|SEC 1852
      (06-2001) | Persons who potentially are to respond to the collection of information
      contained in this form are not required to respond unless the form
      displays a currently valid OMB control number.
|------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

> oREGISTRATION STATEMENT PURSUANT TO
>   SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

> xANNUAL REPORT PURSUANT TO SECTION 13
>   OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended __March 31, 2007_______________________

OR

> oTRANSITION REPORT PURSUANT TO SECTION
>   13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ________________

Commission file number _ 0-29108____________________________

___________________Biotech Holdings Ltd.__________________________________

(Exact name of Registrant as specified in its charter)

___________________Biotech Holdings Ltd.__________________________________

(Translation of Registrant`s name into English)

______________________Alberta, Canada______________________________________

(Jurisdiction of incorporation or organization)

#160 - 3751 Shell Road

Richmond, British Columbia, Canada, V6X 2W2

______________________________________________________________________

(Address of principal executive offices)



Securities registered or to be registered pursuant to Section 12(b) of the
Act.

Title of each class Name of each exchange on which registered

_____________None_________________
_______________________________

__________________________________ _______________________________

Securities registered or to be registered pursuant to Section 12(g) of the
Act.

_________NONE____________________________________________________

(Title of Class)

__________________________________________________________________

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act.

___________________Common Shares Without Par Value________________

(Title of Class)



Indicate the number of outstanding shares of each of the issuer`s classes of
capital or common stock as of the close of the period covered by the annual
report.

92,229,512 Common Shares Without Par Value

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

x

o

Indicate by check mark which financial statement item the registrant has
elected to follow.

x

o

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

p

p



Item 1. Identity of Directors, Senior Management and Advisers

This information is not required to be provided because it is an annual
report filing.

Item 2. Offer Statistics and Expected Timetable

This information is not required to be provided because it is an annual
report filing.

Item 3. Key Information

The table in this section sets forth selected consolidated
financial data. Such data, for and as of the end of the five previous fiscal
periods, are derived from the consolidated financial statements of Biotech
Holdings Ltd. (the "Company"). The selected financial data are
expressed in Canadian dollars.

The selected financial data should be read in conjunction
with the Consolidated Financial Statements of the Company and the Notes thereto
contained elsewhere in the Annual Report.

Product Information

The Company`s principal revenue will be derived from its
Type II diabetes drug currently distributed in Mexico. The drug is marketed
under brand name Sucanon. It is also known as DIAB II and Glucanin and for the
sake of clarity and brevity is hereinafter referred to as Sucanon. The clinical
trials for Sucanon in China were done under the brand name DIAB II.

Critical Accounting Policies

The Consolidated Financial Statements of the Company have
been prepared in accordance with generally accepted accounting principles in
Canada ("Canadian GAAP"). Differences with generally accepted
accounting principles in the United States ("U.S. GAAP") are set forth
in Note 18 to the Consolidated Financial Statements of the Company (Item 17 of
this Form 20F). Some accounting policies have a significant impact on the
amounts reported in these financial statements. The Consolidated Financial
Statements include a section describing the Company`s significant accounting
policies. Note that the preparation of this Form 20-F requires the Company to
make estimates and assumptions that:

may affect the reported amount of assets and liabilities;

may affect the contingent assets and liabilities as
  disclosed at the date of the financial statements and;

may affect the reported amounts of revenues and expenses
  during the reported period.

There can be no assurance that actual results will not differ
from those estimates.

The Company believes, as explained below, that our most
critical accounting policies comprise the following:

Revenue Recognition

The Company`s principal revenue will be
derived from its Type II diabetes drug currently distributed in Mexico. The
Company has entered into agreements with two non-related companies in Mexico.
The first company manufactures and packages the tablets from a pre-mix of active
ingredients manufactured by the Company in Canada. The second company markets
the drug.

Revenue from product sales will be recognized upon the
delivery of the product to a retailer or final consumer when persuasive evidence
of an arrangement exists, the price is fixed or determinable and collection is
reasonably assured and the Company has no future performance obligations under
any licensing agreement or other significant post-delivery obligations.

To March 31, 2007, the Company had generated $336,595 (2006:
$482,840; 2005: $Nil) in revenues from its Type II diabetes drug.

The Company`s last fiscal period ended March 31 of the
current year. All fiscal periods are for the full year. The following table is a
summary of certain selected financial information of the Company, in accordance
with Canadian GAAP, for the Company`s most recently completed fiscal period and
for the



|Fiscal year ended          |             |             |             |             |            
|-------------------------- | ----------- | ----------- | ----------- | ----------- | -----------
|March 31,                  | 2007        | 2006        | 2005        | 2004        | 2003       
|                           |             |             |             |             |            
|Revenues                   | $ 336,595   | $ 482,840   | $ nil       | $ nil       | $ 9,731    
|Loss from continuing       |             |             |             |             |            
|Operations                 | (1,733,989) | (2,095,602) | (1,815,867) | (1,460,669) | (1,679,020)
|                           |             |             |             |             |            
|Profit (Loss) from         |             |             |             |             |            
|discontinued operations    |             |             |             |             |            
|including amortization of  |             |             |             |             |            
|goodwill and gain          |             |             |             |             |            
|from debt restructuring    | 199,094     | 76,224      | 239,057     | (846,282)   | (1,397,420)
|                           |             |             |             |             |            
|Net loss for the year      | (1,534,895) | (2,019,378) | (1,576,810) | (2,306,951) | (3,076,440)
|Loss per share             | (0.02)      | (0.02)      | (0.02)      | (0.03)      | (0.04)     
|                           |             |             |             |             |            
|Working Capital Deficiency | (2,899,934) | (2,083,586) | (1,644,095) | (2,156,781) | (1,859,903)
|Total Assets               | 314,020     | 795,570     | 1,759,027   | 2,232,225   | 3,629,040  
|Long Term Debt             | 224,343     | 224,343     | 224,343     | 224,343     | 3,325,526  
|Total Liabilities          | 3,323,031   | 2,553,069   | 2,437,211   | 2,788,489   | 5,504,202  
|Shareholders` Equity       |             |             |             |             |            
|(Deficiency)               | (3,009,011) | (1,757,499) | (678,184)   | (556,264)   | (1,875,162)
|                           |             |             |             |             |            
|Number of issued common    |             |             |             |             |            
|Shares at March 31         | 92,229,512  | 92,229,512  | 90,134,310  | 87,542,219  | 73,928,130 
|Dividends per share        | Nil         | nil         | nil         | nil         | nil        
|                           |             |             |             |             |            



The figures below are presented in
accordance with U.S. GAAP (expressed in Canadian Dollars).

|                           | Year ended  | Year ended  | Year ended  | Year ended  | Year ended 
|-------------------------- | ----------- | ----------- | ----------- | ----------- | -----------
|                           | March 31,   | March 31,   | March 31,   | March 31,   | March 31,  
|                           | 2007        | 2006        | 2005        | 2004        | 2003       
|                           |             |             |             |             |            
|Revenues                   | $ 336,595   | $ 482,840   | $ nil       | $ nil       | $ 9,731    
|Net Loss                   | (1,534,895) | (2,019,378) | (1,575,338) | (4,939,328) | (2,964,870)
|Loss per share             | (.02)       | (.02)       | (.02)       | (.06)       | (.04)      
|                           |             |             |             |             |            
|Working Capital Deficiency | (2,899,934) | (2,083,586) | (1,644,095) | (2,156,781) | (1,859,903)
|Total Assets               | 314,020     | 795,570     | 1,757,555   | 2,230,753   | 2,684,492  
|Long Term Debt             | 224,343     | 224,343     | 224,343     | 224,343     | 3,325,526  
|Total Liabilities          | 3,323,031   | 2,553,069   | 2,437,211   | 2,788,489   | 5,504,202  
|Shareholders` (Deficiency) | (3,009,011) | (1,757,499) | (679,656)   | (557,736)   | (2,819,710)
|                           |             |             |             |             |            
|Number of issued common    |             |             |             |             |            
|Shares at March 31         | 92,229,512  | 92,229,512  | 90,134,310  | 87,542,219  | 73,928,130 
|                           |             |             |             |             |            
|Dividend per share         | Nil         | Nil         | Nil         | Nil         | Nil        



Exchange Rate Information



The Company`s
accounts are maintained in Canadian dollars. In this Annual Report, all dollar
amounts are expressed in Canadian dollars except where otherwise indicated.



The following table
sets forth, for the periods indicated, the high and low rates of exchange of
Canadian dollars into United States dollars, the average of such exchange rates
on the last day of each month during the periods, and the end of period rates.

|Year Ended |       |       |       |       |      
|---------- | ----- | ----- | ----- | ----- | -----
|March 31   | 2007  | 2006  | 2005  | 2004  | 2003 
|           | US$   | US$   | US$   | US$   | US$  
|High       | .9148 | .8850 | .8532 | .7883 | .6854
|Low        | .8420 | .7851 | .7138 | .6690 | .6229
|Average    | .8790 | .8565 | .7842 | .7403 | .6458
|End        | .8655 | .8373 | .8220 | .7648 | .6797



The closing exchange rate as at
August 18, 2007 was US$ 0.9334 and the high and low exchange rates for each of
the previous six months was as follows:



|                   | High  | Low  
|------------------ | ----- | -----
|                   | US$   | US$  
|March 2007         | .8694 | .8455
|April 2007         | .8984 | .8621
|May 2007           | .9355 | .8928
|June 2007          | .9557 | .9294
|July 2007          | .9669 | .9344
|To August 18, 2007 | .9556 | .9199



Capitalization and indebtedness



Capitalization and indebtedness is
not required for an annual filing.



Risk Factors



This section is
intended to be a summary of more detailed discussions elsewhere in this Annual
Report. The risks described below are not the only ones the Company faces.
Additional risks may impair the business operations and the results of
operations or financial condition could be materially affected if any of these
risks materialize.



In addition to the
risk factors inherent in investing in any junior equity, additional risks
affecting the Company fall into three principal categories that can be described
as follows:



a. Financial



i) risk that the
Company will not be able to raise financing sufficient to make up for its
ongoing losses



ii) risk that, for
the investing public, continuing issuance of equity to make up for losses
significantly dilutes the per-share value of the Company`s assets and
potential earnings



iii) risk that, in
the event that the Company experiences financial difficulty, it may lose control
of its primary marketing assets, that is, its rights to market Sucanon.



iv) risk of
diminution or loss of liquidity in the market for the Company`s securities,
due either to fluctuations in securities markets or to investor perception of
the Company, thus reducing the ability of third parties to use sale of shares as
a method of generating capital for funding the Company



v) risk that ongoing
losses will reduce the Company`s ability to obtain credit from suppliers, thus
increasing the pressure on the Company as a going concern. These concerns are
expressed in the Comments by Auditors for U.S. Readers On Canada-U.S. Reporting
Differences and Note 1 of the attached Audited Consolidated Financial Statements



vi) risk that major
creditors of the Company could place the Company in receivership or bankruptcy
by acting on their charges against the Company



b. Drug-related



i) risk that the
Company`s principal product will not begin to produce significant revenue in
the only markets where it is currently approved (Mexico, China and Peru)



ii) risk that other
regulatory approvals will not be forthcoming



iii) risk that
competitive products in the Type II Diabetes therapy field will emerge during
the next few years and reduce or negate any competitive therapeutic advantages
currently offered by Sucanon



iv) risk that Sucanon
or other products produced by the Company will lead to lawsuits that are not
covered by the Company`s insurance



v) risk that,
although the product is clearly indicated as not for pregnant women, will be
taken by women who are or become pregnant and suffer or claim to suffer medical
problems related to using the drug



vi) risk that a Type
I or insulin-dependent diabetic will take the drug and will suffer a
hypoglycemic episode



vii) risk that
competitors within the market will in various ways act to reduce the commercial
success of the drug



viii) risk that the
drug will have unexpected side-effects which may place new constraints on its
commercial viability.



c. Risk related to
obtaining and enforcing patents



i) the Company relies
significantly on trade secrets for the protection of its Type II Diabetes
product in jurisdictions where obtaining or enforcing patent rights is either
not feasible or not possible; management believes that difficulties in
replicating the composition and production process for its Type II Diabetes
product will continue to protect the drug from being copied in such markets but
acknowledges that one or more competitors could potentially copy essential
aspects of the drug, thus leading to a loss of intellectual knowledge, and
potentially having an impact on revenues



d. Management-related



i) risk that
management of Biotech Holdings is sharply focused on a few key managers or a
single key manager and that loss of the services of these persons or this person
for any reason would be severely negative for the prospects of ongoing
operations



ii) risk that
additional management needed for creating and guiding meaningful growth at the
Company will be difficult to attract



e. Political risk



i) risk that markets
in which the drug are sold or are to be sold in Latin America are politically
unstable and that one or more of these markets will undergo a significant
political change, such as imposition of price controls, which impacts the
company`s ability to sell the drug profitably



Item 4 Information
on the Company



A. 
    History and
    development of the Company



Biotech Holdings Ltd.
(the "Company") was incorporated in Alberta, Canada and is an
integrated pharmaceutical company whose common shares traded on The Alberta
Stock Exchange (the "ASE") until November 1999 at which time the ASE
was merged into The Canadian Venture Exchange (the "CDNX" now called
the "TSX Venture Exchange") under the symbol "BIO.V". The
Company also trades on the NASD OTC-BB under the symbol "BIOHF". In
2001 the Company was listed on the Frankfurt Stock Exchange under the symbol
"925970.F".



