise**
                **Price**
              
              **Warrant
                  Maturity****Date**
              
              **Debt**
                **Discount
                  at**
                **Inception**
              
              **Debt
                  Balance**
                **at
                  April 30,**
                **2005**Related
                    party
              
              $
              154,313
              
              
              7
              %
              
              8/1/2005
              
              $
              0.10
              
              
              n/a
              
              
              n/a
              
              
              n/a
              
              $
              154,313
              
              $
              -Individual
              
              
              10,000
              
              
              8
              %
              
              12/15/2008
              
              
              0.17
              
              
              58,824
              
              $
              0.19
              
              
              12/15/2008
              
              
              9,088
              
              
              10,000Individual
              
              
              12,750
              
              
              8
              %
              
              1/20/2009
              
              
              0.17
              
              
              75,000
              
              
              0.19
              
              
              1/20/2009
              
              
              7,695
              
              
              12,750Individual
              
              
              10,000
              
              
              10
              %
              
              1/22/2006
              
              
              0.20
              
              
              10,000
              
              
              0.20
              
              
              1/22/2009
              
              
              1,180
              
              
              10,000Individual
              
              
              8,000
              
              
              10
              %
              
              1/22/2006
              
              
              0.20
              
              
              8,000
              
              
              0.20
              
              
              1/22/2009
              
              
              944
              
              
              8,000Individual
              
              
              10,000
              
              
              8
              %
              
              2/26/2009
              
              
              0.10
              
              
              13,333
              
              
              0.15
              
              
              2/26/2009
              
              
              2,228
              
              
              10,000Individual
              
              
              100,000
              
              
              24
              %
              
              3/12/2006
              
              
              0.20
              
              
              500,000
              
              
              0.50
              
              
              3/12/2009
              
              
              41,100
              
              
              100,000Individual
              
              
              26,700
              
              
              10
              %
              
              3/25/2007
              
              
              0.17
              
              
              31,412
              
              
              0.21
              
              
              3/25/2009
              
              
              3,898
              
              
              26,700Individual
              
              
              38,000
              
              
              10
              %
              
              4/15/2007
              
              
              0.10
              
              
              58,462
              
              
              0.13
              
              
              4/15/2009
              
              
              6,103
              
              
              38,000Related
                  party
              
              
              26,000
              
              
              8
              %
              
              5/7/2009
              
              
              0.10
              
              
              52,000
              
              
              0.10
              
              
              6/30/2009
              
              
              19,240
              
              
              26,000Individual
              
              
              50,000
              
              
              10
              %
              
              5/12/2009
              
              
              0.10
              
              
              66,666
              
              
              0.15
              
              
              5/17/2009
              
              
              29,666
              
              
              50,000Individual
              
              
              20,000
              
              
              8
              %
              
              6/18/2009
              
              
              0.10
              
              
              26,666
              
              
              0.15
              
              
              6/18/2009
              
              
              20,000
              
              
              20,000Individual
              
              
              28,750
              
              
              10
              %
              
              8/2/2007
              
              
              0.10
              
              
              57,500
              
              
              0.13
              
              
              8/2/2009
              
              
              28,750
              
              
              28,750Individual
              
              
              10,000
              
              
              10
              %
              
              8/25/2007
              
              
              0.20
              
              
              10,000
              
              
              0.20
              
              
              8/25/2009
              
              
              1,300
              
              
              10,000Individual
              
              
              35,000
              
              
              8
              %
              
              11/3/2009
              
              
              0.10
              
              
              70,000
              
              
              0.10
              
              
              11/3/2009
              
              
              35,000
              
              
              35,000Individual
              
              
              70,000
              
              
              8
              %
              
              1/21/2007
              
              
              0.07
              
              
              200,000
              
              
              0.13
              
              
              1/21/2008
              
              
              67,143
              
              
              70,000Related
                  party
              
              
              9,000
              
              
              8
              %
              
              2/14/2008
              
              
              0.03
              
              
              90,000
              
              
              0.10
              
              
              2/14/2011
              
              
              9,000
              
              
              9,000$
              464,200


A-11
 *Table
          of Contents*


The
      following table sets forth principal maturities for the years ended April
      30:




2006
              
              $
              147,9692007
              
              
              275,9202008
              
              
              48,8442009
              
              
              32,7502010
              
              
              131,000Thereafter
              
              
              150,000$
              786,483





**Note
      6:  Provision for Income Taxes**





Deferred
      income taxes reflect the net tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amounts used for income tax purposes.





