**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, 2006**





o
            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 ofincorporation
                or organization)
            (I.R.S.
                EmployerIdentification
                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  x  No o .





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 o No  x .





State
      issuer’s revenues for its most recent fiscal year.  $1,573,716 for the year ended April 30, 2006.





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.) $2,105,119, based on the closing price of $0. 09
      for
      the common stock on August 10, 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 August 10, 2006, there were ----
      37,134,119 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 o No  x .









**HUMATECH,
      INC.**





**TABLE
      OFCONTENTS**








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





**ITEM
      1— 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.





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.





1
 *Table
            of Contents*





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.





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 94%
      of
      our sales for the year ended April 30, 2006.





2
 *Table
            of Contents*





Our
      animal feed supplement products consist of:





o
            PROMAX
                MaxAppetin, Nutri-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 6% of our sales last year, with 5% coming
      from sales to commercial growers and less than 1% 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





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 $196,890 and $23,058 from this entity in the years ended
      April
      30, 2006 and 2005, 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.





3
 *Table
            of Contents*





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 1% and 5% for fiscal years ended April 30 2006
      and
      2005, respectively 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.





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 $299,556, and $28,000
      for the years ended April 30, 2006 and 2005 respectively.





4
 *Table
            of Contents*





Employees





As
      of
      April 30, 2006, we employed a total of 11 full-time employees, two (2) of which
      were officers, seven (7) of which were engaged in manufacturing activities,
      and
      two (2) engaged in administrative activities.





**ITEM
      2— DESCRIPTION OF PROPERTY** ****





Our
      main
      office is located in Mesa, Arizona under the terms of a three (3) year lease
      which terminated on July 14, 2006. We are in the process of re-negotiating
      the
      lease, but in the interim, we continue to rent the space on a month-to-month
      term 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 three (3) years, terminating on April 30, 2009, at a rate of
      $1,300 per month.





**ITEM
      3— 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.





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.





**ITEM
      4— 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.




5
 *Table
            of Contents*





**PART
      II**





**ITEM
      5— 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. With the filing of our Quarterly Report on Form
      10-QSB for the period ended January 31, 2006, we completed all of our delinquent
      ’34 Act filings and now 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**
            
            
            
            **Prices****April
                30,**
            
            **Period**
            
            **High**
            
            **Low**2005
            
            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
            
            $0.04Fourth
                Quarter
            
            $0.13
            
            $0.07








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.





**Holders**





As
      of
      April 30, 2006, there were 35,884,119 shares of our common stock issued and
      outstanding and held by 181 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
      April
      5, 2006, we issued a Convertible Promissory Note in the principal amount of
      $100,000, in exchange for $100,000 in cash. The Note is due three years from
      its
      date of issuance and accrues interest at a rate of ten percent (10%) per annum.
      The note holder also has the option, at any time, to convert the amounts due
      under the Note into shares of our common stock. Any amounts the Holder elects
      to
      convert will be converted into common stock at a rate of $0.25 per share. The
      issuance was exempt from registration pursuant to Section 4(2) of the Securities
      Act of 1933, and the shareholder is accredited.





6
 *Table
            of Contents*





On
      April
      19, 2006, we issued 462,000 shares of common stock to an unrelated investor
      in
      exchange for the conversion of $27,720 in interest due to the investor under
      a
      $100,000 principal amount promissory note. The issuance was exempt from
      registration pursuant to Section 4(2) of the Securities Act of 1933, and the
      investor was a sophisticated investor.





7
 *Table
            of Contents*





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





**Disclaimer
      Regarding Forward Looking Statements**




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. Forward-looking
      statements are, by their very nature, uncertain and risky. These risks and
      uncertainties 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
      the 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, and because 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 and in its
      other reports, 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 94% 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 are sold primarily through distributors, and are currently
      available in a small number of retail chain stores on a trial basis. Our
      fertilizer products accounted for approximately 6% of our total sales last
      year,
      with approximately 5% coming from sales to commercial growers of agricultural
      crops and 1% 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, 2006, the Company 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, 2006, we focused the growth of our business
      around our animal feed supplement products. These products have generated
      significant increases in net revenues from 2005 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.





8
 *Table
            of Contents*





**Year
      ended April 30, 2006 compared to year ended April 30, 2005**





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, 2006 and 2005, respectively, are as follows:





**Year
                ended April 30,**
            
            **Percentage****2006**
            
            **2005**
            
            **Change**Net
                revenues
            
            $
            1,573,716
            
            $
            720,765
            
            
            118
            %Cost
                of goods sold
            
            
            1,074,329
            
            
            524,905
            
            
            105
            %Gross
                profit
            
            $
            499,387
            
            $
            195,860
            
            
            155
            %




Revenues





Revenues
      for the year ended April 30, 2006 were $1,573,716 compared to $720,765 for
      the
      same period in 2005. Our revenues increased in 2006 primarily due to an increase
      in sales of Promax domestically and in the U.K. Our product mix has shifted
      in
      fiscal 2006 and 2005 toward our animal feed supplement product line, with
      approximately 94% of revenues coming from this product line in fiscal 2006,
      as
      compared to 92% in fiscal 2005 and 26% in fiscal 2004.





Cost
      of Goods Sold





Cost
      of
      goods sold for the year ended April 30, 2006 were $1,074,329, compared to
      $524,905 for the same period in 2005. 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 costs of sales were spread over a larger volume
      of production.





Operating
      Expenses





Total
      operating expenses were $984,457 for the year ended April 30, 2006 as compared
      to $1,091,439 for the year ended April 30, 2005. Operating
      expenses consist primarily of officer and administrative salaries, legal and
      professional fees and rent, utilities and insurance which are, to a large
      extent, fixed in nature. Our operating loss decreased primarily due to our
      increase in gross profit.





Included
      in operating expenses was interest expense and non-cash expenses associated
      with
      the beneficial conversion features attributable to our convertible notes. Also
      included in other income (expense) during the year ended April 30, 2006 were
      losses on the sale of fixed assets totaling $51,012 and a $10,481 gain on debt
      extinguishment. **





Net
      Loss





We
      experienced a net loss of $700,985 for the year ended April 30, 2006 as compared
      to a net loss of $1,031,686 for the year ended April 30, 2005. This decrease
      is
      attributable to an increase in gross profit of $303,527 and a decrease in
      operating expenses of approximately $106,982. Additionally, our interest expense
      increased by approximately $19,000 as we recognized additional interest expense
      from the amortization of debt discounts associated with beneficial conversion
      features and warrants issued with our convertible debt.