The Company`s
business focus is on developing the distribution of the Company`s Type II
Diabetes drug known as Sucanon. The operations of the Company`s subsidiary for
the development, manufacture and distribution of lotions and creams were
discontinued during the year ended March 31, 2003, based on a management
decision that the subsidiary had limited prospects for developing profitable
operations in the near-term. The Company`s business focus remains the
development and distribution of the Company`s Type II Diabetes drug,
particularly in Mexico and Latin America.



The Company`s head
office and principal office are located at #160 - 1501 Shell Road, Richmond,
British Columbia, V6X 2W2, Telephone No. (604) 295-1119, and the registered
office of the Corporation is located at 1000 Canterra Tower, 400 - 3rd Avenue
S.W., Calgary, Alberta, T2P 4H2.



The Company`s
discussion of its anticipated future operations and the other forward looking
statements contained in this Form 20-F involve a number of material risks and
uncertainties. In addition to the factors specifically discussed in context
hereafter, factors that could cause actual results to differ materially are
regulatory requirements imposed upon the Company`s lines of business,
international political instability and changes in economic conditions, advances
in development of competing products, the Company`s ability to acquire
protection for its intellectual property rights, and its ability to obtain
financing on acceptable terms when and as required.



History of the
Company and Its Subsidiaries



The Company`s
history has had the following highlights:



> The Company was
>   originally incorporated under the name LMK Technologies Inc. ("LMK")
>   under the provisions of the Business Corporations Act (Alberta) on
>   August 20, 1993.
>   
> 
>   Pursuant to a
>   prospectus dated February 9, 1994, the Company, acting under the name of
>   Conserve Energy Corporation ("Conserve"), made an initial public
>   offering of 2,500,000 common shares at $0.10 per share.
>   
> 
>   In January, 1995
>   the Conserve identified Biotech Holdings Inc. ("Holdings") as a
>   potential acquisition. On December 14, 1995 the Company`s shareholders
>   approved the acquisition of all of the issued and outstanding shares of
>   Holdings in exchange for 15 million shares issued to the shareholders of
>   Holdings and approved the Company`s name change to Biotech Holdings Ltd. to
>   reflect its corporate direction in the biotechnology field.
>   
> 
>   On September 11,
>   1998 Holdings sold its operational assets to Biotech Laboratories Inc.
>   ("Laboratories"), another subsidiary of the Company, in exchange for
>   Laboratories` assumption of $2,000,000 in collateralized debts on the books
>   of Holdings.
>   
> 
>   In November, 2002
>   the Company`s primary operating subsidiary, Biotech Laboratories Inc.
>   discontinued operations.
>   
> 
>   On December 12,
>   2002, the Company filed a proposal under federal creditor protection
>   legislation in Canada. The purpose of the filing of the proposal was to
>   protect the interests of all stakeholders of the Company from an action taken
>   by the landlord of Laboratories. The landlord in question undertook to seize
>   Laboratories assets and the filing of the proposal prevented the landlord`s
>   seizure from continuing.
>   
> 
>   On May 21, 2003,
>   both the Company and Laboratories received approval from the Supreme Court of
>   British Columbia in the matter of two proposals regarding its creditors
>   pursuant to the Bankruptcy and Insolvency Act of Canada. These proposals,
>   accepted by the required majority of creditors, allows for the operating
>   subsidiary to maintain operations and generate funds from those operations to
>   pay a portion of its pre-proposal liabilities. Under the proposal, preferred
>   creditors shall be paid in full in priority to all claims of unsecured
>   creditors. Provision for payment of claims of unsecured creditors shall be
>   made in the lesser amount of 10% or $25,000 on each day, which is one year,
>   one year six months and two years, respectively, after the end of the month of
>   court ratification.
>   
> 
>   On November 3,
>   2003, the Company announced that it received formal regulatory approval for
>   the sale of its Type II Diabetes drug in Mexico.
>   
> 
>   December 1, 2004 -
>   the Company announced that it had received its first order for Sucanon from
>   Farmacias Benavides, the largest pharmacy chain in Mexico.
>   
> 
>   National television
>   and radio advertising for the sale of Sucanon in Mexico began in May 2005.
>   Revenues from shipments made prior to the launch of the advertising were
>   recognized in the quarter ended June 30, 2005.
>   
> 
>   November 21, 2005 -
>   the Company announced that the TSXV had completed a compliance review and had
>   identified a number of issues which in the Exchange`s view required
>   clarification, particularly the fact of ongoing relationships that the Company
>   had with a number of companies controlled by the Robert Rieveley and his
>   spouse and contraventions of Exchange policy which had occurred pursuant to
>   that fact.
>   The resulting clarifications confirmed: that a company called R. Rieveley and
>   Associates has provided financing and was as of June/05 owed $233,348 by the
>   Company; that a company called Wenroth Limited ("Wenroth") provides
>   financing via loans and as of June 30, 2005 was owed $13,497; that the company
>   called Inreg Corporation ("Inreg") provides financing via loans
>   bearing interest at 8% and was owed $96,265 by the Company as of June 30,
>   2005; that a company called Penne Investments has provided financing to the
>   Company via loans but had no loans to the Company outstanding as of June 30,
>   2005; that Allburg Holdings Inc. ("Allburg") provides financing to
>   the Company via loans and held as of June 30, 2005 a note payable of $116,927
>   and bearing interest at 8%; further that Allburg owns 25% of the Company`s
>   75%-owned subsidiary Smith Rothe Pharmaceutical Inc., which has been granted
>   by the Company an exclusive license to manufacture and market the Company`s
>   Sucanon Type II Diabetes medication in all countries outside Oriental Asia, in
>   return for a royalty equal to 25% of Sucanon profits in any country where the
>   license is granted, which royalties for the three months ended June 30/05
>   totalled $17,165; that a company called Seabright Holdings Ltd. indirectly
>   finances the Company through Seabright`s owning of the shares of Allburg,
>   Inreg and Wenroth, this ownership also making Allburg the largest creditor of
>   the company; that the Company`s Sucanon medication is manufactured on behalf
>   of the Company by a private company controlled by Robert Rieveley, which
>   transfers Sucanon to the Company at cost, receiving no profit from the
>   manufacturing operation, and the the private company was owed $6,092 as of
>   June 30, 2005; that general security agreements registered with the provincial
>   government in Victoria support the above-described loans and financing
>   arrangements; additionally, that an independent director of the Company, Geoff
>   Herring, owns a company, Grand Poisson & Chemical Consulting, which
>   provides chemical analysis and quality control testing of the Company`s
>   diabetes medication.
>   The contraventions of Exchange policy were summarized in the report as
>   follows: that the company failed to issue press releases disclosing the
>   existence and terms of the above-noted agreements with the related parties;
>   that the Company failed to disclose the related party agreements in the
>   Company`s Management Discussion and Analysis ("MD&A") reports
>   filed with audited and interim financial statements; that the Company failed
>   to file with the Exchange in a timely manner the majority of related party
>   agreements noted above; that the company failed to file for approval by the
>   Exchange a majority of the agreements with related parties; that the Company
>   had not disclosed all materials facts regarding development progress of
>   Sucanon and the level of market acceptance of Sucanon.
>   The Exchange also required the Company to provide a clarification regarding
>   the drug or herbal remedy status of Sucanon, in response to which the Company
>   pointed out that Sucanon has a natural or herbal component but that this does
>   not preclude it from being classified as a drug since a class of herbally
>   based drugs, which may be sold on an OTC basis, is available to Mexican
>   regulators, who approved the use of Sucanon for reduction of symptoms of Type
>   II Diabetes.





The Exchange further
determined that 429,185 shares plus warrants issued to Mr. Rieveley at $0.375,
with an expiry date of January 27, 2006, had been issued in satisfaction of debt
and not in consideration of cash and that by failing to file for this share
issuance in compliance with Exchange policy the Company had inadvertently made
an incorrect filing to the Exchange.



In addition to the
above, the Exchange required and the Company acceded to: execution of agreements
with Mr. Rieveley whereby he agreed to the cancellation 429,185 warrants at
$0.375 per share; an undertaking signed by each of the directors recognizing
that any further violations of Exchange requirements could result in a review of
the acceptability of each of the directors and officers of the Company to be a
director, officer, agent or consultant of any company traded on the Exchange.



The Exchange also
required that: the Company will ensure that its future public disclosures do not
contain promotional language; that the Company disclose all relevant terms of
contracts and agreements completed by the Company; and that the Company issue
timely updates informing the marketplace of the status of events that are
delayed or are not proceeding.



December 6, 2005 -
it was announced that trading in the Company`s shares was halted on the TSX
Venture Exchange pending the appointment of two independent directors to the
Company`s board of directors satisfactory to the Exchange, including
possessing the requisite degree of positive public company experience.



February 2, 2006 -
it was announced that the TSX Venture Exchange had upgraded its halt trading
announced in December to a suspension of trading in the Company`s shares on
the Exchange. The Company had presented one directorial candidate who was
accepted by the Exchange. (Subsequent to March 31, 2006, the Exchange accepted a
second directorial candidate.)

The following are
highlights of the Company`s business during fiscal 2007:

> June 23, 2006 -
>   it was announced, the Board of Directors replaced 896,000 stock options
>   exercisable at $0.25 per share which expired on January 2, 2006, with new
>   stock options exercisable at $0.16 per share. The replacement options vest on
>   October 22, 2006 and expire on June 22, 2008. A total of 560,000 of these
>   options were granted to Directors and Officers of the Company and the
>   remaining 336,000 were granted to Consultants to the Company. The shares were
>   trading at $0.08 per share at the date of the grant.
>   
> 
>   The Board of
>   Directors also replaced 545,000 stock options exercisable at $0.55 per share
>   which expired or were cancelled by March 24, 2006 with new stock options
>   exercisable at $0.10 per share. These replacement options will vest October
>   22, 2006 and expire on June 22, 2008. A total of 470,000 of these options were
>   granted to directors and officers and 75,000 were granted to consultants to
>   the company. The stock options described above comply with the Stock Option
>   Plan approved by the shareholders on September 30, 2005 and are subject to the
>   approval of the TSX Venture Exchange. The shares were trading at $0.08 per
>   share at the date of the grant.
>   
> 
>   August 29, 2006 -
>   It was announced that the TSX Venture Exchange approved two new independent
>   directors for the Company, a requirement outlined in the press release, dated
>   November 21, 2005 titled "TSX Venture Exchange Compliance Review
>   Completed".
>   
> 
>   The two approved
>   directors are Mr. Art Cowie and Mr. Ross Wilmot.
>   
> 
>   Mr. Cowie is a
>   director and vice-chair of Sungold International Holdings Corp., of Toronto,
>   Ontario (SGIHF.OB). Mr. Cowie is a former elected member of the British
>   Columbia legislative assembly, a former member of Vancouver City Council and
>   the founding principal of a landscape architecture firm in Vancouver.
>   
> 
>   Mr. Wilmot is a
>   Chartered Accountant (CA) and is a director and/or officer of the following
>   publicly traded companies: Orex Ventures (REX.V), Orko Silver (OK.V), Avigo
>   Resources (TMX.H.V), Verb Exchange (VEI.V) and Arvana Inc. (OTCBB), as well as
>   privately held CTF Technologies.
>   
> 
>   The Company`s
>   audit committee is comprised of Mr. Rieveley, Mr. Cowie, Mr. Wilmot and Mr. De
>   Rooy.
>   
> 
>   The Company was
>   suspended from trading on the TSX Venture Exchange on December 6, 2005 while
>   concerns raised by the TSX Venture Exchange were addressed to the TSX Venture
>   Exchange`s satisfaction - the most difficult issue being the appointment
>   of 2 additional independent directors satisfactory to the Exchange. With the
>   appointment of Mr. Cowie and Mr. Wilmot, the TSX Venture Exchange resumed
>   trading of the Company`s shares on August 30, 2006.
>   
> 
>   With the
>   appointment as director, and reinstatement of trading of the Company`s
>   shares, Mr. Wilmot received as of June 26, 2006, 300,0000 share options at
>   $0.10 per share, vesting October 26, 2006 and expiring June 25, 2008. The
>   shares were trading at $0.06 per share at the date of the grant.
>   November 23, 2006 -
>   the Company granted a total 275,000 share options at $.10 US stock options to
>   three of the Company`s employees. The options vest March 23, 2007 and expire
>   November 22, 2008.
>   January 16, 2007
>   - the Company reported that sales for the quarter ended December 31, 2006
>   exceeded the combined sales of the first two quarters, ended September 30,
>   2006, by $55,692 or 73%. The sales during the quarter ended December 31, 2006,
>   at $127,194, exceeds sales of $99,137 generated during the quarter ended
>   December 31, 2005, and is the second-largest quarterly sales total recorded to
>   date.
>   
> 
>   In addition to the
>   year-over-year sales increase, sales during the December 31, 2006 quarter
>   itself increased each month, suggesting a trend of sales growth following the
>   Company`s resumption of advertising support for the product and the
>   Company`s managers taking over the marketing of Sucanon in Mexico in
>   September 2006.
>   
> 
>   February 19, 2007 -
>   The Company, announced that a private placement application previously
>   announced on November 7, 2005 for 984,666 shares to be issued for funds was
>   cancelled effective February 16, 2007. On this date, the Board of Directors
>   approved the conversion of the funds, which had been advanced by an insider,
>   from a secured non-interest bearing loan to a secured loan bearing interest at
>   8% from the effective date.
>   
> 
>   April 12, 2007 -
>   the Company announced that the Company has applied to the TSX Venture Exchange
>   (the "Exchange") to replace 700,000 options that had expired and to
>   issue new options. The grant was for a total of 5,034,000 options allocated
>   among officers, directors, employees and consultants and had an exercise price
>   of $.11 per share, vesting October 12, 2007 and expiring April 12, 2009.
>   
> 
>   May 30, 2007 -
>   The Company reported that it had signed an agreement for distribution of
>   Sucanon, a Type II diabetes drug, in four markets in Latin America. Sucanon is
>   already widely sold in Mexico.
>   
> 
>   The four additional
>   markets - Colombia, Peru, Ecuador and Costa Rica - will be served by a
>   private company based in Bogota, Colombia. The private company, unrelated to
>   Biotech Holdings, focuses on sales of antibiotic products and has subsidiary
>   operations in several Latin American countries.
>   
> 
>   Biotech will carry
>   out tableting and blister-packing of Sucanon tablets through a company which
>   it sub-contracts in Mexico, and sell the blisterpacked product to the
>   Colombian company. The Colombian company will add country-specific external
>   packaging for each of the different markets for which it is licensed and
>   distribute to those markets.
>   
> 
>   Colombia, with
>   approximately 44 million people, is the largest of these markets. The four
>   markets have a combined population of approximately 90 million and are
>   typified by high rates of Type II Diabetes, affecting approximately 15% of the
>   adult population.
>   
>   June 11, 2007 - the Company
>   reported that it launched a website, www.sucanonhealth.com, for internet sales
>   of Sucanon, a Type II diabetes drug. Sucanon, which is broadly classed as an
>   insulin-sensitizing drug, has been shown to be an effective and very safe
>   treatment for Type II Diabetes, without the side-effects that are associated
>   with several competing Type II Diabetes medications including the glitazone
>   medications which are now the subject of a "black box" warning by
>   the U.S. FDA.