The
      deferred tax consequences of temporary differences in reporting items for
      financial statement and income tax purposes are recognized, if appropriate.
      Realization of the future tax benefits related to the deferred tax assets is
      dependent on many factors, including the Company’s ability to generate taxable
      income within the net operating loss period. The Company has considered these
      factors in reaching its conclusion as to the valuation allowance for financial
      reporting purposes.





At
      April
      30, 2005 the Company has unused federal net operating losses of $9,315,000
      expiring from 2012 through 2024. The Company may utilize the unavailable net
      operating loss carryforwards upon generating taxable income.





Income
      taxes for years ended April 30, is summarized as follows:




**2005**
              
              **2004**Current
                  provision (benefit)
              
              $
              (307,401
              )
              $
              (751,836
              )Deferred
                  provision
              
              
              307,401
              
              
              751,836Net
                  income tax (benefit) provision
              
              $
              -
              
              $
              -





The
      following table summarizes differences between the effective and statutory
      income tax rates for years ended April 30:




**2005**
              
              **2004****Amount**
              
              **Percent**
              
              **Amount**
              
              **Percent**Federal
                  statutory rates
              
              $
              (350,773
              )
              
              34
              %
              $
              (639,060
              )
              
              34
              %State
                  income taxes
              
              
              (61,901
              )
              
              6
              %
              
              (112,775
              )
              
              6
              %Valuation
                  allowance
              
              
              370,055
              
              
              (36
              )%
              
              72,000
              
              
              (4
              )%Other
                  (permanent differences)
              
              
              42,620
              
              
              (4
              )%
              
              679,835
              
              
              (36
              )%Effective
                  rate
              
              $
              -
              
              
              0
              %
              $
              -
              
              
              0
              %


The
      permanent differences in the year ended April 30, 2004, relate primarily to
      differences in accounting for the value of stock compensation for income tax
      purposes.





Deferred
      tax assets totaling approximately $3,656,000 existing at April 30, 2005 relate
      to net operating loss carryforwards and other timing differences and are fully
      offset by a valuation allowance due to the uncertainty of future realization
      of
      such assets.


A-12
 *Table
          of Contents*


**Note
      7:  Leases**





Operating
      Leases





The
      Company is a lessee to certain operating leases during the years ended April
      30,
      2005 and 2004 as follows:





·
            A
                lease for facilities in Houston that expired in July 2003


·
            A
                lease for office space in Mesa, Arizona expiring in July 2006.


·
            A
                lease for real property located in Albuquerque, New Mexico from an
                entity
                owned by its President and Chief Financial Officer.





Rent
      expense under these leases totaled $33,998 and $42,838 for the year ended April
      30, 2005 and 2004, respectively, of which $12,100 and $13,896 were paid to
      related parties, respectively.





Future
      minimum annual lease payments under the operating lease agreements are as
      follows for years ended April 30:




2006
                
                $
                31,3542007
                
                
                4,538Thereafter
                
                
                -Total
                
                $
                35,892





Capital
      Leases





The
      Company leases certain equipment under capital leases that expire through 2008.
      At April 30, 2005, there were future minimum lease payments, excluding interest,
      of $1,358 that is reflected as a liability in the Company’s balance
      sheet.





**Note
      8:  Stockholders’ Equity**





Common
      Stock Issued for Services




The
      Company has historically granted shares of its common stock to employees and
      consultants as payment for services rendered. The value of those shares was
      determined based on the trading value of the stock at the dates on which the
      agreements were entered into for the services. The Company issued 2,039,112
      and
      3,415,000 shares of common stock to employees and consultants valued at $353,500
      and $578,650 during the years ended April 30, 2005 and 2004, respectively.