**Liquidity
      and Capital Resources**





Introduction




As
      of
      April 30, 2006 we had cash of $33,745 and accounts receivable of $108,812.
      Our
      total liabilities as of April 30, 2006 were $1,813,889, consisting primarily
      of
      accounts payable, amounts due to our officers, and notes payable, accounting
      for
      approximately 19%, 24% and 37% of our total liabilities, respectively. Until
      our
      revenues increase to a level of profitability, we will have to fund operations
      from the sale of our stock and from loans. We have been successful in obtaining
      the necessary funding in the past, and anticipate that we will be able to
      continue to do so in the future. However, there can be no assurances that such
      sources will be available to us or, if available, at prices attractive to
      us.





9
 *Table
            of Contents*





Our
      cash,
      current assets, total assets, current liabilities, and total liabilities as
      of
      April 30, 2006 and
      2005, respectively, are as follows:




**April
                30, 2006**
            
            **April
                30, 2005**
            
            **Change**Cash
            
            $
            33,745
            
            $
            166
            
            $
            33,579Total
                current assets
            
            
            183,212
            
            
            53,314
            
            
            129,898Total
                assets
            
            
            354,966
            
            
            300,578
            
            
            54,388Total
                current liabilities
            
            
            1,431,619
            
            
            841,592
            
            
            590,027Total
                liabilities
            
            
            1,813,889
            
            
            1,271,459
            
            
            542,430






Sources
      and Uses of Cash





For
      the
      year ended April 30, 2006 our net cash provided by (used in) operating
      activities was $4,218 as compared to ($300,236) for the year ended April 30,
      2005. This increase in operating cash flows was due primarily to a reduction
      in
      net loss of $330,701.




Net
      cash
      used in investing activities for the years ended April 30, 2006 and 2005,
      respectively was $34,935 and $33,427. During fiscal 2006 and 2005, the Company
      made significant investments in production equipment to increase its
      manufacturing capacity. In 2005, these net cash outflows were partially offset
      by proceeds received from the partial sale of an investment in an unconsolidated
      entity in fiscal 2005.





Net
      cash
      provided by financing activities was $64,296 for the year ended April 30, 2006
      as compared to $332,594 for the year ended April 30, 2005. Net cash flows from
      debt financing activities were approximately $64,000 and $247,000 in fiscal
      2006
      and 2005, respectively. Net cash flows from equity financing activities were
      approximately $0 and $86,000 in fiscal 2006 and 2005, 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 $285,000 and $90,000 in principal debt maturities
      due
      in fiscal 2007 and 2008. 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**





During
      the year ended April 30, 2006, the Company engaged in the following debt-related
      activities:





Ÿ
            Negotiated
                the settlement of an installment note payable with a lender, resulting
                in
                the payment of approximately $35,000 and the recognition of a gain
                on debt
                extinguishment of $10,481.


Ÿ
            On
                or about September 6, 2005, received $35,000 from Dogman Transport,
                LLC,
                an entity owned by two adult sons of J.D. Rottweiler, one of our
                officers
                and a director, in exchange for a convertible note payable with interest
                accruing at an annual rate of 21% and all principal and interest
                due and
                payable on September 9, 2007. This note is convertible into shares
                of
                common stock at $0.02 per share, resulting in a beneficial conversion
                feature of $35,000 which has been reflected as additional debt discount
                in
                the accompanying balance sheet. In connection with this transaction,
                the
                Company also issued 380,000 warrants at an exercise price of $0.08
                per
                share that expire on September 6, 2011. This note is collateralized
                by
                certain manufacturing equipment.





10
 *Table
            of Contents*





Ÿ
            Renegotiated
                the terms of three convertible instruments. For all such instruments,
                the
                conversion price was reduced from $0.20 to $0.05 and for two of the
                instruments, the maturity date was extended to October 1, 2007. In
                accordance with EITF 96-19,*Debtor's
                Accounting for a Modification or Exchange of Debt
                Instruments*and EITF 05-07,*Accounting
                for Modifications to Conversion Options Embedded in Debt Securities
                and
                Related Issues*,
                the Company recorded additional debt discount of $3,360 equal to
                the
                difference in the fair value of the embedded conversion feature
                immediately before and after the
                modification.


Ÿ
            Entered
                into a sale-leaseback transaction with a lender whereby certain assets
                with a net book value of $96,784 were sold for net proceeds of $50,000
                and
                were leased back under a capital lease with a bargain purchase option
                of
                $1. The capital lease calls for 2 advance payments and 48 monthly
                lease
                payments of $1,493 with an effective interest rate of 24%. A loss
                of
                $46,784 was recorded on the transaction and is included in other
                income
                (expense) in the accompanying statement of
                operations.


Ÿ
            Obtained
                proceeds of $100,000 in exchange for a convertible note payable to
                a third
                party. This note is convertible into shares of common stock at $0.25
                per
                share. This investor also purchased all of the convertible debt
                instruments detailed in Note 5 of the footnotes to our financial
                statements from the original owners with the exception of those held
                by
                related parties. We consented to the assignment of these convertible
                debt
                instruments from the original owners to the investor. Two of the
                notes
                that were purchased were modified to extend their maturity dates,
                as they
                were previously due in fiscal 2006. Ownership of the warrants issued
                to
                the original purchasers was not transferred as part of this transaction.





We
      have
      notes payable totaling $667,600 as of April 30, 2006, net of a discount of
      $140,974 Of this amount, $285,330 is the current portion. None of our debt
      instruments contain restrictive financial covenants. These notes payable are
      detailed in Note 5 to our financial statements.





We
      are a
      party to royalty agreements that contain contingent 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, 2006, there have not been any
      revenues from that product.





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 $15,540 and $7,361 in the years ended April 30,
      2006 and April 30, 2005, respectively.





**Off
      Balance Sheet Contracts**





At
      April
      30, 2006 and 2005, 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.




11
 *Table
            of Contents*





*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 non-employees, 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.
 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 carry-forwards.





12
 *Table
            of Contents*





**ITEM
      7— FINANCIAL STATEMENTS**





Index
                to Consolidated Financial Statements**Humatech,
                Inc.**Report
                of Epstein, Weber & Conover, PLC
            A-2Balance
                Sheet as of April 30, 2006
            A-3Statements
                of Operations for the years ended April 30, 2006 and 2005
            A-4Statement
                of Stockholders’ Deficit for years ended April 30, 2006 and
                2005
            A-5Statements
                of Cash Flows for the years ended April 30, 2006 and 2005
            A-6Notes
                to Consolidated Financial Statements
            A-7





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





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





**ITEM
      8A— 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.





**ITEM
      8B— OTHER INFORMATION**





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





13
 *Table
            of Contents*





**PART
      III**





**ITEM
      9— 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
            
            57
            
            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, 2006, 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.