Capital Expenditures



The following table details the
company`s principal capital expenditures under the three categories of
Property and Equipment, Technology Interests and Formulations and deferred costs
since March 31, 2004:



| | Property and Equipment for
    Continuing Operations |            
| | ---------------------------------------------------- | -----------
| |                                                      |            
| | Cost March 31, 2004                                  | $ 402,367  
| | Additions                                            |            
| | Laboratory Equipment                                 | 3,169      
| | Computer Equipment                                   | 2,254      
| | Cost March 31, 2005                                  | $ 407,790  
| | Additions                                            |            
| | Laboratory Equipment                                 | 3,792      
| | Cost March 31, 2006                                  | $ 411,582  
| | Additions                                            |            
| | Computer Equipment                                   | 2,282      
| | Cost March 31, 2007                                  | $ 413,864  
| |                                                      |            
| | Technology Interests                                 |            
| |                                                      |            
| | Cost March 31, 2004, 2005, 2006 and
  2007           | $ 4,461,282
| |                                                      |            
| | Formulations and Deferred Costs                      |            
| |                                                      |            
| | Cost March 31, 2004                                  | $ 3,681    
| | Write-off of fully amortized
  deferred              |            
| | Costs                                                | (3,681)    
| | Cost March 31, 2005, 2006 and 2007                   | $ Nil      



The Company currently has no major
capital expenditures in progress and has no commitments for such capital
expenditures as at the date of this filing.

Public Takeover Offers



There have been no public takeover
offers by third parties in respect of the Company`s shares or by the Company
in respect of other companies` shares in the last and current financial year.



B. Business Overview



The Company`s
business focus is on developing the distribution of the Company`s Type II
Diabetes drug known as Sucanon.



Sales and Revenue
Activity Analysis



During the past three
fiscal years, sales and revenue from the distribution of the Company`s Type II
Diabetes drug in Mexico, have had the following distribution amongst activities
and geographic markets:



|                           | Fiscal    | Fiscal    | Fiscal
|-------------------------- | --------- | --------- | ------
|                           | 2007      | 2006      | 2005  
|Drug Sales in
      Mexico | $ 336,595 | $ 482,840 | $ Nil 
|                           |           |           |       
|Total Sales in
      Year  | $ 336,595 | $ 482,840 | $ Nil 



Pharmaceutical Business



Although the
pharmaceutical business has not yet reached profitability, the Company has
significant investment in capital and has expended considerable efforts in
getting its Type II Diabetes drug registered in various countries in Latin
America and elsewhere. The potential of the drug has enabled the Company to
receive financial support from its investors.

The pharmaceutical business is
divided into the following regions:

China and other
  "Asia Countries" which are defined as Indonesia, Philippines,
  Malaysia, Kampuchea (Cambodia), Thailand, Laos, China, Mongolia, Japan, North
  Korea, South Korea, Vietnam, Hong Kong, Macao, and Singapore and;



All other countries.

Structure of the Chinese
Pharmaceutical Business



The history and
structure of the Company`s operations in China is described in the Company`s
20-F filings for the years March 31, 2005 and prior. The Company suspended its
Chinese operations during the fiscal year ended March 31, 2003 due to economic
reasons.



Structure of Other Countries
Pharmaceutical Business



Allburg Holdings Inc.

Allburg Holdings Inc.
("Allburg"), previously known as Wanchi Inc., has been granted an
exclusive license to manufacture and sell Sucanon, make any claims and to use
all patent rights in all countries outside Oriental Asia. As a condition of this
license Allburg must sub-license these rights, and this sub-license may only be
granted to companies that are at least 50% owned by the Company (see Exhibit 3.8
to the Company`s Registration Statement previously filed with the March 31,
1996 Form 20-F). Allburg granted an exclusive license to sub-contract the
manufacture and marketing of the Company`s Type II diabetes drug Sucanon, make
claims and to use all patent rights in countries outside Oriental Asia to Smithe
Rothe Pharmaceutical, Inc. ("Smith Rothe").



During 1999, Allburg
sold a 25% interest in Sucanon to Immunis Corp. for $2.43 million worth of
shares in Immunis. In January 2001, the Company purchased that 25% interest from
Immunis Corp. by issuing 8,613,419 of its common shares at $0.26 per share to
Immunis Corp. for a total consideration of $2,239,489. The Company has a 75%
interest in rights to DIAB II in countries other than the Asia Countries.



Pursuant to US GAAP,
shares should be valued at the date of issue. The closing price of 26 cents per
share represents a 12 percent discount of the weighted average share price
before and after the date of the transaction. As per the above analysis, the
number of shares issued represents a considerable discount from their intrinsic
worth.

In December 2002, a
Director of the Company purchased Allburg. This purchase resulted in his
indirect ownership of 25% of Smith Rothe.



History of Operations and Business
Structure



Approval for the sale
of the diabetes drug was received from Peruvian regulatory authorities in
November 2001. The Company couldn`t agree on terms with a suitable distributor
in Peru because under the terms of the approval, as a prescription product, the
drug could only be marketed directly through doctors.



Approval for the sale
of the diabetes drug Sucanon was received from Mexican regulatory authorities in
November, 2003 as a non-prescription medication for the reduction of symptoms of
Type II diabetes.

During the year ended
March 31, 2005, the Company entered into agreements with two non-related
companies in Mexico. The first company manufactures and packages the tablets
from a pre-mix of active ingredients manufactured by the Company in Canada. The
second company distributes and markets the drug.



On December 1, 2004
the Company announced that it had received its first order for Sucanon.
Shipments of Sucanon were made starting in December 2004. Due to delays in the
launch of the Company`s advertising campaign, it was felt that the Company had
had future performance obligations to meet prior to recognizing initial sales.
As a result, revenues of $50,278 in shipments made in the period from December
2004 to March 31, 2005 were deferred until the first quarter of the fiscal year
ended March 31, 2006.

During the year ended
March 31, 2006, Smith Rothe incorporated an operating company in Mexico,
Pharmaroth Latin America S.A. de C.V. to co-ordinate the production and
marketing of Sucanon in Mexico.



Clinical Information for the Type II
Diabetes Medication



Clinical Trials



This drug is used
both as a prophylactic and a therapeutic. The clinical trials, which were
undertaken under the name "DIAB II" (Sucanon), have shown this drug to
be effective and safe. Although the clinical trial protocols are similar to
those required for FDA approval, the stages specified below relate to the
Chinese drug approval authorities. Clinical trials were done in China because of
the lower cost than would be the case in North America.



Stage I trials were
conducted on rat muscle cells. Binding and internalization of insulin was
evaluated as well as monitoring changes in intracellular glucose metabolism
under dosage.



Stage II trials were
conducted on both dogs and rats. Tests included general pharmacology,
pharmokinetics, acute toxicity including establishing an LD50 rate, and long
term toxicity.



Stage III trials were
conducted using three hospitals and sixty doctors. Over 1,500 patients were
interviewed and tested with the results from 370 patients submitted for approval
in the first quarter of 1995. Trials were conducted on a double blind basis.
Participation time for each applicant was six months including one month each
before and after Sucanon treatment or placebos. Dietary intake was strictly
controlled with breakfast, lunch and dinner provided to participants. Twice per
week through the duration of the trial fasting glucose, fasting cholesterol and
blood tests were conducted. Once every two weeks 100 gram oral glucose tolerance
tests were conducted.



Although an approval
has been received to market Sucanon in China and in Mexico (during the 2004
fiscal year), there can be no assurance supplemental clinical trials will
demonstrate the required efficacy to obtain approval in other countries. Failure
to successfully complete the existing clinical trials or other clinical trials
contemplated on a timely basis could have a material adverse effect on the
Company`s future business, financial condition and results of operations.



Summary of Results



Sucanon is a
synthesized compound that includes a synthetic and a herbal component, the two
together having a significant hypoglycemic effect in Non-Insulin Dependent
Diabetes Mellitus (NIDDM) patients. Animal tests and clinical trials have shown
that this product increases the binding and internalization of insulin in
peripheral cells. Sucanon is a promising new product for NIDDM therapy,
especially for those with IGT and mild/medium NIDDM (<230 mg/dL, or <13
mmole/L).



The results of the
clinical trials were positive, achieving a high patient satisfaction rate and
successfully reducing the clinical symptoms and signs of diabetes. The dosage
form utilized was successful, and the product has been approved for use as a
drug in China, indicated as a therapy for NIDDM and IGT. The following
conclusions were reached by Clinical Trial Centers and approved by the Chinese
Government:

Sucanon reduces the
  clinical symptoms and signs of diabetes, which include polyuria, polydipsia,
  polyphagia, and fatigue.



Sucanon
  significantly lowers fasting venous plasma glucose levels and significantly
  improves the 2-hour glucose tolerance in NIDDM patients.



Sucanon is
  effective in 87% of the NIDDM patients in the clinical trial.



Sucanon
  significantly lowers fasting venous plasma cholesterol and triglyceride levels
  in NIDDM patients.



The dosage form of
  Sucanon is acceptable for clinical uses.



No adverse side
  effect was observed in the clinical trials.

This product has also
shown significant benefit in combination uses with other oral hypoglycaemics,
e.g. sulfonylureas and/or biguanides. When used in combination with current
hypoglycaemics, Sucanon is shown to decrease the primary and secondary failure
to respond to these other agents, thus significantly improving the overall
clinical success rate.



Manufacturing of the
Drug



Sucanon is a pressed
tablet that is coated and then packaged in a blister-pack form for distribution.
In order to safe-guard the proprietary information of the drug, the active
ingredient in the drug is manufactured at the Company`s facility in Vancouver,
British Columbia and then shipped to Mexico (and in the past to China) for
tableting. The tableting and packaging of the drug in Mexico is being undertaken
on a contract basis by unaffiliated manufacturers.



Marketing of Sucanon



It is intended that
Sucanon will be marketed throughout the world under licenses granted by
Volkspharm. Volque has been granted an exclusive license to market Sucanon to
all Asia Countries. Allburg has been granted an exclusive license to market
Sucanon to all countries other than Asia Countries. Allburg must sub-license
these rights, and the sub-license may only be granted to companies that are at
least 50% owned by the Company or its subsidiaries. The Company has a 75%
interest in rights to Sucanon in countries other than the Asia Countries. The
25% minority interest in these rights is owned by a Company controlled by a
Director of the Company.