Common
      Stock Issued as Payment for Obligations





In
      the
      year ended April 30, 2004, the Company granted 7,698,658 shares of its common
      stock to two of the Company’s officers as payment of accrued compensation. The
      value of the shares of approximately $0.21 was based on the trading value of
      the
      stock at the dates on which the agreements were entered into to grant the shares
      as payment for $1,604,042 in accrued compensation.





Other





The
      Company also raised capital by offering shares of its common stock to investors.
      The Company issued 545,833 and 280,882 shares of its common stock for $85,500
      and $70,000 in the years ended April 30, 2005 and 2004,
      respectively.





The
      Company periodically grants options to parties other than employees as
      consideration for services. The Company estimates the value of those securities
      using the Black-Scholes option pricing model. The estimated value of those
      securities is expensed when granted. The Company did not grant any options
      to
      nonemployees during the fiscal years ended April 30, 2005 and
      2004.


A-13
 *Table
          of Contents*




**Note
      9:  Commitments and Contingencies**





As
      discussed in Note 5, the Company entered into a Product Development and Funding
      Agreement with a stockholder. Under the agreement, the Company is committed
      to
      repay advances and additional amounts up to $450,000. The rate at which
      repayment occurs is based on 6% of the gross revenue of the product specified
      in
      the agreement. The Company had not generated any revenue from this product
      through April 30, 2005.





On
      or
      about February 28, 2005, a Civil Complaint was filed by the Securities and
      Exchange Commission against the Company and its Chief Executive Officer and
      Chief Financial Officer. The lawsuit alleges that the defendants violated
      various securities laws in the way the Company reported its assets, sales,
      and
      revenues related to its business dealings with Humatech, Ltd., a United Kingdom
      company, and in the way it corrected these alleged violations. The Company
      and
      its CEO and CFO have negotiated the terms of an agreement in principal to settle
      this matter with the Securities and Exchange Commission, but no settlement
      can
      be finalized until the Company is current in its reporting requirements under
      the Securities Exchange Act of 1934 and the terms of the settlement have been
      approved by the Commissioners.





The
      Company has a license agreement with its President and largest single
      shareholder for the use of all copyrights, trademarks, patents, trade secrets,
      product formulas, customer lists and other proprietary information. The
      agreement requires the payment of 1% of gross domestic sales generated by the
      Company as a result of this intellectual property. The Company recorded royalty
      expense of $7,361 and $2,389 in the years ended April 30, 2005 and 2004,
      respectively, related to this agreement.




An
      action
      was filed by several parties during the year ended April 30, 2004 in the Circuit
      Court of St. Louis County, State of Missouri seeking damages against the
      Company, in connection with advertising goods or services via facsimile which
      had not been specifically requested. On March 23, 2004, the Circuit Court of
      St.
      Louis County entered a default judgment against the company for $100,500. The
      Company later appealed but the parties settled without further ruling from
      the
      court in the amount of $33,125.




**Note
      10:  Net Loss per share**





Net
      loss
      per share is calculated using the weighted average number of shares of common
      stock outstanding during the year. Warrants and options to purchase 2,339,363
      and 2,813,501 shares of common stock were excluded from the calculation for
      the
      year ended April 30, 2005 and 2004, respectively, as the inclusion of such
      options and warrants would be anti-dilutive.





The
      following presents the computation of basic and diluted loss per share from
      continuing operations for the years ended April 30:




**2005**
              
              **2004****Income**
              
              **Shares**
              
              **Per
                  Share**
              
              **Income**
              
              **Shares**
              
              **Per
                  Share**Basic
                  earnings per share:Income
                  available to common stockholders
              
              $
              (1,031,686
              )
              
              31,913,472
              
              $
              (0.03
              )
              $
              (1,879,589
              )
              
              23,015,785
              
              $
              (0.08
              )Effect
                  of dilutive securities
              
              
              
              
              
              N/A
              
              
              
              
              
              
              