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





14
 *Table
            of Contents*





**ITEM
      10— 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, 2006, we can issue a total of 11,168,669 shares under the 2002
      Securities Plan. As of August 10, 2006, a total of 2,481,220 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, 2006 and 2005.
      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.





**Long
                Term Compensation****Annual
                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
            2006
            175,000(1)
            -0-
            -0-
            
            -0-
            -0-
            
            -0-
            15,540President
                and CEO
            2005
            175,000(1)
            -0-
            -0-
            
            -0-
            -0-
            
            -0-
            7,362(2)John
                D. Rottweiler
            2006
            125,000(1)
            -0-
            -0-
            
            -0-
            -0-
            
            -0-
            -0-Secretary
                and CFO
            2005
            125,000(1)
            -0-
            -0-
            
            -0-
            -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.





15
 *Table
            of Contents*





**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**
            **Exercise****or**
              **Base****Price**
            **Expiration**
              **Date****(#)**
            
            **($/Sh)**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
      FISCAL YEAR END OPTION/SAR VALUES**





**Shares
                Acquired**
            
            **Number
                of Unexercised Securities**
              **Underlying
                Options/SARs at**
              **Fiscal
                Year End**
            **Value
                of Unexercised In-The-**
              **Money
                Options/SARs at**
              **Fiscal
                Year End****Name**
            **On
                Exercise**
            **Value
                Realized**
            **Exercisable/Unexercisable**
            **Exercisable/Unexercisable****(#)**
            **($)**
            **(#)**
            **($)**David
                G. Williams
            -0-
            N/A
            N/A
            N/AJohn
                D. Rottweiler
            -0-
            N/A
            N/A
            N/A





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





The
      following table sets forth, as of August 10, 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 of
              Beneficial
                Owner (1)
            Amount
                and Nature of
              Beneficial
                Ownership
            Percent
                of
              Class
                (2)Common
                Stock
            David
                G. Williams
            9,268,255
                (3)
            25%Common
                Stock
            John
                D. Rottweiler
            4,475,658
            12%Common
                Stock
            All
                officers and directors as a group(2
                persons)
            13,743,913
                (3)
            37%





(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 37,134,119 shares outstanding as of August 10,
                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.





16
 *Table
            of Contents*





**ITEM
      12— 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.





As
      of
      April 30, 2006 and 2005, total cumulative amounts unpaid under these agreements
      are as follows:





**2006**
            
            **2005**Officer
                compensation
            
            $
            438,032
            
            $
            263,578Royalty
                Fees
            
            
            -
            
            
            -$
            438,032
            
            $
            263,578





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% of this
      entity at April 30, 2006 and 2005, 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%.




In
      October 2000, David Williams, the Company’s
      President and Director, personally loaned Humatech Ltd. $99,800 in order to
      help
      provide Humatech Ltd. with required working capital. The Company is not a party
      to the loan between Mr. Williams and Humatech Ltd, and no recourse exists
      between the parties to the loan and Humatech, Inc.  Under the terms of the
      loan, the principal and interest is due from Humatech Ltd. to Mr. Williams
      and
      is payable upon demand   In order to avoid the excessive costs that would
      have been incurred due to wire transfer fees, currency conversion rates, and
      money market fluctuations between the US Dollar and the British Pound Sterling,
      Mr. Williams deposited the $99,800 directly into the Company’s bank account
      rather than sending the proceeds to Humatech, Ltd. in the UK, and having the
      funds subsequently forwarded by Humatech, Ltd. onto the Company. All the
      proceeds of the loan were used to pay for product sold by the Company to
      Humatech Ltd. Under the equity method of accounting which was required, these
      payments could not be listed as sales to Humatech Ltd, our distributor in the
      UK, until Humatech Ltd. had sold the product to third party customers; which
      when verified allowed Humatech Inc. to classify this prepayment as sales
      income.





17
 *Table
            of Contents*





RAMMSCO,
      Inc.




We
      purchase certain raw materials from RAMMSCO, Inc., an entity owned by our
      President and Chief Financial Officer. We
      made
      purchases of $196,890 and $23,058 from this entity in the years ended April
      30,
      2006 and 2005, respectively. Additionally, we lease our Albuquerque, New Mexico
      property from this entity whereby we paid $31,354 and $12,100 during the years
      ended April 30, 2006 and 2005, respectively. This lease, expires April 30,
      2009,
      and requires monthly lease payments of $1,300 per month, with the lease term
      extending on a month-to-month basis thereafter.




Dogman
      Transport, LLC





On
      or
      about September 6, 2005, we received $35,000 from Dogman Transport, LLC, an
      entity owned by two adult sons of J.D. Rottweiler, one of our officers and
      a
      director, in exchange for a convertible note payable with interest accruing
      at
      an annual rate of 21% and all principal and interest due and payable on
      September 9, 2007. This note is convertible into shares of common stock at
      $0.02
      per share, resulting in a beneficial conversion feature of $35,000 which has
      been reflected as additional debt discount in the accompanying balance sheet.
      In
      connection with this transaction, we also issued 380,000 warrants at an exercise
      price of $0.08 per share that expire on September 6, 2011.





Entrenuity





We
      borrowed $154,313 from an entity owned by a family member of our President
      on
      August 1, 2003. The loan granted the related entity the option to convert any
      unpaid principal and interest into shares of the Company’s common stock at $.10
      per share. This note, together with $4,400 of accrued interest, was converted
      into common stock during the year ended April 30, 2005.





18
 *Table
            of Contents*





**ITEM
      13— 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
                  Officer32.1
              
              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.




19
 *Table
            of Contents*





(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.





**ITEM
      14— PRINCIPAL ACCOUNTANT FEES AND
      SERVICES**





. **Audit
      Fees**





The
      aggregate fees billed in each of the fiscal years ended April 30, 2006 and
      2005
      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 $28,310 and $38,885, 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 2006 and 2005.





**Tax
      Fees**





For
      the
      fiscal years ended April 30, 2006 and, 2005, 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:
                  August 15, 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:
                  August 15, 2006
              /s/
              David
                G. WilliamsBy:
              David
                  G. WilliamsIts:
              Chairman,
                  President, CEO, and DirectorDated:
                  August 15, 2006
              /s/
              John
                D. RottweilerBy:
              John
                  D. RottweilerIts:
              Secretary,
                  Chief Financial Officer, and
                  Director




21
 *Table
            of Contents*





**HUMATECH,
      INC.**







**Financial
      Statements as of**


**April
      30, 2006**


**And
      Report of Independent Registered**


**Public
      Accounting Firm**








*Table
            of Contents*





**HUMATECH,
      INC.**








**TABLE
                OF CONTENTS****Page**REPORT
                OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            
            A-2FINANCIAL
                STATEMENTS:Balance
                Sheet at April 30, 2006
            
            A-3Statements
                of Operations for the years ended April
                30, 2006 and April 30, 2005Statements
                of Stockholders’ Deficit for the years ended April 30, 2006 and April 30,
                2005
            
            A-5Statements
                of Cash Flows for the years ended April 30, 2006 and April 30,
                2005
            
            A-6NOTES
                TO FINANCIAL STATEMENTS
            
            A-7





*Table
            of Contents*





**REPORT
      OF 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, 2006
      and the related statements of operations, stockholders’ deficit and cash flows
      for each of the two years in the period ended April 30, 2006. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.