Sucanon is an oral
hypoglycemic that typically requires a doctor`s prescription (in Peru and
China), though the regulatory approval received in Mexico also permits Sucanon
to be dispensed by a pharmacist without prescription. Prescriptions are filled
through a pharmacy or through a hospital. Pricing of the drug has been
established so that it is affordable for the majority of the urban population in
Mexico.



The primary market
for Sucanon is IGT (Impaired Glucose Tolerance) and mild-medium NIDDM
(Non-Insulin Dependent Diabetes Mellitus) patients. At present, dietary therapy
is the primary recommended regimen for IGT sufferers.



That regimen involves
the close monitoring of a patient`s diet to reduce calorie intake in order to
decrease blood sugar (glucose) levels. However, complications arise due to the
difficulty in monitoring the patient`s diet in order to achieve satisfactory
blood sugar, nutrient and energy levels; similarly, as IGT and NIDDM severity
increases, this dietary treatment has decreased effectiveness.



Sucanon has been
tested successfully as an alternative to dietary therapy in treating IGT and
mild-medium NIDDM patients, as it not only provides control of blood sugar
levels but also gives patients a feeling of well being and enhances the
metabolism of glucose at the cellular level.



In Mexico and Peru,
where regulatory approval has been received, marketing of Sucanon is to be
carried out by marketing companies which are unrelated to the Company.



Sale of Sucanon
Outside of Asia Countries



Allburg may grant the
rights to sell Sucanon II outside of Asia Countries, but only to companies in
which the Company owns at least a 50% interest. The name Sucanon has been
trademarked for the marketing of the drug in North America.



During the 2004
fiscal year, the Company located a suitable space in the Vancouver, Canada area
where equipment specifically related to Sucanon pre-mix manufacture was
installed. The facilities are used for pre-mixing of Sucanon powder for supply
to tableters. Tableting for the Mexico and Peru markets - the Company`s
first markets outside China --- is carried out by a tableter in Mexico.



Company Highlights of
Fiscal 2007



The following are
highlights of the Company`s business during fiscal 2007:

June 23, 2006 -
  it was announced, the Board of Directors replaced 896,000 stock options
  exercisable at $0.25 per share which expired on January 2, 2006, with new
  stock options exercisable at $0.16 per share. The replacement options vest on
  October 22, 2006 and expire on June 22, 2008. A total of 560,000 of these
  options were granted to Directors and Officers of the Company and the
  remaining 336,000 were granted to Consultants to the Company. The shares were
  trading at $0.08 per share at the date of the grant.



The Board of
  Directors also replaced 545,000 stock options exercisable at $0.55 per share
  which expired or were cancelled by March 24, 2006 with new stock options
  exercisable at $0.10 per share. These replacement options will vest October
  22, 2006 and expire on June 22, 2008. A total of 470,000 of these options were
  granted to directors and officers and 75,000 were granted to consultants to
  the company. The stock options described above comply with the Stock Option
  Plan approved by the shareholders on September 30, 2005 and are subject to the
  approval of the TSX Venture Exchange. The shares were trading at $0.08 per
  share at the date of the grant.



August 29, 2006 -
  It was announced that the TSX Venture Exchange approved two new independent
  directors for the Company, a requirement outlined in the press release, dated
  November 21, 2005 titled "TSX Venture Exchange Compliance Review
  Completed".



The two approved
  directors are Mr. Art Cowie and Mr. Ross Wilmot.



Mr. Cowie is a
  director and vice-chair of Sungold International Holdings Corp., of Toronto,
  Ontario (SGIHF.OB). Mr. Cowie is a former elected member of the British
  Columbia legislative assembly, a former member of Vancouver City Council and
  the founding principal of a landscape architecture firm in Vancouver.



Mr. Wilmot is a
  Chartered Accountant (CA) and is a director and/or officer of the following
  publicly traded companies: Orex Ventures (REX.V), Orko Silver (OK.V), Avigo
  Resources (TMX.H.V), Verb Exchange (VEI.V) and Arvana Inc. (OTCBB), as well as
  privately held CTF Technologies.



The Company`s
  audit committee is comprised of Mr. Rieveley, Mr. Cowie, Mr. Wilmot and Mr. De
  Rooy.



The Company was
  suspended from trading on the TSX Venture Exchange on December 6, 2005 while
  concerns raised by the TSX Venture Exchange were addressed to the TSX Venture
  Exchange`s satisfaction - the most difficult issue being the appointment
  of 2 additional independent directors satisfactory to the Exchange. With the
  appointment of Mr. Cowie and Mr. Wilmot, the TSX Venture Exchange resumed
  trading of the Company`s shares on August 30, 2006.



With the
  appointment as director, and reinstatement of trading of the Company`s
  shares, Mr. Wilmot received as of June 26, 2006, 300,0000 share options at
  $0.10 per share, vesting October 26, 2006 and expiring June 25, 2008. The
  shares were trading at $0.06 per share at the date of the grant.



November 23, 2006 -
  the Company granted a total 275,000 share options at $.10 US stock options to
  three of the Company`s employees. The options vest March 23, 2007 and expire
  November 22, 2008.

January 16, 2007
  - the Company reported that sales for the quarter ended December 31, 2006
  exceeded the combined sales of the first two quarters, ended September 30,
  2006, by $55,692 or 73%. The sales during the quarter ended December 31, 2006,
  at $127,194, exceeds sales of $99,137 generated during the quarter ended
  December 31, 2005, and is the second-largest quarterly sales total recorded to
  date.



In addition to the
  year-over-year sales increase, sales during the December 31, 2006 quarter
  itself increased each month, suggesting a trend of sales growth following the
  Company`s resumption of advertising support for the product and the
  Company`s managers taking over the marketing of Sucanon in Mexico in
  September, 2006.



February 19, 2007 -
  The Company, announced that a private placement application previously
  announced on November 7, 2005 for 984,666 shares to be issued for funds was
  cancelled effective February 16, 2007. On this date, the Board of Directors
  approved the conversion of the funds, which had been advanced by an insider,
  from a secured non-interest bearing loan to a secured loan bearing interest at
  8% from the effective date.



Subsequent to March
  31, 2007, the Company made the following announcements:



April 12, 2007 -
the Company announced that the Company has applied to the TSX Venture Exchange
(the "Exchange") to replace 700,000 options that had expired and to
issue new options. The grant was for a total of 5,034,000 options allocated
among officers, directors, employees and consultants and had an exercise price
of $.11 per share, vesting October 12, 2007 and expiring April 12, 2009.



May 30, 2007 - The
Company reported that it had signed an agreement for distribution of Sucanon, a
Type II diabetes drug, in four markets in Latin America. Sucanon is already
widely sold in Mexico.



The four additional
markets - Colombia, Peru, Ecuador and Costa Rica - will be served by a
private company based in Bogota, Colombia. The private company, unrelated to
Biotech Holdings, focuses on sales of antibiotic products and has subsidiary
operations in several Latin American countries.



Biotech will carry
out tableting and blister-packing of Sucanon tablets through a company which it
sub-contracts in Mexico, and sell the blisterpacked product to the Colombian
company. The Colombian company will add country-specific external packaging for
each of the different markets for which it is licensed and distribute to those
markets.



Colombia, with
approximately 44 million people, is the largest of these markets. The four
markets have a combined population of approximately 90 million and are typified
by high rates of Type II Diabetes, affecting approximately 15% of the adult
population.



June 11, 2007 - the
Company reported that it launched a website, www.sucanonhealth.com, for internet
sales of Sucanon, a Type II diabetes drug. Sucanon, which is broadly classed as
an insulin-sensitizing drug, has been shown to be an effective and very safe
treatment for Type II Diabetes, without the side-effects that are associated
with several competing Type II Diabetes medications including the glitazone
medications which are now the subject of a "black box" warning by the
U.S. FDA.

Research &
Development - the Company`s Type II Diabetes drug



Research expenditures
are expensed in the year in which they are incurred. During fiscal 2007 the
Company expensed $Nil (2006 - $Nil and 2005 - $5,576) in drug related research
costs.



It is the Company`s
policy to defer all costs that relate to the development of new products where
management is satisfied as to the technological, commercial and financial
viability of individual products. These costs are amortized on a straight-line
basis over a five year period. All deferred development costs were fully
amortized in the year ended March 31, 2005 and no additional amounts were
capitalized.



Patents and Proprietary Information



The Company, itself
and through Volque, pursues a policy of seeking patent protection where possible
for the valuable patentable subject matter of its proprietary technology. The
Company believes that patent and trade secret protection is important in its
business, and that its success will depend, in part, on its ability to obtain
and enforce strong patents, to maintain trade secret protection and to operate
without infringing the proprietary rights of others. Volkspharm has patent
applications pending in Canada on Sucanon for which the Company, through Allburg
(see "Associated Company" above), has been granted exclusive licensing
rights to countries other than Asia Countries. See Exhibit 3.8 "Assignment
of 50% Interest Rights" of the Company`s Registration Statement
(previously filed with the March 31, 1996 Form 20F).



No assurance can be
given that patents will issue from any pending applications or that claims now
or in the future, if any, allowed under issued patents will be sufficiently
broad to protect the Company`s technology. In addition, no assurance can be
given that patents issued or licensed by the Company will not be challenged,
invalidated, infringed or circumvented, or that the rights granted thereunder
will provide competitive advantages to the Company. The commercial success of
the Company will also depend in part on the Company or any of its affiliates not
infringing patents or proprietary rights of others and not breaching the
licenses granted to the Company.



Although the Company
is presently unaware of the need for or risk of any such action, litigation,
which could result in substantial cost to the Company, may also be necessary to
enforce any patents issued to the Company and/or Volkspharm or to determine the
scope and validity of other parties` proprietary rights, which may affect the
Company`s products and technology. If the outcome of any such litigation is
adverse to the Company, the Company`s business could be materially affected. To
determine the priority of invention, the Company and/or Volkspharm may also have
to participate in interference proceedings declared by the United States Patent
and Trademark Office, which could result in substantial cost to the Company.



Patent protection is
provided in the People`s Republic of China "PRC" through the Patent
Law of the People`s Republic of China of 1984 ("PRC Patent Law"). For
a discussion of the differences between U.S. and PRC patent law, please refer to
the Company`s Registration Statement previously filed with the March 31, 1996
Form 20F.



There has been, and
the Company believes that there may be in the future, significant litigation in
the industry regarding patent and other intellectual property rights and that,
if the Company becomes involved in such litigation, it could consume substantial
resources. Significant legal issues frequently arise regarding the extent to
which patent protection is afforded in the pharmaceutical field. The Company,
therefore, also relies upon trade secrets, know-how, and continuing
technological advancement to develop and maintain its competitive position.
Disclosure and use of the Company`s know-how is generally controlled in part
under confidentiality agreements with the parties involved. In addition, the
Company has confidentiality agreements or non-disclosure agreements with certain
of its key employees, consultants, officers and directors. There can be no
assurance, however, that all confidentiality agreements will be honored, that
others will not independently develop equivalent technology, that disputes will
not arise as to ownership of intellectual property, or that disclosure of the
Company`s trade secrets will not occur. Furthermore, there can be no assurance
that others have not obtained or will not obtain patent protection that will
exclude the Company from using its trade secrets and confidential information.
Non-disclosure or confidentiality agreements would be difficult and expensive to
enforce, and may not be upheld by the courts, especially those of foreign
nations. Inability to protect any patents or enforce its non-disclosure or
confidentiality agreements, especially in foreign countries where much of the
Company`s business may be established, could enable others to take advantage of
the Company`s technology without compensation, causing it substantial economic
loss.



The Company believes
its competitive position in the diabetes therapy market has some strengths.
First, the Company`s Sucanon product is clinically effective and may have
fewer side effects than competing products as a diabetes monotherapy. In
addition, Sucanon may also be an effective combination therapy. The President of
the Company received, during calendar year 2000, two U.S. patents covering use
of an insulin-sensitizing drug in a combination with a standard therapy for Type
II Diabetes. These rights, as they pertain to Sucanon, were assigned to the
Company in December 2001. Third, the Company believes that industrial processing
and trade secrets are sufficient to maintain confidentiality and control over
the production of Sucanon, whether patents for the product are granted or not.



Competition



The pharmaceutical
and biotechnology industries are characterized by rapidly evolving technology
and intense competition. The Company anticipates that it will face increased
competition in the future as new products enter the market and advanced
technologies become available. There can be no assurance that existing products
or new products developed by the Company`s competitors will not be more
effective, or be more effectively marketed and sold, than any that may be
developed by the Company. Competitive products may render the Company`s products
obsolete and non-competitive prior to the Company`s recovering research,
development or commercialization expenses incurred with respect to any such
products. The Company`s competitors include major pharmaceutical, diagnostic,
chemical and biotechnology companies, many of which have financial, technical,
and marketing resources significantly greater than those of the Company. Many of
the Company`s existing or potential competitors, particularly large
pharmaceutical companies, also have significantly greater experience than the
Company in undertaking research, preclinical studies and human clinical trials
of new pharmaceutical products, obtaining FDA and other regulatory approvals,
and manufacturing and marketing such products. Accordingly, the Company`s
competitors may succeed in commercializing products more rapidly or effectively
than the Company, which could have a material adverse affect on the Company`s
business, financial condition or results of operations.