              
              N/ADiluted
                  earnings per share:
              
              $
              (1,031,686
              )
              
              31,913,472
              
              $
              (0.03
              )
              $
              (1,879,589
              )
              
              23,015,785
              
              $
              (0.08
              )


**Note
        11:  Related Party Transactions**
 
 The
        Company has a license agreement with its President and largest single
        shareholder. The agreement requires the payment of 1% of gross domestic sales
        generated by the Company as a result of this intellectual property. See Note
        9.
        The Company also leases real property located in Albuquerque, New Mexico
        from an
        entity owned by its President and Chief Financial Officer. See Note
        7.
  A-14
 *Table
            of Contents*
  The
        Company has accrued salaries to its President and Chief Financial Officer.
        At
        April 30, 2005, the total amount accrued and unpaid compensation due to these
        officers was $260,069. During the year ended April 30, 2004, the Company
        granted
        7,698,658 shares of common stock as payment for $1,604,042 in accrued
        compensation.
 
 The
        Company received an advance of $39,500 from an entity owned by its President
        and
        Chief Financial Officer in the year ended April 30, 2002. The $39,500 advance
        remains outstanding at April 30, 2005. The Company also purchases certain
        of its
        raw materials from this entity. The Company made purchases of $23,058 and
        $13,429 from this entity in the years ended April 30, 2005 and 2004,
        respectively. Additionally, the Company leases its Albuquerque, New Mexico
        property from this entity and pays monthly rent of $1100 per month.
 
 The
        Company borrowed $154,313 from an entity owned by a family member of the
        Company’s President on August 1, 2003. The loan grants the related entity the
        option to convert any unpaid principal and interest into shares of the Company’s
        common stock at $.10 per share any time during the loan period ending August
        30,
        2005. This note, together with $4,400 of accrued interest, was converted
        into
        common stock during the year ended April 30, 2005.
 
 During
        the year ended April 30, 2004, the Company’s CEO assumed the Company’s $336,000
        obligation to third party. The officer becomes obligated to the third party
        for
        that amount and the third party has no further recourse against the Company
        should the officer default on the obligation. The officer had received cash
        advances from the Company that had accumulated to over $336,000 over a several
        year period. The obligation that was previously due to the third party and
        transferred to the officer was then offset against advances due from the
        officer.


**Note
      12:  Concentrations of Credit Risk**





The
      Company maintains cash balances at banks in Texas. Accounts are insured by
      the
      Federal Deposit Insurance Corporation up to $100,000. At April 30, 2005, the
      Company had uninsured bank balances of $0.





Approximately
      73% of the Company’s sales in the year ended April 30, 2005 were to one
      customer. Two customers accounted for approximately 96% of the Company’s
      outstanding accounts receivable at April 30, 2005.


**Note
        13:  Stock-based Compensation**
 
 From
        time
        to time, the Company issues stock options to executives, key employees and
        members of the Board of Directors. The Company has adopted the disclosure-only
        provisions of Statement of Financial Accounting Standards No. 123, "Accounting
        for Stock-Based Compensation," and continues to account for stock based
        compensation using the intrinsic value method prescribed by Accounting
        Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees".
        Accordingly, no compensation cost has been recognized for the stock options
        granted to employees. However, there is compensation expense recognized on
        options and warrants granted to non-employees. There were no options granted
        to
        employees in either of the years ended April 30, 2004 and 2003. Therefore,
        the
        pro-forma information required under SFAS No. 123 is not presented.
 
 The
        Humatech, Inc. 2002 Omnibus Securities Plan (the "Plan") was established
        to
        provide selected employees, directors and consultants awards in the form
        of
        Restricted Shares and Options (which may constitute Incentive Stock Options
        or
        Nonstatutory Stock Options) as well as the direct award or sale of shares
        of the
        Company's common stock. Under the Plan, the total number of shares of common
        stock that may be granted is 1,500,000. The plan provides that shares granted
        come from the corporation's authorized but unissued common stock. The price
        of
        the options granted pursuant to this plan shall not be less than 100 percent
        of
        the fair market value of the shares on the date of grant. The options expire
        from five to ten years from date of grant. At April 30, 2003, the Company
        had
        granted 963,021 shares of common stock and 339,000 options under this plan.
        The
        options are vested upon grant.
  A-15
 *Table
            of Contents*
  In
        addition to the Plan, the Company will occasionally grant options and warrants
        to consultants and others under specific stock option agreements. There were
        100,000 and 761,220 such options granted in the years ended April 30, 2004
        and
        2003 respectively.
 