We
      conducted our audits in accordance with 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,
      2006
      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 continues to incur operating
      losses. The Company has a working capital deficit of $1,248,000 at April 30,
      2006. 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


August
      10, 2006





A-2
 *Table
            of Contents*





**HUMATECH,
      INC.**


**BALANCE
      SHEET**


**APRIL
      30, 2006**





**Assets**Cash
            
            $
            33,745Accounts
                receivable
            
            
            108,812Inventories
            
            
            16,824Prepaid
                expenses and other assets
            
            
            23,831Total
                current assets
            
            
            183,212Property
                and equipment, net
            
            
            171,754Total
                assets
            
            $
            354,966**Liabilities
                and Stockholders' Deficit**Accounts
                payable
            
            $
            352,473Accrued
                liabilities
            
            
            180,670Due
                to affiliates
            
            
            175,114Notes
                payable and capital lease obligations - current portion
            
            
            285,330Due
                to officers
            
            
            438,032Total
                current liabilities
            
            
            1,431,619Notes
                payable and capital leases (net of discount of $140,975)
            
            
            382,270Total
                liabilities
            
            
            1,813,889Common
                stock, no par value, 50,000,000 shares authorized, 35,084,119 shares
                issued and outstanding
            
            
            8,482,414Paid
                in capital
            
            
            1,673,206Accumulated
                deficit
            
            
            (11,614,543
            )Total
                stockholders' deficit
            
            
            (1,458,923
            )Total
                liabilities and stockholders' deficit
            
            $
            354,966





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





A-3
 *Table
            of Contents*





**HUMATECH,
      INC.**


**STATEMENT
      OF OPERATIONS**





**Year
                ended April 30,****2006**
            
            **2005**Net
                revenues
            
            $
            1,573,716
            
            $
            720,765Cost
                of goods sold
            
            
            1,074,329
            
            
            524,905Gross
                profit (loss)
            
            
            499,387
            
            
            195,860Operating
                expenses:General
                and administrative expenses
            
            
            965,555
            
            
            1,060,173Sales
                and marketing expenses
            
            
            16,315
            
            
            24,689Research
                and development
            
            
            775
            
            
            224Depreciation
                and amortization
            
            
            1,812
            
            
            6,353Total
                operating expenses
            
            
            984,457
            
            
            1,091,439Operating
                loss
            
            
            (485,070
            )
            
            (895,579
            )Other
                income (expense):Interest
                expense and other financing costs
            
            
            (175,384
            )
            
            (156,107
            )Other
                income (expense)
            
            
            (40,531
            )
            
            20,000Total
                other expense
            
            
            (215,915
            )
            
            (136,107
            )Loss
                before income taxes
            
            
            (700,985
            )
            
            (1,031,686
            )Income
                tax provision
            
            
            -
            
            
            -Net
                loss
            
            $
            (700,985
            )
            $
            (1,031,686
            )Net
                loss per share:Basic
            
            $
            (0.02
            )
            $
            (0.03
            )Diluted
            
            $
            (0.02
            )
            $
            (0.03
            )Weighted
                average common shares outstanding:Basic
            
            
            34,274,988
            
            
            31,913,472Diluted
            
            
            34,274,988
            
            
            31,913,472





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





A-4
 *Table
            of Contents*





**HUMATECH,
      INC.**


**STATEMENT
      OF STOCKHOLDERS' DEFICIT**




**Common
                  Stock**
              **Shares**
            
            **Amount**
            
            **Paid-in**
              **Capital**
            
            **Accumulated**
              **Deficit**
            
            **Total**Balances
                at April 30, 2004
            
            
            29,689,273
            
            $
            7,710,018
            
            $
            1,390,998
            
            $
            (9,881,872
            )
            $
            (780,856
            )Common
                stock issued for consulting and employee services
            
            
            2,039,112
            
            
            353,500
            
            
            
            
            
            
            
            
            353,500Common
                stock issued for cash
            
            
            545,833
            
            
            85,500
            
            
            
            
            
            
            
            
            85,500Common
                stock issued for conversion of note payable
            
            
            1,588,130
            
            
            158,813
            
            
            
            
            
            
            
            
            158,813Imputed
                value of beneficial conversion feature of debt
            
            
            
            
            
            
            
            
            152,623
            
            
            
            
            
            152,623Imputed
                value of common stock 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
            )Common
                stock issued for consulting and employee services
            
            
            1,242,500
            
            
            131,000
            
            
            
            
            
            
            
            
            131,000Common
                stock issued for conversion of note payable
            
            
            779,271
            
            
            43,583
            
            
            
            
            
            
            
            
            43,583Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            (700,985
            )
            
            (700,985
            )Imputed
                value of embedded conversion feature of debtdue to
                modification
            
            
            
            
            
            
            
            
            38,360
            
            
            
            
            
            38,360Balances
                at April 30, 2006
            
            
            35,884,119
            
            $
            8,482,414
            
            $
            1,673,206
            
            $
            (11,614,543
            )
            $
            (1,458,923
            )





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





A-5
 *Table
            of Contents*





**HUMATECH,
      INC.**


**STATEMENT
      OF CASH FLOWS**





**Year
                ended April 30,****2006**
            
            **2005**Cash
                flows from operating activities:Net
                loss
            
            $
            (700,985
            )
            $
            (1,031,686
            )Adjustments
                to reconcile net income to net cash provided by (used in) operating
                activities:Loss
                on sale of assets
            
            
            51,012
            
            
            -Gain
                on sale of investment in unconsolidated entity
            
            
            -
            
            
            (20,000
            )Services
                received in exchange for fixed assets
            
            
            14,000
            
            
            -Depreciation
                and amortization
            
            
            45,433
            
            
            51,517Issuance
                of common stock as compensation for services
            
            
            131,000
            
            
            353,500Amortization
                of beneficial conversion feature of debt and related
                warrants
            
            
            106,033
            
            
            102,553Provision
                for uncollectible accounts
            
            
            (30,615
            )
            
            (20,167
            )Changes
                in assets and liabilities:Accounts
                receivable
            
            
            (39,311
            )
            
            (1,782
            )Inventories
            
            
            (14,116
            )
            