In addition, many
biotechnology companies have formed collaborations with large, established
pharmaceutical companies to support research, development and commercialization
of products that may be competitive with those of the Company. Academic
institutions, government agencies and other public and private research
organizations are also conducting research and seeking patent protection and may
commercialize products on their own or through joint ventures. The Company is
aware of certain products manufactured or under development by competitors that
are used for the detection or treatment of diabetes, the markets which the
Company has targeted for product commercialization. The existence of these
products, or other products or treatments of which the Company is not aware, or
products or treatments that may be developed in the future, may adversely affect
the marketability of products developed by the Company.



Many pharmaceutical
and biotechnology companies, alone and in collaboration with larger
pharmaceutical companies, have developed and are marketing, or are developing,
various products for the treatment of diabetes.



There are three basic
classes of existing drugs for the treatment of NIDDM: sulfonylureas, biguanides
and insulin sensitizers. Acarbose is being marketed at the present as a fourth
class; however, for the purposes of this document it will be considered as
similar to the biguanides. The primary mechanism of the sulfonylurea group of
drugs is to stimulate increased insulin production from the pancreas in an
attempt to enhance glucose utilization. The biguanide and acarbose group of
drugs in general act to decrease glucose absorption in the digestive tract. By
comparison the insulin sensitizers act to re-sensitize the cell membrane to
enhance the uptake of glucose. Some drugs frequently described as biguanides,
such as metformin, also have significant insulin-sensitizing characteristics and
can also be classified as insulin-sensitizers.



Other than biguanides
with insulin-sensitizing action, there are, in addition to Sucanon, only two
insulin sensitizers which currently have regulatory approval anywhere in the
world; a third one, troglitazone (brand name "Rezulin") was withdrawn
from the market world-wide due to concerns regarding liver toxicity. Leaving
asides the biguanides with insulin-sensitizing action and Sucanon, the existing
insulin-sensitizers are all in the glitazone or TZD (thiazolidinendione) class
and are generally described as peroxisome proliferator-activated receptor
agonists ("PPAR agonists"). The main action of these agents is to
enhance glucose uptake by peripheral cells. The activity of PPAR`s is believed
to be strongest in white fat tissue. The "glitazones" have a number of
side-effects reported during the trial process including increased liver
dysfunction and weight gain.



The mechanism of
action of Sucanon on the other hand as an insulin sensitizer is to enhance the
binding of insulin to the receptor sites primarily in muscle cells, increasing
the sensitivity of such cells to insulin. This increased sensitivity results in
enhanced absorption and consequently, utilization of glucose in the muscle
cells.



All drugs in these
classes have been shown to be effective in resolving the medical condition of
high blood sugar levels; however, there is a considerable variance amongst the
drug classes in the degree of side effects experienced and the long term
efficacy in all patients. It is intended that Sucanon will be marketed based on
the benign nature of the drug as well as the subjective benefits associated with
the increased utilization of glucose experienced during Sucanon usage.



Generally,
sulfonylureas and biguanides are prescribed to NIDDM patients with serum blood
glucose levels above 140 mg/dL only after dietary regimens fail to control the
condition. Diabetes Mellitus is a prolonged disease, and it is clinically
difficult to administer sulfonylureas for too long a period. The difficulties
for long term use arise from a wide variety of side-effects and drug resistance.



For Sucanon, an
important factor in competition may be the timing of market introduction of the
Company`s or competitors` products. Accordingly, the relative speed with which
the Company`s competitors can develop products, complete the clinical trials and
approval processes, and supply commercial quantities of the product to the
market are key factors for competitiveness. The Company`s competition will be
determined in part by the potential indications for which the Company`s products
receive approval by regulatory authorities. The development by competitors of
new treatment methods for diabetes could render the Company`s drug
non-competitive or obsolete. The Company expects that competition among products
approved for sale will be based, among other things, on product efficacy,
safety, reliability, availability, price and intellectual property protection.



The Company`s
competitive position also depends upon its ability to secure market acceptance
for its Type II Diabetes drug. There can be no assurance that Sucanon will
achieve market acceptance. The degree of market acceptance will depend upon a
number of factors, including the receipt of regulatory approvals, the
establishment and demonstration in the medical community of the clinical
efficacy and safety of Sucanon, and the establishment and demonstration of the
potential advantages over existing and new treatment methods and reimbursement
policies of government and third party payors. There can be no assurance that
physicians, patients, payors or the medical community in general will accept and
utilize Sucanon. Additionally, the Company`s competitive position depends upon
its ability to attract and retain qualified personnel, obtain patent or other
proprietary protection, establish collaborative relationships and secure
manufacturing.



As noted above in
reference to TZD drugs, the principal competitors to Sucanon for diabetes
therapy are "Avandia" from GlaxoSmithKline and "Actos" from
Eli Lilly. The Company believes that its Sucanon product will be able to compete
effectively in the marketplace based on studies that have been carried out
showing that Sucanon is clinically effective and may have fewer side effects
than the competitor drugs.



Government Regulation



Regulation by
governmental authorities in Canada, the United States and other countries is a
significant factor in the production and marketing of Sucanon and the Company`s
ongoing research and development activities. Sucanon has received approval for
sale in China, Peru and Mexico. In November 3, 2003 the Company announced that
it received formal written approval from the Mexican national regulator for the
sale of Sucanon in Mexico.



Pharmaceutical and
biological products intended for therapeutic or prophylactic use for humans are
governed by the FDA in the United States, by the Health Protection Branch
("HPB") in Canada and by comparable agencies in other countries. For
most of these products, the regulations require extensive clinical trials and
other testing and government review and final approval prior to marketing the
product. This procedure is likely to take a number of years and involves the
expenditure of substantial resources. For example, before obtaining regulatory
approval for the commercial sale of Sucanon in Canada and the United States, the
Company must demonstrate through preclinical studies and clinical trials that
the product is safe and efficacious. The results from the Company`s preclinical
studies and early clinical trials may not be predictive of results obtained in
large-scale clinical trials, and there can be no assurance that the Company`s or
its collaborators` clinical trials will demonstrate safety and efficacy even
though the results indicating safety and efficacy were achieved in human
clinical trials results in China. There can be no assurance that regulatory
approval will be received for any countries other than those already received
(China, Peru and Mexico). A number of companies in the biotechnology industry
have suffered significant setbacks in advanced clinical trials, even after
achieving promising results in earlier trials. In addition, government
regulations specify standards for manufacturing and marketing pharmaceutical
products. Any failure by the Company or its collaborators or licensees to
obtain, or any delay in obtaining, regulatory approvals, could adversely affect
the marketing of Sucanon and its ability to receive product or royalty revenue.
There can be no assurance that Sucanon will be approved by the FDA, HPB or any
other government agency on a timely basis, if at all.



Sales of therapeutic
products outside Canada and the United States are subject to regulatory
requirements that vary widely from country to country. Whether or not FDA or HPB
approval has been obtained, final approval of a product by comparable regulatory
authorities of other countries must be obtained prior to the commencement of
marketing the product in those countries. The time required to obtain any such
approval may be longer or shorter than that required by FDA or HPB approval.



International
Operations



It is management`s
intention that marketing of Sucanon will be conducted through a partnership with
either local distributors or through the creation of a strategic alliance with a
large multi-national pharmaceutical company. To that end, management of the
Company has had preliminary discussions with a number of multi-national
corporations. These discussions have involved licensing of the product for
distribution in selected areas of the world. The Company has also received a
number of enquiries from distribution firms around the world with respect to the
licensing of this drug. The Company is taking contact with potential national
distributors in Latin American countries and elsewhere in the world that may be
interested in purchasing Sucanon pre-mix and producing, packaging, marketing and
distributing Sucanon tablets in their own markets.



Most of the Company`s
sales of Sucanon are expected to be made in international markets. The Company
will require regulatory approval prior to undertaking sales activity in a
particular country. Sales of Sucanon in international markets are subject to
certain risks common to such sales, including government regulation, export and
import license requirements, risks of tariffs or trade barriers and political
and economic instability. There can be no assurance that these risks will not
materially adversely affect the Company in the future.



The Company expects
to price sales of its products in the currency of the country in which it is
sold. Accordingly, the prices of its products in Canadian dollars will vary as
the value of the Canadian dollar fluctuates against such local currencies. In
addition, any royalty payments to be made to the Company will be made as a
percentage of sales denominated in the currency of the country where sales are
made. There can be no assurance that there will not be increases in the value of
the Canadian dollar against such currencies, reducing the Canadian dollar return
to the Company on the sales of its products. Furthermore, there can be no
assurance that significant fluctuations in foreign currency values will not
occur that will create sufficient differences in the relative prices of the
products in different countries, such that the Company will find it necessary to
reduce its prices in certain local currencies in order to bring the relative
cost of its products into line. Although the Company may seek to implement
hedging techniques with respect to its foreign currency transactions in the
future, it does not currently do so, and there can be no assurance that such
techniques, if employed, would be successful.



In Mexico, where the
Company initiated sales of Sucanon in the first quarter of fiscal 2006,
distribution and marketing of Sucanon under the trade name Sucanon has been
carried out by an independent Mexican marketing group. The company opened an
office in Mexico to co-ordinate the marketing efforts and the supply of Sucanon
to the market in Mexico. The Company does not plan to be involved in the sales
and marketing of Sucanon and other Latin American countries and plans to engage
the services of third-party marketing companies to achieve its distribution and
marketing goals.



Product Liability



The use of any of the
Company`s products in clinical trials, and the sale of any approved products,
may expose the Company to liability claims resulting from the use of its
products. These claims might be made directly by consumers, healthcare providers
or by pharmaceutical companies or others selling such products. The Company
currently has liability insurance which includes all products sold by the
Company in Canada and the United States. The Company`s product liability
insurance does not cover liability claims with respect to clinical trial
products or for any product sold by Volque. There can be no assurance that the
Company will be able to obtain or maintain sufficient, commercially reasonable
product liability insurance for any products approved for marketing. A product
liability claim brought against the Company could have a material adverse effect
on its business, financial condition or results of operations.



C. Organizational
Structure



The following table
provides details of the Company`s significant present subsidiaries:



|                                       |               |           | Percent    | Biotech`s 
|-------------------------------------- | ------------- | --------- | ---------- | ----------
|                                       |               | Percent   | of Direct  | Proportion
|                                       | Country of    | of Direct | & Indirect | of Voting 
|Subsidiary Name                        | Incorporation | Ownership | Ownership  | Power     
|                                       |               |           |            |           
|Biotech Laboratories Inc.              | Canada        | 100.0%    | 100.0%     | 100.0%    
|401718 B.C. Ltd. (formerly             |               |           |            |           
|Biotech Holdings Inc.)                 | Canada        | 100.0%    | 100.0%     | 100.0%    
|314202 B.C. Ltd                        | Canada        | 100.0%    | 100.0%     | 100.0%    
|Volkspharm Healthcare
    Incorporated | Canada        | 0.0%      | 37.5%      | 50.0%     
|Volque Pharmaceutical Company
    Ltd. | China         | 40.0%     | 59.1%      | 59.1%     
|Smith Rothe Pharmaceutical, Inc.       | Barbados      | 75.0%     | 75.0%      | 75.0%     



During the year ended
March 31, 2006, Smith Rothe incorporated an operating company in Mexico,
Pharmaroth Latin America S.A. de C.V. to co-ordinate the production and
marketing of Sucanon in Mexico.



D. Description of
Property



Manufacturing
Facility



In January, 2004 the
Company leased a location in the Vancouver, BC area, totaling approximately
2,400 square feet, for housing equipment and facilities for production of
pre-mix powder for Sucanon, which is at present the Company`s sole product.



The equipment in the
former manufacturing facility was moved out of the former production facilities
and equipment not related to the production of the Type II Diabetes drug has
been stored and is held for resale. The proceeds from the equipment sale will be
applied to secured outstanding debts of the Company.



There are a number of
related-party notes payable issued which have been collateralized by the assets
of this facility totaling approximately $1.532 million (2006: $0.643 million).
(See Note 6 of the Consolidated Financial statements attached.)



Tableting, Filling
and Packaging



When the Company
discontinued its lotions and creams operation in fiscal 2003, the Company
retained critical pieces of equipment for manufacture of Sucanon pre-mix powder
and for quality control of ingredients and the final product. This equipment,
plus the subsequent purchases of additional equipment is adequate to meet
production requirements of Sucanon in the Mexico and other Latin American
markets.



Sales and
Administration Office



The sales and
administration office is a 2,600 square foot leased premises located in suburban
Vancouver. The use of this office is expected to be meet the Company`s
requirements at least for the next three years.