 Subsequent
        to April 30, 2004, the Company’s board of directors approved the 2004 Stock
        Grant and Option Plan. The 2004 provides for up to 6,000,000 shares of common
        stock to be provided for direct grant or under options.
 
 The
        fair
        value of each option grant is estimated on the date of grant using the
        Black-Scholes option-pricing model with the following assumptions for years
        ended April 30:


2005
              
              2004Dividend
                  yield
              
              
              None
              
              
              NoneVolatility
              
              
              60.58%
              
              
              60.58%Risk
                  free interest rate
              
              
              4.15%
              
              
              4.15%Expected
                  asset life
              
              
              5
                  years
              
              
              5
                  years






The
      summary of activity for the Company's stock options is presented
      below:




**2005**
              
              **2004**Weighted
                Average
                Exercise
                Price
              
              
              
              Weighted
                Average
                Exercise
                PriceOptions
                  outstanding at beginning of year
              
              
              1,027,220
              
              $
              0.81
              
              
              1,882,220
              
              $
              0.89Granted
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -Exercised
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -Terminated/Expired
              
              
              (622,220
              )
              $
              0.71
              
              
              (855,000
              )
              $
              0.98Options
                  outstanding at end of year
              
              
              405,000
              
              $
              0.97
              
              
              1,027,220
              
              $
              0.81Options
                  exercisable at end of year
              
              
              405,000
              
              $
              0.97
              
              
              1,027,220
              
              $
              0.81Price
                  per share of options outstanding
              
              $
              0.43
                  - $1.10
              
              
              
              
              $
              0.43
                  - $1.25Weighted
                  average remaining contractual lives
              
              1.91
                  years
              
              
              
              
              1.65
                  years


A-16
 *Table
            of Contents*




**Note
      14:  Common Stock Warrants**





The
      Company has issued warrants in connection with certain debt and equity
      transactions. Warrants outstanding are summarized as follows:




**2005**
              
              **2004**Weighted
                Average
                Exercise
                Price
              
              
              
              Weighted
                Average
                Exercise
                PriceWarrants
                  outstanding at beginning of year
              
              
              1,786,281
              
              $
              2.47
              
              
              1,375,000
              
              $
              3.50Granted
              
              
              491,832
              
              $
              0.13
              
              
              755,031
              
              $
              0.39Exercised
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -Terminated/Expired
              
              
              (343,750
              )
              $
              3.00
              
              
              (343,750
              )
              $
              2.00Warrants
                  outstanding at end of year
              
              
              1,934,363
              
              $
              1.78
              
              
              1,786,281
              
              $
              2.47Warrants
                  exercisable at end of year
              
              
              1,934,363
              
              $
              1.78
              
              
              1,786,281
              
              $
              2.47Price
                  per share of warrants outstanding
              
              $
              0.10
                  - $5.00
              
              
              
              
              $
              0.13
                  - $5.00Weighted
                  average remaining contractual lives
              
              2.72
                  years
              
              
              
              
              2.81
                  years


**Note
      15:  Business Segments**





The
      Company operates in only one reportable segment, trace element fertilizers
      and
      animal feed products and holds all of its assets in the United States. The
      following table outlines the breakdown of sales to unaffiliated customers
      domestically and internationally:


Gross
        Revenues


**2005**
              
              **2004**United
                  States
              
              $
              443,130
              
              $
              237,860Europe
              
              
              188,085
              
              
              38,058Asia
              
              
              89,550
              
              
              -Total
              
              $
              720,765
              
              $
              275,918




***
      * * * * ***




A-17