            38,766Prepaid
                expenses and other current assets
            
            
            (12,277
            )
            
            (10,946
            )Due
                to affiliates
            
            
            135,614
            
            
            (4,385
            )Accounts
                payable
            
            
            65,634
            
            
            73,686Accrued
                liabilities
            
            
            71,122
            
            
            43,392Due
                to officers
            
            
            181,674
            
            
            133,410Deferred
                revenue
            
            
            -
            
            
            (8,094
            )Net
                cash provided by (used in) operating activities
            
            
            4,218
            
            
            (300,236
            )Cash
                flows from investing activities:Proceeds
                from sale of investment in unconsolidated entity
            
            
            -
            
            
            20,000Purchases
                of equipment
            
            
            (34,935
            )
            
            (53,427
            )Net
                cash used in investing activities
            
            
            (34,935
            )
            
            (33,427
            )Cash
                flows from financing activities:Principal
                repayments on notes payable and capital lease obligations
            
            
            (101,549
            )
            
            (69,656
            )Proceeds
                from notes payable and capital lease obligations
            
            
            165,845
            
            
            316,750Proceeds
                from sale of common stock
            
            
            -
            
            
            85,500Net
                cash provided by (used in) financing activities
            
            
            64,296
            
            
            332,594Increase
                (decrease) in cash
            
            
            33,579
            
            
            (1,069
            )Cash,
                beginning of period
            
            
            166
            
            
            1,235Cash,
                end of year
            
            $
            33,745
            
            $
            166**Supplemental
                cash flow information:**Cash
                paid for interest
            
            $
            39,115
            
            $
            12,826Cash
                paid for income taxes
            
            $
            -
            
            $
            -**Supplemental
                disclosure of noncash financing and investing
                activities:**Imputed
                value of common stock warrants issued with debt
            
            $
            -
            
            $
            91,225Property
                acquired under note payable
            
            $
            -
            
            $
            99,293Imputed
                value of beneficial conversion feature of debt issued and
                modified
            
            $
            38,360
            
            $
            152,623Conversion
                of debt and interest into common stock
            
            $
            43,583
            
            $
            158,813Common
                stock issued for services
            
            $
            131,000
            
            $
            353,500





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





A-6
 *Table
            of Contents*





**HUMATECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**Note
                1:**
            **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, 2006, cash
      deposits did not exceeded those insured limits.


Accounts
        Receivable :
        The
        Company records an allowance for doubtful accounts to provide for losses
        on
        accounts receivable due to customer credit risk. Increases to the allowance
        for
        doubtful accounts are charged to general and administrative expense as bad
        debt
        expense. Losses on accounts receivable due to financial distress or failure
        of
        the customer are charged to the allowance for doubtful accounts. The allowance
        estimate is based on an analysis of the historical rate of credit losses.
        The
        accuracy of the estimate is dependent on the future rate of credit losses
        being
        consistent with the historical rate. If the rate of future credit losses
        is
        greater than the historical rate, then the allowance for doubtful accounts
        may
        not be sufficient to provide for actual credit losses.
  The
        allowance for doubtful accounts was $30,615 as of April 30, 2006 and is based
        on
        its historical collection experience. Any adjustments to these accounts are
        reflected in the income statement for the current period, as an adjustment
        to
        revenue in the case of the sales reserve and as a general and administrative
        expense in the case of the allowance for doubtful accounts.


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 $45,434 and $51,517 for the years ended
      April 30, 2006 and 2005 respectively, of which $43,621 and $45,164 is included
      in cost of sales, 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 $0
      and
      $16,953 for the years ended April 30, 2006 and 2005, 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 may have a material
      effect on the estimates of fair values.





A-7
 *Table
            of Contents*





**HUMATECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





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 13.





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
      June
      2006, the FASB ratified EITF Issue No. 05-01 “Accounting for the Conversion of
      an Instrument That Becomes Convertible upon the Issuer’s Exercise of a Call
      Option” (“Issue No. 05-01”). Issue No. 05-01 requires the conversion accounting
      model to be used when equity instruments are issued to settle an instrument
      that
      becomes convertible upon the issuer’s exercise of a call option if, at issuance,
      the debt instrument contains a substantive conversion feature. The issuance
      of
      shares to settle the debt pursuant to the original terms of the instrument
      should be afforded conversion treatment. However, if the instrument does not
      contain a substantive conversion feature at issuance, then the issuance of
      equity securities to settle the instrument should be recognized as a debt
      extinguishment. A conversion feature is considered substantive if, at issuance,
      it is reasonably possible that the conversion feature will affect the manner
      of
      the debt instrument’s settlement. Issue No. 05-01 is effective for all
      conversions or settlements that result from exercise of call options occurring
      in interim or annual periods beginning after June 28, 2006. While Issue No.
      05-01 requires entities to apply these rules to instruments issued prior to
      the
      effective date, it does not require entities to evaluate and document whether
      the conversion feature was substantive at the time of issuance unless or until
      the conversion feature is exercised. The Company is currently evaluating the
      impact of Issue No. 05-01 to its financial position and results of operations.





A-8
 *Table
            of Contents*





**HUMATECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





In
      June
      2006, the FASB ratified EITF Issue No. 06-03 “How Taxes Collected from Customers
      and Remitted to Governmental Authorities Should Be Presented in the Income
      Statement (That Is, Gross Versus Net Presentation)” (“Issue No. 06-03”). Under
      Issue No. 06-03, a company must disclose its accounting policy regarding the
      gross or net presentation of certain taxes. If taxes included in gross revenues
      are significant, a company must disclose the amount of such taxes for each
      period for which an income statement is presented (i.e., both interim and annual
      periods). Taxes within the scope of this Issue are those that are imposed on
      and
      concurrent with a specific revenue-producing transaction. Taxes assessed on
      an
      entity’s activities over a period of time, such as gross receipts taxes, are not
      within the scope of the issue. Issue No. 06-03 is effective for the first annual
      or interim reporting period beginning after December 15, 2006. The Company
      is
      currently evaluating the impact of Issue No. 06-03 to its financial position
      and
      results of operations.





In
      July
      2006, the FASB issued FASB Interpretation No. 48 “Accounting For Uncertain Tax
      Positions” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income
      taxes recognized in an enterprise’s financial statements in accordance with FASB
      Statement No. 109 “Accounting for Income Taxes”. It prescribes a recognition
      threshold and measurement attribute for the financial statement recognition
      and
      measurement of a tax position taken or expected to be taken in a tax return.
      FIN
      48 also provides guidance on derecognition, classification, interest and
      penalties, accounting in interim periods, disclosure, and transition. FIN 48
      is
      effective for fiscal years beginning after December 15, 2006. The Company is
      currently evaluating the impact of FIN 48 to its financial position and results
      of operations.