Item 5 Operating
and Financial Review and Prospects



A. Operating
Results



US Generally Accepted
Accounting Principles



The Consolidated
Financial Statements of the Company have been prepared in accordance with
generally accepted accounting principles in Canada ("Canadian GAAP").
Differences with generally accepted accounting principles in the United States
("U.S. GAAP"), are set forth in Note 18 to the Consolidated Financial
Statements of the Company (Item 17 of this Form 20F). Some accounting policies
have a significant impact on the amounts reported in these financial statements.
The Consolidated Financial Statements includes a section describing the
Company`s significant accounting policies



Year Ended March 31,
2007 Compared

With Year Ended March
31, 2006



Operating Results



Revenues from the
sale of Sucanon in the year ended March 31, 2007 were $336,595 which resulted in
a Gross Profit of $224,847. The revenues in the year ended March 31, 2006 were
$482,840 and the Gross Profit was $335,553. Management is disappointed with the
$146,245 (30.2%) decline in revenues in comparison with the prior year. The
following factors contributed to the decline:

Because the Company
  had had future performance obligations to meet prior to recognizing initial
  sales, revenues in the prior year included $50,278 in shipments made in the
  period from December 2004 to March 31, 2005;



Revenues in the
  year ended March 31, 2006 included initial orders from retailers which, by
  their nature, are larger than repeat orders;



The Company
  severely constrained its advertising during the quarter as it had a lack of
  capital partially caused by its not trading on the Company`s exchange in
  Canada. This factor severely impacted sales. Trading in the Company`s shares
  resumed in August 2006.



The Company had a
  dispute with its independent marketing Company since early 2006 due to the
  latter`s under-performance. In September 2006, the Company assumed the
  responsibility for the marketing of Sucanon in Mexico. The marketing company
  continues to sell Sucanon to the customers that it introduced during 2005.

As is discussed
below, with the change in marketing efforts and the resumption of advertising,
revenues in the quarter ended December 31, 2006 rebounded and this trend
continued through the fourth quarter.



Operating expenses
totaled $1,958,836 representing a $490,319 (20.0%) decrease from the $2,449,155
expenses incurred in the year ended March 31, 2006. Amortization declined from
$610,112 in 2006 to $436,446. Technology interests were fully amortized in the
year which accounted for the $173,666 decline.



Stock based
compensation decreased from $366,277 to $283,383 in the year after considering
the prior period adjustment to stock-based compensation.



Professional fees
increased from $64,728 to $112,800 because the 2007 amount includes the audit
fees for 2006 and a $50,000 accrual for the current audit.



Operating
expenditures include $321,426 (2006 - $571,985) in product marketing costs. In
the first 3 quarters of the fiscal year ended March 31, 2006, these expenditures
were included in amounts receivable because they were considered to be advances
to the marketing company for advertising and were wholly repayable once sales
levels reached a certain contracted level. During the 2006 year-end audit,
management and the audit committee met to review developments with regard to
these amounts. This review led to a determination to expense a significant
portion ($571,985) of these advances in the quarter ended March 31, 2006



The net loss for the
year ended March 31, 2007 was $1,534,895 (2006: $2,019,378) and the loss per
common share was $0.02 for both periods.



Financial Highlights



The loss from
operations for the year ended March 31, 2007 was $1,733,989 (2006: $2,095,602)
and after adding back non-cash items, Operations used $837,255 (2006:
$1,140,259). The $793,616 (2006: $151,212) increase in due to related parties
provided financing to maintain operations. There were no shares issued during
the 2007 fiscal year, however, the Company raised a net of $573,786 in cash
through the issuance of shares through private placements and stock options
during the 2006 fiscal year.



The Company has
incurred recurring operating losses and has an accumulated deficit of
$31,273,810 and a Shareholders` Deficiency of $3,009,011 at March 31, 2007.
These factors, among others, raise doubt about the Company`s ability to be able
to continue as a going concern. The future of the Company and the realization of
its asset values will depend upon the Company`s ability to obtain adequate
financing and continuing support from shareholders and creditors including
refinancing and to attain profitable operations.



Management plans to
raise debt and equity capital on a private placement basis to finance the
operating and capital requirements of the Company. It is management`s intention
to continue using debt and equity to finance planned capital expansion and
initial market development in Mexico and Latin America and other markets and
operations until such time as the Company`s operations are self-sustaining.



While the Company is
expending its best efforts to achieve the above plans, there is no assurance
that any such activity will generate sufficient funds for operations.



As at March 31, 2007,
the Company had cash and deposits totaling $23,358.



Year Ended March 31,
2006 Compared

With Year Ended March
31, 2005



Operating Results



Shipments of the
Company`s Type II Diabetes drug Sucanon started in December 2004. Due to
unexpected delays in the launch of the TV advertising campaign for Sucanon, it
was felt that a retailer would have had a reasonable expectation that the
advertising should have started sooner and that the Company therefore had future
performance obligations to meet prior to recognizing the $50,278 sales to March
31, 2005. The shipments from December 2004 to June 30, 2005 were therefore
recognized as revenue in the quarter ended June 30, 2005, when the TV
advertising campaign began (May 26, 2005).



Revenues from the
sale of Sucanon in the year ended March 31, 2006 were $482,840 which resulted in
a Gross Profit of $353,553. There were no revenues in the same period ended
March 31, 2005.



Operating expenses
totaled $2,366,422 representing a $611,294 (34.8%) increase from the $1,755,128
expenses incurred in the year ended March 31, 2005. The expense categories with
significant increases included:

a. The Company
    incurred $571,985 in product marketing costs in the year. These expenses
    were included in amounts receivable throughout the year because they were
    considered to be advances to the marketing company for advertising and were
    wholly repayable once sales levels reached a certain contracted level.
    Management and the audit committee met to review developments with regard to
    these amounts; this review led to a determination to expense a significant
    portion of these advances.



b. The Company
    deals predominantly in US Dollars in Mexico. Due to the strengthening of the
    Canadian dollar against the US dollar, the Company had a $60,101 foreign
    exchange loss



c. General,
    administrative and selling expenses increased from $438,704 to $658,529
    ($219,825 or 50.1%) in the year. Mexican office expenses (the Mexican office
    only operated for part of the prior year) increased by $98,721. Salaries and
    benefits increased by $38,890 and Communication and travel expenses
    increased by $22,874.

The net loss for the
year was $2,019,378 which was $442,568 (28.1%) higher than the $1,576,810 loss
incurred in the year ended March 31, 2005.



Financial Highlights



Operating activities
used $1,140,259 (2005: $753,058) in cash while financing activities provided
$724,998 (2005: $795,959) in cash flow and investing activities provided $42,936
(2005: $21,072) in cash. As a result cash decreased $372,325 (2005: increased
$63,973) in the year. As at March 31, 2006, the working capital deficiency was
$2,083,586 (2005: $1,644,095).



Management plans to
raise debt and equity capital on a private placement basis to finance the
operating and capital requirements of the Company. It is management`s intention
to continue using debt and equity to finance planned capital expansion and
initial market development in Latin America and other markets and operations
until such time as the Company`s operations are self-sustaining.



During the year ended
March 31, 2006, the Company issued a total of 2,095,202 common shares for
consideration of $638,431 ($573,786 net of private placement finder`s fees).
After taking into account the $2,019,378 loss in the year, and adding back the
$366,277 in stock-based compensation expense and the common share issuances, the
shareholders` deficiency has increased from $678,184 as at March 31, 2005 to
$1,757,499 as at March 31, 2006.



Foreign Currency
Fluctuations



The Company`s main
source of revenues and purchases are from Canada and the United States. The
Canadian dollar has not been subjected to wide fluctuations when compared to the
US dollar. As a result, foreign exchange has not had a material effect on the
Company`s operations.



Legal Proceedings



On December 12, 2002,
the Company filed a proposal under federal creditor protection legislation in
Canada. The purpose of the filing of the proposal was to protect the interests
of all stakeholders of the Company from an action taken by the landlord of
Laboratories. The lease of the plant was in the Company`s name. The landlord
in question undertook to seize Laboratories assets and the filing of the
proposal prevented the landlord`s seizure from continuing.



On May 21, 2003, both
the Company and Laboratories received approval from the Supreme Court of British
Columbia in the matter of two proposals regarding its creditors pursuant to the
Bankruptcy and Insolvency Act of Canada. These proposals, accepted by the
required majority of creditors, allows for the operating subsidiary to maintain
operations and generate funds from those operations to pay a portion of its
pre-proposal liabilities. Under the proposal, preferred creditors shall be paid
in full in priority to all claims of unsecured creditors. Provision for payment
of claims of unsecured creditors shall be made in the lesser amount of 10% and
$25,000 on each day, which is one year, one year six months and two years,
respectively, after the end of the month of court ratification. The proposals
also allow the companies to provide ongoing business to its suppliers. Creditors
of the subsidiary after the filing of the proposal will be paid in full, in
priority to preferred and general unsecured creditors.



In July 2006 the
trustee acting in the proposal of the Company filed a certificate with the
Supreme Court of British Columbia that certified that the Company had fully
performed its obligations required under the proposal. At the same time, the
trustee acting in the proposal of Biotech Laboratories Inc. filed a notice of
default with the Supreme Court of British Columbia stating that the creditors
could take proceedings to place Biotech Laboratories Inc. in bankruptcy at their
own expense.



The Company is the
subject of legal disputes arising from the normal course of business. In 1998,
Cheron Holdings Ltd., one of Holdings` previous suppliers, filed a claim
against Biotech Holdings Inc. in B.C. Supreme Court, Kamloops Division, for
$711,000 which exceeds the payable amount on Holdings` books by approximately
$250,000. This supplier is claiming non-payment of outstanding amounts.
Management has issued a $1 million counter claim to this suit. On September 11,
1998 Holdings sold the operational assets to Biotech Laboratories Inc., another
subsidiary of Biotech, in exchange for the assumption of $2,000,000 in
collateralized debts on the books of Holdings. This action was taken in order to
continue operations until settlement of both the claim and the counter suit. The
operations of Holdings are now being carried on by Laboratories. The outcome of
the legal disputes is not determinable; however, in the opinion of management,
they would not have a material adverse financial impact on the Company. There
has been no legal activity on this claim since the filing of the Company`s $1
million counter claim.



Governmental,
Economic, Fiscal and Political Influences



None of the above
influences have materially affected the operations of the Company in the past.
Canada is an original partner in the North American Free Trade Agreement (NAFTA)
and as a result enjoys the economic benefits that this agreement provides.



B. Liquidity and
Capital Resources



As referred to
previously, the Company has incurred operating losses in each of the last three
fiscal years and has an accumulated deficit of $31,273,810 and a Shareholders`
Deficiency of $3,009,011 at March 31, 2007. These factors, among others, raise
substantial doubt about the Company`s ability to be able to continue as a going
concern. The future of the Company and the realization of its asset values will
depend upon the Company`s ability to obtain adequate financing and continuing
support from shareholders and creditors including refinancing and to attain
profitable operations.



Management plans to
raise debt and equity capital on a private placement basis to finance the
operating and capital requirements of the Company. It is management`s intention
to continue using debt and equity to finance planned capital expansion and
initial market development in Latin America and other markets and operations
until such time as the Company`s operations are self-sustaining.



The loss from
operations for the year ended March 31, 2007 was $1,733,989 (2006: $2,095,602)
and after adding back non-cash items, Operations used $837,255 (2006:
$1,140,259). The $793,616 (2006: $151,212) increase in due to related parties
provided financing to maintain operations. There were no shares issued during
the 2007 fiscal year, however, the Company raised a net of $573,786 in cash
through the issuance of shares through private placements and stock options
during the 2006 fiscal year.



As at March 31, 2007,
the Company had cash and deposits totaling $23,358.



Commitments for
Capital Expenditures



The Company has not
made any material commitments for capital expenditures during the year or during
the subsequent interim period.



C.  
  Research and
  Development



Research expenditures
are expensed in the year in which they are incurred. During fiscal 2007 the
Company expensed $Nil (2006 - $Nil and 2005 - $5,576) in drug related research
costs.



It is the Company`s
policy to defer all costs that relate to the development of new products where
management is satisfied as to the technological, commercial and financial
viability of individual products. These costs are amortized on a straight-line
basis over a five year period. All deferred development costs were fully
amortized in the year ended March 31, 2005 and no additional amounts were
capitalized.



D. Trend Information



The Company intends
to maintain fixed monthly overhead in the $165,000 range during the balance of
the 2008 fiscal year while focusing on advancing Sucanon production and
distribution primarily on markets in Latin America. Maintenance of overhead at
these relatively low levels is expected to be achieved by limiting any expansion
of overhead at the head office in Vancouver and the subsidiary office in Mexico
City while sub-contracting sales and marketing to arms` length companies in
the Latin American markets where Sucanon is planned to be launched as part of
the ongoing expansion of Sucanon distribution.