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.




**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,
      2006:




Property
                and equipment, net:Manufacturing
                equipment
            
            $
            322,005Furniture
                and fixtures
            
            
            17,116Vehicles
            
            
            90,911Total
            
            
            430,032Less:
                accumulated depreciation
            
            
            (258,278
            )Total,
                net
            
            $
            171,754Accrued
                expenses:Payroll
                taxes payable
            
            $
            68,481Accrued
                interest
            
            
            85,011Other
            
            
            27,178Total
            
            $
            180,670








**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% of this entity at April 30, 2006 and 2005. During fiscal
      2004,
      the Company accounted for its initial 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.




As
        of
        April 30, 2006 and 2005, we had accounts receivable with this entity of
        approximately $87,000 and $37,000, respectively. Sales to this entity for
        the
        year ended April 30, 2006 and 2005 respectively, were approximately $270,000
        and
        $28,000.





A-9
 *Table
            of Contents*





**HUMATECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





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.





**Note
                5:**
            **Notes
                Payable**


Notes
      payable at April 30, 2006, 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 and fiscal 2008. Interest rates
                  from 6.3%
                  to 14.3% per annum. Collateralized by vehicles and
                  equipment.
              
              $
              26,029Note
                  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, 2006, there had not yet been any sales
                  of this
                  product.
              
              
              150,000Capital
                  lease for manufacturing equipment with 48 month term
              
              
              36,982Various
                  convertible notes - see details in table below.
              
              
              549,563Note
                  payable to individual. This unsecured note bears interest at 10%
                  per annum
                  and was due in March 2007
              
              
              46,000Totals
              
              
              808,574Less
                  discount on convertible debt
              
              
              (140,974
              )Less
                  current portion
              
              
              (285,330
              )Long-term
                  portion
              
              $
              382,270




During
      the year ended April 30, 2006, the Company engaged in the following debt-related
      activities:


Ÿ
              Negotiated
                  the settlement of an installment note payable with a lender, resulting
                  in
                  the payment of approximately $35,000 and the recognition of a gain
                  on debt
                  extinguishment of $10,481.
 Ÿ
              On
                  or about September 6, 2005, received $35,000 from Dogman Transport,
                  LLC,
                  an entity owned by two adult sons of J.D. Rottweiler, one of our
                  officers
                  and a director, in exchange for a convertible note payable with
                  interest
                  accruing at an annual rate of 21% and all principal and interest
                  due and
                  payable on September 9, 2007. This note is convertible into shares
                  of
                  common stock at $0.02 per share, resulting in a beneficial conversion
                  feature of $35,000 which has been reflected as additional debt
                  discount in
                  the accompanying balance sheet. In connection with this transaction,
                  the
                  Company also issued 380,000 warrants at an exercise price of $0.08
                  per
                  share that expire on September 6, 2011. This note is collateralized
                  by
                  certain manufacturing equipment.
 Ÿ
              Renegotiated
                  the terms of three convertible instruments. For all such instruments,
                  the
                  conversion price was reduced from $0.20 to $0.05 and for two of
                  the
                  instruments, the maturity date was extended to October 1, 2007.
                  In
                  accordance with EITF 96-19,*Debtor's
                  Accounting for a Modification or Exchange of Debt
                  Instruments*and EITF 05-07,*Accounting
                  for Modifications to Conversion Options Embedded in Debt Securities
                  and
                  Related Issues*,
                  the Company recorded additional debt discount of $3,360 equal to
                  the
                  difference in the fair value of the embedded conversion feature
                  immediately before and after the
                  modification.




A-10
 *Table
            of Contents*





**HUMATECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**


Ÿ
              Entered
                  into a sale-leaseback transaction with a lender whereby certain
                  assets
                  with a net book value of $96,784 were sold for net proceeds of
                  $50,000 and
                  were leased back under a capital lease with a bargain purchase
                  option of
                  $1. The capital lease calls for 2 advance payments and 48 monthly
                  lease
                  payments of $1,493 with an effective interest rate of 24%. A loss
                  of
                  $46,784 was recorded on the transaction and is included in other
                  income
                  (expense) in the accompanying statement of
                  operations.
 Ÿ
              Obtained
                  proceeds of $100,000 in exchange for a convertible note payable
                  to a third
                  party. This note is convertible into shares of common stock at
                  $0.25 per
                  share. This investor also purchased the convertible debt instruments
                  in
                  the table below from the original owners with the exception of
                  those held
                  by related parties. The Company consented to the assignment of
                  these
                  convertible debt instruments from the original owners to the investor.
                  Two
                  of the notes that were purchased were modified to extend their
                  maturity
                  dates, as they were previously due in fiscal 2006. Ownership of
                  the
                  warrants issued to the original purchasers was not transferred
                  as part of
                  this transaction.




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, 2006:


**Counterparty**
                
                **Loan
                    Date**
                
                **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,**
                  **2006**Individual
                
                
                12/15/2003
                
                
                10,000
                
                
                8
                %
                
                12/15/2008
                
                
                0.17
                
                
                58,824
                
                $
                0.19
                
                
                12/15/2008
                
                
                9,088
                
                $
                10,000Individual
                
                
                1/20/2004
                
                
                12,750
                
                
                8
                %
                
                1/20/2009
                
                
                0.17
                
                
                75,000
                
                
                0.19
                
                
                1/20/2009
                
                
                7,695
                
                
                12,750Individual(1)
                
                
                1/22/2004
                
                
                8,000
                
                
                10
                %
                
                10/1/2007
                
                
                0.05
                
                
                8,000
                
                
                0.20
                
                
                1/22/2009
                
                
                944
                
                
                5,000Individual
                
                
                2/26/2004
                
                
                10,000
                
                
                8
                %
                
                2/26/2009
                
                
                0.10
                
                
                13,333
                
                
                0.15
                
                
                2/26/2009
                
                
                2,228
                
                
                7,500Individual(1)
                
                
                3/12/2004
                
                
                100,000
                
                
                10
                %
                
                3/12/2007
                
                
                0.20
                
                
                500,000
                
                
                0.50
                
                
                3/12/2009
                
                
                41,100
                
                
                72,000Individual
                
                
                3/25/2004
                
                
                26,700
                
                
                10
                %
                
                3/25/2007
                
                
                0.17
                
                
                31,412
                
                
                0.21
                
                
                3/25/2009
                
                
                3,898
                
                
                26,700Individual
                
                
                4/15/04
                
                
                38,000
                
                
                10
                %
                
                4/15/2007
                
                
                0.10
                
                
                58,462
                
                
                0.13
                
                
                4/15/2009
                
                
                6,103
                
                
                38,000Related
                    party
                
                
                5/7/2004
                
                
                26,000
                
                
                8
                %
                
                5/7/2009
                
                
                0.10
                
                
                52,000
                
                
                0.10
                
                
                6/30/2009
                
                
                19,240
                
                
                26,000Individual
                
                
                5/12/2004
                
                
                50,000
                
                
                10
                %
                
                5/12/2009
                
                
                0.10
                
                
                66,666
                
                
                0.15
                
                
                5/17/2009
                
                
                29,666
                
                
                50,000Individual
                
                
                6/18/2004
                
                
                20,000
                
                
                8
                %
                
                6/18/2009
                
                
                0.10
                
                
                26,666
                
                
                0.15
                
                
                6/18/2009
                
                
                20,000
                
                
                20,000Individual
                
                
                8/2/2004
                
                
                28,750
                
                
                10
                %
                
                8/2/2007
                
                
                0.10
                
                
                57,500
                
                
                0.13
                
                
                8/2/2009
                
                
                28,750
                
                
                28,750Individual(1)
                
                
                8/25/2004
                
                
                10,000
                
                
                10
                %
                
                8/25/2007
                
                
                0.05
                
                
                10,000
                
                
                0.20
                
                
                8/25/2009
                
                
                1,300
                
                
                10,000Individual
                
                
                11/3/2004
                
                
                35,000
                
                
                8
                %
                
                11/3/2009
                
                
                0.10
                
                
                70,000
                
                
                0.10
                
                
                11/3/2009
                
                
                35,000
                
                
                35,000Individual
                
                
                1/21/2005
                
                
                70,000
                
                
                8
                %
                
                1/21/2007
                
                
                0.07
                
                
                200,000
                
                
                0.13
                
                
                1/21/2008
                
                
                67,143
                
                
                70,000Related
                    party
                
                
                2/14/2005
                
                
                9,000
                
                
                8
                %
                
                2/14/2008
                
                
                0.03
                
                
                90,000
                
                
                0.10
                
                
                2/14/2011
                
                
                9,000
                
                
                9,000Individual
                
                
                4/5/2006
                
                
                100,000
                
                
                10
                %
                
                4/5/2009
                
                
                0.25
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                100,000Related
                    party
                
                
                9/6/2005
                
                
                35,000
                
                
                21
                %
                
                9/9/2007
                
                
                0.02
                
                
                380,000
                
                
                0.08
                
                
                9/6/2011
                
                
                35,000
                
                
                28,863$
                549,563
 (1)
                Certain
                    terms of this loan were renegotiated during the year ended April
                    30,
                    2006.
 **Year
                        ended April 30,**2007
                    
                    $
                    285,3302008
                    
                    
                    90,4102009
                    
                    
                    144,0162010
                    
                    
                    138,818Thereafter
                    
                    
                    150,000Total
                    
                    $
                    808,574




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




A-11
 *Table
            of Contents*





**HUMATECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**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, 2006 the Company has unused federal net operating losses of $9,685,420
      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:




**2006**
              
              **2005**
              
              **2004**Current
                  provision (benefit)
              
              $
              (148,367
              )
              $
              (307,401
              )
              $
              (751,836
              )Deferred
                  provision
              
              
              148,367
              
              
              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:




**2006**
              
              **2005**
              
              **2004****Amount**
              
              **Percent**
              
              **Amount**
              
              **Percent**
              
              **Amount**
              
              **Percent**Federal
                  statutory rates
              
              $
              (238,335
              )
              
              34
              %
              $
              (350,773
              )
              
              34
              %
              $
              (639,060
              )
              
              34
              %State
                  income taxes
              
              
              (42,059
              )
              
              6
              %
              
              (61,901
              )
              
              6
              %
              
              (112,775
              )
              
              6
              %Valuation
                  allowance
              
              
              237,610
              
              
              (34
              )%
              
              370,055
              
              
              (36
              )%
              
              72,000
              
              
              (4
              )%Other
                  (permanent differences)
              
              
              42,784
              
              
              (6
              )%
              
              42,620
              
              
              (4
              )%
              
              679,835
              
              
              (36
              )%Effective
                  rate
              
              $
              -
              
              
              0
              %
              $
              -
              
              
              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 $3,894,000 existing at April 30, 2006 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.





**Note
                7:**
            **Leases**





Operating
      Leases





The
      Company is a lessee to certain operating leases during the years ended April
      30,
      2006 and 2005 as follows:


Ÿ
              A
                  lease for office space in Mesa, Arizona which expired in July 2006.
                  The
                  Company is currently leasing the space on a month-to-month basis.
 Ÿ
              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 $31,354 and $33,998 for the year ended April
      30, 2006 and 2005, respectively, of which $13,200 and $12,100 were paid to
      related parties, respectively.





A-12
 *Table
            of Contents*





**HUMATECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





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


2007
              
              $
              15,6002008
              
              
              15,600Thereafter
              
              
              -Total
              
              $
              31,200




Capital
      Leases





The
      Company leases certain equipment under a sale-leaseback arrangement that expires
      in fiscal 2010 (see Note 5). These assets had a gross value (determined on
      the
      date of the sale-leaseback) of $50,000 and a net book value of $47,143 at June
      30, 2006. Future minimum annual lease payments under the capital lease agreement
      are as follows for years ended April 30:




2007
              
              $
              17,9162008
              
              
              17,9162009
              
              
              17,9162010
              
              
              8,958Total
              
              
              62,706Portion
                  representing interest
              
              
              (25,724
              )Present
                  value of future minimum lease payments
              
              $
              36,982





**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 1,242,500
      and
      2,039,112 shares of common stock to employees and consultants valued at $131,000
      and $353,500 during the years ended April 30, 2006 and 2005, 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





In
      the
      year ended April 30, 2006, the Company issued 779,271 shares of common stock
      for
      the conversion of principal and interest on convertible notes payable valued
      at
      $43,583 based on conversion terms of the individual notes.





In
      2005,
      the Company raised capital by offering shares of its common stock to investors.
      The Company issued 545,833 shares of its common stock for $85,500 in the years
      ended April 30, 2005. There were no capital transactions of this nature in
      fiscal year ended 2006.





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, 2006 and 2005.




Subsequent
        to April 30, 2006, the Company issued 1,250,000 shares of common stock valued
        at
        $87,500 in satisfaction of existing balances and as prepayment for future
        services rendered by the Company’s attorneys.





A-13
 *Table
            of Contents*





**HUMATECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**Note
                9:**
            **Commitments
                and Contingencies**





***Royalty
      Agreements***





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, 2006.





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 $15,540 and $7,361 in the years ended April 30, 2006 and 2005,
      respectively, related to this agreement.