Mexico, where Sucanon
is currently distributed, is the eighth-largest pharmaceutical market in the
world by dollar value. In June 2007, the Company signed an agreement for
distribution of Sucanon in four other Latin American markets, specifically
Colombia, Peru, Ecuador and Costa Rica, all of which have the elevated
prevalence of Type II Diabetes that typifies Latin America. In all of these
countries, the Company intends to submit essentially the same regulatory
information that has led to regulatory approval in Mexico. Given that sales in
these markets are projected to have relatively high profit margins, entry into
these markets would likely have a significantly positive effect on both the
Company`s revenues and its bottom line.



The Company has been
working to also open markets in Argentina, Brazil and Chile.



The Company has also
started discussions with a potential distributor for some markets in the Middle
East including the United Arab Emirates and has been advised that no regulatory
approval is necessary for the sale of Sucanon in this market. There is no
assurance, however, that sales in this market will occur or will be material.





Item 6 Directors,
Senior Management and Employees



Directors , senior
  management and key employees



The following is a list of the
current directors, senior officers and key employees of the Company, their
municipalities of residence, their current position with the Company and their
principal occupations during the past five years:

|Name and
      Municipality of | Positions and
      Offices Held | Principal
      Occupation                                
|------------------------------ | -------------------------------- | ----------------------------------------------------------
|Residence                      | with the
      Corporation       |                                                           
|Robert B. Rieveley             | President and Chief              | President and Chief Executive
      Officer of Biotech    
|Vancouver, BC                  | Executive Officer, director      | Holdings Ltd., President of
      Biotech Laboratories    
|                               | and member of the audit          | Inc., Vancouver, BC, Canada                               
|                               | Committee since 1995             |                                                           
|                               |                                  |                                                           
|Johan de Rooy, FCA             | Director and Chairman of         | Lecturer in the Faculty of
      Commerce and Business    
|Vancouver, BC                  | the Audit Committee since        | Administration at the
      University of British Columbia
|                               | 1998                             | Since 1984. He has served as a
      National Director    
|                               |                                  | for the Canadian Cancer
      Society, as the President   
|                               |                                  | of the British Columbia Cancer
      Agency and as a      
|                               |                                  | Member of Council for the
      Institute of Chartered    
|                               |                                  | Accountants of B.C.                                       
|                               |                                  |                                                           
|Gale Belding                   | Executive Vice-President         | Executive Vice-President of
      Biotech Holdings Ltd.   
|Vancouver, BC                  | and director since 1995          |                                                           
|                               |                                  |                                                           
|Cheryl Rieveley                | Director since 1995              | Secretary/Treasurer of the
      Company and RCAR         
|Vancouver, BC                  |                                  | Investments Limited, Vancouver,
      BC                  
|                               |                                  |                                                           
|Art Cowie                      | Director. Appointed by the       | Planning Consultant (community
      planner), for        
|Vancouver, BC                  | Directors and approved by the    | professional firms, private and
      government clients. 
|                               | TSX Venture Exchange             | Additionally, he has experience
      in public service on
|                               | (February 22, 2006) to fill a    | private and public planning
      issues and served as    
|                               | vacancy created by the           | Chair of the Vancouver Port
      Authority and as        
|                               | resignation of Dr. Geoff         | director for the Pacific
      National Exhibition and Su 
|                               | Herring                          | Sungold International Holding
      Corp.                 
|                               |                                  |                                                           
|Ross Wilmot                    | Director. Appointed by the       | Financial Consultant. Past
      President d CFO for 6    
|                               | Directors and approved by the    | and technology and resource
      companies. Presently    
|                               | TSX Venture Exchange (June       | Mr. Wilmot is President for the
      Cedarwoods Group    
|                               | 26, 2006) to fill an additional  | in BC. He has been a director
      of 6 public companies 
|                               | director position requested by   | has been involved in RTO
      situations and the writing 
|                               | the TSX Venture Exchange         | of Corporate Governance
      Procedures. He is a C.A.    
|                               |                                  | and holds a B.A.S.C. along with
      a M.A.S.C.          
|                               |                                  |                                                           
|Lorne Brown                    | Chief Financial Officer since    | Chief Financial Officer for the
      Company, prior      
|Langley, BC                    | June, 1999                       | thereto Controller and Director
      A&A International   
|                               |                                  | Industries Inc., Port Coquitlam,
      BC.                



There are no
arrangements or understandings between any of the officers or directors of the
Company as to their election or employment, and no family relationships other
than Robert and Cheryl Rieveley, who are husband and wife.



B. Compensation of Directors and
Officers



The Company does not
pay any cash compensation to directors in their capacity as directors.



The compensation paid
to the Company`s directors, officers and senior management during the fiscal
period ended March 31, 2007 was $317,481.



In addition to the
foregoing, all of the executive officers of the Company are also entitled to
reimbursement of all reasonable business expenses and, from time to time, the
grant of stock options (see "Options to Purchase Securities from Company or
Subsidiaries - Stock Options", below).



No plan exists, and
no amount has been set aside or accrued by the Company or any of its
subsidiaries, to provide pension, retirement or similar benefits for directors
and officers of the Company, or any of its subsidiaries.



Other than as herein
set forth, the Corporation did not pay any additional compensation to the
executive officers or directors (including personal benefits and securities or
properties paid or distributed, which compensation was not offered on the same
terms to all full time employees) during the last fiscal year.



C Board Practices



The directors of the
Company are elected by the shareholders at each Annual General Meeting and
typically hold office until the next Annual General Meeting at which time they
may be re-elected or replaced.



The articles of the
Company permit the directors to appoint directors to fill any vacancies that may
occur on the board. The articles of the Company also permit the directors to add
additional directors to the board between successive Annual General Meetings so
long as the number appointed does not exceed by more than one third of the
number of directors appointed at the last Annual General Meeting. Individuals
appointed as directors to fill vacancies on the board or added as additional
directors hold office like any other director until the next Annual General
Meeting at which time they may be re-elected or replaced.



Stock options were
the only form of directors compensation in fiscal 2007 (see "Options to
Purchase Securities from Company or Subsidiaries - Stock Options"). No
stock options were exercised during the year ended March 31, 2007.



Apart from the above,
the Company does not have any service contracts with any Director or provide any
benefits upon termination of employment.



The Company`s audit
committee consists of three independent Directors Mr. Johan de Rooy, FCA,
Committee Chairman, Mr. Art Cowie (since February, 2006) and Mr. Ross Wilmot
(since June 2006) together with Mr. Robert Rieveley, the Company`s President
and Chief Executive Officer. The audit committee meets with the Company`s
independent auditors annually where the role and responsibilities of both the
auditor and the committee are reviewed. The independent Directors also meet with
the auditor separately from management to discuss any outstanding issues. The
Committee also meets on a quarterly basis to review and discuss the quarterly
financial statements. All financial statements are approved by the Committee and
their recommendations for approval are passed on to the Board of Directors for
final approval.





The Company`s
Compensation Committee consists of the three independent Directors and Mr.
Robert Rieveley. The charter of the Committee is as follows:



Biotech Holdings Ltd.
(the "Company")



Compensation Committee





The Compensation
Committee`s Mandate is to report to and to assist the Board in carrying out
its responsibilities by reviewing compensation and human resources issues and
making recommendations and/or reports to the Board. Because of the small size of
the Company and the Board, the responsibilities of the Committee are:



Annually review the
compensation packages for the officers of the Company;



On an on-going basis, review any
salary, budget, and succession recommendations from the C.E.O.;



Negotiate and set the compensation
package for any new officer hired by the Company.



The Committee will
set its owns terms of reference for the above, as they see fit, depending on the
resources of the Company.



Composition

a. The Committee shall consist of
    at least three directors. Members of the Committee shall be appointed by the
    Board after each Annual General Meeting and may be removed by the Board at
    its discretion.

b. To the extent possible, the
    majority of the members shall be independent directors.

c. The members of the Committee
    shall elect a Chairman from among their number.

d. The Committee shall appoint
    one member to act as Secretary.

Quorum



Because of the small
size of the Committee, all three directors must be present at each meeting in
order to have a quorum.



Meetings



Meetings should be
held at least semi-annually or may be called by a director if necessary. There
should be 48 hours notice given, with the agenda prepared by the Chair of the
Committee.







D Employees



At March 31, 2007 the
Company had 5 (2006 - 5; 2005 - 5) employees in Canada and 3 in Mexico (2006
- 2; 2005 - Nil). Temporary employees are periodically required in periods
of high volume production. The Company is not unionized.



E Share Ownership



The following is a
list of Common Shares held by the directors, officers and employees referred to
in Item 6 A. above as at August 23, 2007 (the Company`s record date for its
Annual General Meeting):



|Directors, Officers and
      Employees      | Common     | Percent | Series I    | Percent   | Total         | Percent
|-------------------------------------------- | ---------- | ------- | ----------- | --------- | ------------- | -------
|                                             | Shares     | of      | Convertible | of        | Voting        | of     
|                                             | Held       | Common  | Preferred   | Preferred | Shares Held   | Voting 
|                                             | or         | Shares  | Shares      | Shares    | or Controlled | Shares 
|                                             | Controlled |         | Held        |           |               |        
|                                             |            |         |             |           |               |        
|Robert Rieveley, C.E.O. (1)                  | 20,336,531 | 22.0%   | 13,806,907  | 100.0%    | 34,143,438    | 32.2%  
|Gale Belding, Director,
      Executive V.P. | 310,000    | 0.3%    |             |           | 310,000       | 0.3%   
|Johan de Rooy, Director                      | 1,247,000  | 1.4%    |             |           | 1,247,000     | 1.2%   
|Art Cowie, Director                          | 55,000     | 0.1%    |             |           | 55,000        | 0.1%   
|Cheryl Rieveley, Director (1)                | 0          | 0.0%    |             |           | 0             | 0.0%   
|Ross Wilmot, Director                        | 0          | 0.0%    |             |           | 0             | 0.0%   
|                                             |            |         |             |           |               |        
|Lorne Brown, C.F.O.                          | 50,000     | 0.0%    |             |           | 50,000        | 0.0%   
|                                             |            |         |             |           |               |        
|Total Held                                   | 21,998,531 | 23.8%   | 13,806,907  | 100.0%    | 35,805,438    | 33.8%  
|                                             |            |         |             |           |               |        
|Shares outstanding at Record
      Date      | 92,238,112 |         | 13,806,907  |           | 106,045,019   |        



(1)





The following table provides a list
of stock options outstanding, granted, exercised and expired during the year
ended March 31, 2007:

|          |           |           |           |             |                  |           |            |              |            
|--------- | --------- | --------- | --------- | ----------- | ---------------- | --------- | ---------- | ------------ | -----------
|          |           |           |           |             | ---------------- | Directors | & Officers | Only-------- |            
|Grant     | Vest      | Expiry    | Option    | Total       | Directors        | Expired   | Granted    | Directors    | Total      
|Date      | Date      | Date      | Price     | Outstanding | & Officers       | in Year   | in Year    | & Officers   | Outstanding
|          |           |           |           | 31-Mar-06   | Outstanding      |           |            | Outstanding  | 31-Mar-07  
|          |           |           |           |             | 31-Mar-06        |           |            | 31-Mar-07    |            
|11-Aug-04 | 11-Feb-05 | 11-Aug-06 | $ 0.540   | 25,000      |                  |           |            |              | 0          
|11-Aug-04 | 11-Aug-05 | 11-Aug-06 | $ 0.540   | 25,000      |                  |           |            |              | 0          
|11-Aug-04 | 11-Aug-06 | 11-Aug-06 | $ 0.540   | 25,000      |                  |           |            |              | 0          
|26-Aug-04 | 26-Feb-05 | 26-Aug-06 | $ 0.660   | 50,000      |                  |           |            |              | 0          
|26-Aug-04 | 26-Aug-05 | 26-Aug-06 | $ 0.660   | 50,000      |                  |           |            |              | 0          
|26-Aug-04 | 26-Feb-06 | 26-Aug-06 | $ 0.660   | 50,000      |                  |           |            |              | 0          
|24-Nov-04 | 24-Apr-06 | 24-Mar-07 | $ 0.550   | 700,000     | 500,000          | 500,000   |            | 0            | 0          
|24-Nov-04 | 24-Apr-07 | 24-Mar-08 | $ 0.550   | 1,190,000   | 900,000          |           |            | 900,000      | 1,190,000  
|22-Feb-06 | 22-Jun-06 | 22-Feb-08 | $ 0.135   | 300,000     | 300,000          |           |            | 300,000      | 300,000    
|23-Jun-06 | 22-Oct-06 | 22-Jun-08 | $ 0.160   |             |                  |           | 560,000    | 560,000      | 896,000    
|23-Jun-06 | 22-Oct-06 | 22-Jun-08 | $ 0.100   |             |                  |           | 430,000    | 430,000      | 545,000    
|26-Jun-06 | 26-Oct-06 | 25-Jun-08 | $ 0.100   |             |                  |           | 300,000    | 300,000      | 300,000    
|23-Nov-06 | 23-Mar-07 | 23-Nov-08 | $0.10 USD |             |                  |           | 0          | 0            | 275,000    
|          |           |           |           | 2,415,000   | 1,700,000        | 500,000   | 1,290,000  | 2,490,000    | 3,506,000  
|          |           |           |           |             |                  |           |            |              |            