***Litigation***





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.




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. As the company incurred a net loss in all
      periods presented, the following dilutive securities were excluded from the
      calculation of earnings per share as the effects were
      anti-dilutive:




**Year
                  ended April 30,****2006**
              
              **2005**Options
                  and warrants
              
              
              2,020,613
              
              
              2,339,363Convertible
                  debt
              
              
              6,971,655
              
              
              4,933,7208,992,268
              
              
              7,273,083


**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.





The
      Company has accrued salaries to its President and Chief Financial Officer.
      At
      April 30, 2006, the total amount accrued and unpaid compensation due to these
      officers was $438,032.





A-14
 *Table
            of Contents*





**HUMATECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





The
      Company received an advance of $39,500 from RAMMSCO, Inc. 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, 2006. The Company also
      purchases certain of its raw materials from this entity. The Company made
      purchases of $196,890 and $23,058 from this entity in the years ended April
      30,
      2006 and 2005, respectively. Additionally, the Company leases its Albuquerque,
      New Mexico property from this entity and pays monthly rent of $1,300 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.





On
      or
      about September 6, 2005 the Company received $35,000 from Dogman Transport,
      LLC,
      an entity owned by two adult sons of J.D. Rottweiler, one of our officers and
      a
      director, in exchange for a convertible note payable with interest accruing
      at
      an annual rate of 21% and all principal and interest due and payable on
      September 9, 2007. This note is convertible into shares of common stock at
      $0.02
      per share, resulting in a beneficial conversion feature of $35,000 which has
      been reflected as additional debt discount in the accompanying balance sheet.
      In
      connection with this transaction, the Company also issued 380,000 warrants
      at an
      exercise price of $0.08 per share that expire on September 6, 2011.





In
      October 2000, David Williams, the Company’s President and Director, personally
      loaned Humatech Ltd. $99,800 in order to help provide Humatech Ltd. with
      required working capital. The Company is not a party to the loan between Mr.
      Williams and Humatech Ltd, and no recourse exists between the parties to the
      loan and Humatech, Inc. Under
      the
      terms of the loan, the principal and interest is due from Humatech Ltd. to
      Mr.
      Williams and is payable upon demand   In order to avoid the excessive costs
      that would have been incurred due to wire transfer fees, currency conversion
      rates, and money market fluctuations between the US Dollar and the British
      Pound
      Sterling, Mr. Williams deposited the $99,800 directly into the Company’s bank
      account rather than sending the proceeds to Humatech, Ltd. in the UK, and having
      the funds subsequently forwarded by Humatech, Ltd. onto the Company. All the
      proceeds of the loan were used to pay for product sold by the Company to
      Humatech Ltd. Under the equity method of accounting which was required, these
      payments could not be listed as sales to Humatech Ltd, our distributor in the
      UK, until Humatech Ltd. had sold the product to third party customers; which
      when verified allowed Humatech Inc. to classify this prepayment as sales income.





**Note
                12:**
            **Concentrations
                of Credit Risk**





The
      Company maintains cash balances at banks in Texas and Arizona. Accounts are
      insured by the Federal Deposit Insurance Corporation up to $100,000. At April
      30, 2006, the Company had uninsured bank balances of $0.





Approximately
      73% of the Company’s sales in the years ended April 30, 2006 and 2005,
      respectively were to one customer. Two customers accounted for approximately
      81%
      of the Company’s outstanding accounts receivable at April 30, 2006.





**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, 2006 and 2005. 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. As of April 30, 2006, the Company
      had
      granted 339,000 options under this plan. The options are vested upon
      grant.





A-15
 *Table
            of Contents*





**HUMATECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





In
      addition to the Plan, the Company will occasionally grant options and warrants
      to consultants and others under specific stock option agreements. There were
      350,000 and 491,832 such warrants granted in the years ended April 30, 2006
      and
      2005 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 warrant grant was estimated on the date of grant using the
      Black-Scholes option-pricing model with the following assumptions for years
      ended April 30:





2006
            
            2005Dividend
                yield
            
            
            None
            
            
            NoneVolatility
            
            
            137%
            
            
            60%Risk
                free interest rate
            
            
            4.15%
            
            
            4.15%Expected
                life
            
            
            3
                years
            
            
            5
                years





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




**2006**
              
              **2005**Weighted
                Average
                Exercise
                Price
              
              
              
              Weighted
                Average
                Exercise
                PriceOptions
                  outstanding at beginning of year
              
              
              405,000
              
              $
              0.97
              
              
              1,027,220
              
              $
              0.81Granted
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -Exercised
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -Terminated/Expired
              
              
              (325,000
              )
              $
              1.10
              
              
              (622,220
              )
              $
              0.71Options
                  outstanding at end of year
              
              
              80,000
              
              $
              0.43
              
              
              405,000
              
              $
              0.97Options
                  exercisable at end of year
              
              
              80,000
              
              $
              0.43
              
              
              405,000
              
              $
              0.97Price
                  per share of options outstanding
              
              $
              0.43
              
              
              
              
              $
              0.43
                  - $1.10Weighted
                  average remaining contractual lives
              
              
              6.43
                  years
              
              
              
              
              
              1.91
                  years





A-16
 *Table
            of Contents*





**HUMATECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**Note
                14:**
            **Common
                Stock Warrants**





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




**2006**
              
              **2005**Weighted
                Average
                Exercise
                Price
              
              
              
              Weighted
                Average
                Exercise
                PriceWarrants
                  outstanding at beginning of year
              
              
              1,934,363
              
              $
              1.78
              
              
              1,786,281
              
              $
              2.47Granted
              
              
              350,000
              
              $
              0.08
              
              
              491,832
              
              $
              0.13Exercised
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -Terminated/Expired
              
              
              (343,750
              )
              $
              4.00
              
              
              (343,750
              )
              $
              3.00Warrants
                  outstanding at end of year
              
              
              1,940,613
              
              $
              1.08
              
              
              1,934,363
              
              $
              1.78Warrants
                  exercisable at end of year
              
              
              1,940,613
              
              $
              1.08
              
              
              1,934,363
              
              $
              1.78Price
                  per share of warrants outstanding
              
              $
              0.08
                  - $5.00
              
              
              
              
              $
              0.10
                  - $5.00Weighted
                  average remaining contractual lives
              
              
              2.80
                  years
              
              
              
              
              
              2.72
                  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


**Year
                  ended April 30,****2006**
              
              **2005**United
                  States
              
              $
              1,234,359
              
              $
              443,130United
                  Kingdom
              
              
              299,557
              
              
              188,085Asia
              
              
              39,800
              
              
              89,550Total
              
              $
              1,573,716
              
              $
              720,765


***
      * * * * ***




A-17