A breakdown of
outstanding options as at March 31, 2007 to Directors and Officers was as
follows:



| | Grant Date      |                   | 24-Nov-04 | 22-Feb-06 | 23-Jun-06 | 23-Jun-06 | 26-Jun-06 |          
| | --------------- | ----------------- | --------- | --------- | --------- | --------- | --------- | ---------
| | Exercise Date   |                   | 24-Apr-07 | 22-Jun-06 | 22-Oct-06 | 22-Oct-06 | 26-Oct-06 |          
| | Expiry Date     |                   | 24-Mar-08 | 22-Feb-08 | 22-Jun-08 | 22-Jun-08 | 25-Jun-08 |          
| | Option Price    |                   | $0.55     | $0.135    | $0.16     | $0.10     | $0.10     | Total    
| |                 |                   |           |           |           |           |           |          
| | Cheryl Rieveley | Director          | 120,000   | 0         | 90,000    | 70,000    | 0         | 280,000  
| | Gale Belding    | Director          | 120,000   | 0         | 0         | 70,000    | 0         | 190,000  
| | Johan de Rooy   | Director          | 100,000   | 0         | 90,000    | 50,000    | 0         | 240,000  
| | Robert Rieveley | Director & C.E.O. | 500,000   | 0         | 190,000   | 150,000   | 0         | 840,000  
| | Art Cowie       | Director          | 0         | 300,000   | 0         | 50,000    | 0         | 350,000  
| | Ross Wilmot     | Director          | 0         | 0         | 0         | 0         | 300,000   | 300,000  
| | Lorne Brown     | C.F.O.            | 60,000    | 0         | 190,000   | 40,000    | 0         | 290,000  
| |                 |                   |           |           |           |           |           |          
| | TOTAL           |                   | 900,000   | 300,000   | 560,000   | 430,000   | 300,000   | 2,490,000





There are no
arrangements involving the employees in the capital of the company, including
any arrangement involving the issue or granting of options or shares or
securities of the Company.



Private Placements and Common Share
Warrants



There were no private
placements issued during the year ended March 31, 2007.



During the year ended
March 31, 2006, the Company completed with related party investors ("the
Investors") a private placement of 2,020,202 common shares for gross
proceeds of $621,181 cash (net proceeds of $556,536 after a finders fee of
$64,645). The Investors also received 2,020,202 warrants to acquire common
shares at $ 0.40 per share, expiring on October 6, 2006.



Warrants to Purchase
Common Shares



The following table
summarizes the number of fully exercisable common share warrants outstanding and
the exercise price thereof:

| |                                  |  | 2007        |  | 2006        |  | 2005     
| | -------------------------------- |  | ----------- |  | ----------- |  | ---------
| |                                  |  |             |  |             |  |          
| | Outstanding, beginning of year   |  | 3,548,682   |  | 3,244,146   |  | 1,826,777
| | Issued at $0.400 per share       |  |             |  |             |  |          
| | expiring October 6, 2006         |  | -           |  | 2,020,202   |  | -        
| | Issued at $0.55 per share        |  |             |  |             |  |          
| | expiring December 16, 2006       |  | -           |  | -           |  | 1,528,480
| | Expired January 27, 2006 $0.375  |  | -           |  | (1,715,666) |  | -        
| | Expired October 6, 2006 $0.400   |  | (2,020,202) |  |             |  |          
| | Expired December 16, 2006 $0.550 |  | (1,528,480) |  | -           |  | (111,111)
| |                                  |  |             |  |             |  |          
| | Outstanding, end of year         |  | -           |  | 3,548,682   |  | 3,244,146



There were no outstanding warrants to
purchase common shares at March 31, 2007.



Preferred Shares and Outstanding
Warrants



At March 31, 2007 and
2006, 13,806,907 convertible preferred shares were outstanding from the exercise
of preferred share warrants during 2004. No cash dividend has been declared to
date. However, the 8% per annum dividend on these shares for the year ended
March 31, 2006 would have amounted to $110,455 (2006: $110,455; 2005: $110,455).
The cumulative effect to March 31, 2007 of the dividend at 8% per annum from
date of issuance would have amounted to $399,265. This would have an
insignificant effect on net loss or on basic and diluted loss per share.



No preferred share
purchase warrants were outstanding or exercisable as of March 31, 2007, 2006 or
2005.



Item 7 Major
Shareholders and Related Party Transactions



A Major
Shareholders



On December 14, 1995,
the shareholders of Conserve, now the Company, approved the acquisition of
Holdings. Control of the Company changed upon the closing of the share exchange
on January 25, 1996 (see Exhibit 3.1 previously filed with the March 31, 1996
Form 20F). With the issuance of 15,000,000 of a total of 18,241,665 common
shares, the shareholders of Holdings then held approximately 82% of the issued
and outstanding shares of the Company. As at the Annual General Meeting ("AGM")
record date (August 23, 2007), the Company had a total of 92,238,112 (2006:
92,229,512) common shares issued and outstanding. Also, there were 13,806,907
Series I Convertible Preferred Shares issued and outstanding on March 31, 2007
and 2006. These preferred shares are voting and are convertible into Common
Shares on a 1:1 basis. They have a cumulative cash dividend of 8% of the
original amount contributed plus accrued interest.



|Class of Shares           |                                | Shares Owned  | Percent of  | Percent Held | Percent Held
|------------------------- | ------------------------------ | ------------- | ----------- | ------------ | ------------
|                          |                                | Aug. 23, 2007 | Class       | In 2006      | In 2005     
|                          |                                |               |             |              |             
|Common                    | Rieveley Family
      Trust    | 20,336,531    | 22.0%       | 22.1%        | 21.3%       
|                          |                                |               |             |              |             
|                          | Total
      Outstanding Shares |               |             |              |             
|                          | as of AGM
      record date    | 92,238,112    | 92,229,512  | 92,229,512   | 92,229,512  
|                          |                                |               |             |              |             
|Preferred                 | Rieveley Family
      Trust    | 13,806,907    | 100.0%      | 100.0%       | 100.0%      
|                          |                                |               |             |              |             
|Total Voting
      Shares | Rieveley Family
      Trust    | 34,143,438    | 32.2%       | 31.5%        | 31.5%       
|                          |                                |               |             |              |             
|                          | Total
      Outstanding Shares |               |             |              |             
|                          | as of AGM
      record date    |               | 106,045,419 | 106,036,419  | 106,036,419 



The major
shareholders of the Company do not have different voting rights in comparison
with other shareholders.



U.S. Shareholders



The following table
indicates the approximate number of registered holders of common shares with
United States addresses and the portion and percentage of common shares so held
in the United States. On August 23, 2007 (the record date for the Annual General
Meeting), 92,238,112 common shares were outstanding.



|Total Number
      Of Registered
      Holders
      

      254 | Number of U.S.
      Registered
      Holders
      

      209 | Number of
      Registered Common Shares Held in the U.S.
      

      
      8,586,426 | Percentage of
      Registered Common Shares Held in the U.S.
      

      
      9.3%
|---------------------------------------------------------------- | --------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------



The computation of
the number and percentage of common shares held in the United States is based
upon the number of common shares held by record holders with United States
addresses and by trusts, estates or accounts with United States addresses as
disclosed to the Company following inquiry to all record holders known to the
trustees, executors, guardians, custodians, or the fiduciaries holding common
shares for one or more trusts, estates or accounts. United States residents may
beneficially own common shares held of record by non-United States residents.



Control



Except as disclosed
above, to the best of the Company`s knowledge, the Company is not directly or
indirectly owned or controlled by another corporation(s), any foreign
government, or by any other natural or legal person(s) severally or jointly.
Furthermore, the company is not aware of any arrangements for the change of
control of the Company or subsequent arrangements that would result in a change
of its control.



B Related Party
Transactions



Allburg Holdings Inc.
("Allburg"), previously known as Wanchi Inc., has been granted an
exclusive license to manufacture and sell the Company`s Type II Diabetes drug
Sucanon, make any claims and to use all patent rights in all countries outside
Oriental Asia. As a condition of this license Allburg must sub-license these
rights, and this sub-license may only be granted to companies that are at least
50% owned by the Company (see Exhibit 3.8 to the Company`s Registration
Statement previously filed with the March 31, 1996 Form 20-F). During 1999,
Allburg sold a 25% interest in Sucanon to Immunis Corp. In January 2001, the
Company purchased that 25% interest from Immunis Corp. by issuing 8,613,419 of
its common shares at $0.26 per share to Immunis Corp. Pursuant to US GAAP,
shares should be valued at the date of issue. The closing price of 26 cents per
share represents a 12 percent discount of the weighted average share price
before and after the date of the transaction. As per the above analysis, the
number of shares issued represents a discount from their intrinsic worth.



Note 10 to the
Consolidated Financial Statements highlights the following amounts paid or
payable to related parties based on exchange values which represented the
amounts agreed upon by the related parties:



| |                                                        |  | 2007      |  | 2006      |  | 2005     
| | ------------------------------------------------------ |  | --------- |  | --------- |  | ---------
| |                                                        |  |           |  |           |  |          
| | Management fees paid to an
  officer/director          |  | $ 144,000 |  | $ 144,000 |  | $ 144,000
| | Salaries and benefits paid to
  officers and directors |  | 173,481   |  | 172,976   |  | 127,032  
| | Interest accrued on Notes Payable
  (Note 6)           |  | 96,833    |  | 56,766    |  | 63,239   
| | Rent and services paid to companies
  controlled by    |  |           |  |           |  |          
| | directors                                              |  | 81,943    |  | 86,216    |  | 98,795   



Note: The Company does not pay any
cash compensation to directors in their capacity as directors.

Ongoing related party associations:



The Company has
ongoing relationships with the following related parties. The following related
parties are controlled by Mr. Robert Rieveley and his spouse, Cheryl Rieveley.
These entities perform the following services to the Company and are party to
the following agreements with the Company:



Secured Debt
controlled by Mr. Robert Rieveley and his spouse, Cheryl Rieveley



The following notes
bear interest at the rate of 8% per annum compounded annually and due on demand.
They are collateralized by a General Security Agreement providing a charge over
the assets of the Company:





|                                   | Balance Mar 31,
      2007
|---------------------------------- | --------------------------
|R Rieveley
      & Associates      | $ 1,273,245               
|Wenroth Limited
      ("Wenroth")  | 15,453                    
|InReg
      Corporation ("InReg")  | 110,221                   
|Allburg
      Holdings ("Allburg") | 133,878                   





The General Security
Agreements mentioned above have been registered with the Personal Property
Security Registry in Victoria, B.C. Once the respective loans are paid in full
the registration becomes null and void.



#20 Seabright
Holdings Ltd. indirectly finances the Company as it owns the shares of Allburg,
InReg, and Wenroth making it the Company`s largest creditor. Additionally, #20
Seabright Holdings Ltd. is a secured creditor of the Company through its
ownership of Allburg, InReg and Wenroth. The terms and amounts due to Allburg,
InReg and Wenroth are described above.



In addition to
interest charged on the above-mentioned notes, the Company had the following
transactions with the secured creditors:



The Company retains
the services of Mr. Rieveley through an employment agreement with his company, R
Rieveley & Associates. Management Fees paid to R
Rieveley and Associatesin the year ended March 31, 2007 amounted to
$144,000. During the year ended March 31, 2007 R Rieveley and Associates
advanced $815,442 to the Company.



In November 2005, the
Company agreed to a private placement with a related party. The private
placement, for the purchase of 984,666 common share units, was subject to the
approval of the TSX Venture Exchange. Each unit included a common share and a
warrant to purchase an additional common share at $0.16 per share until November
7, 2007. In January 2006 the TSX Venture Exchange approved this private
placement but as at December 31, 2006 the shares had not been issued and the
amount received ($118,160) has been included in amounts due to related parties.
On August 30, 2006, trading in the Company`s shares resumed on the TSX Venture
Exchange. During the quarter ended December 31, 2006, this private placement was
cancelled and in February 2007, the Company agreed to combine the funds with the
interest bearing note payable.

.

The Company owns 75%
of Smith Rothe Pharmaceutical Inc. ("Smith Rothe"). Smith Rothe has
been granted an exclusive license to sub-contract the manufacture and marketing
of the Company`s Type II diabetes drug Sucanon make claims and to use all
patent rights in countries outside Oriental Asia. The 25% non-controlling
interest of Smith Rothe is held by Allburg and the 25% amount earned by the
non-controlling interest will be reflected as single line items on both the
Consolidated Balance Sheet and Consolidated Statements of Operations once
marketing profits are realized.

Other companies controlled by Mr.
Robert Rieveley and his spouse, Cheryl Rieveley

Notes payable to RCAR
Investment Ltd., are unsecured, bear interest at the rate of 8% per annum
compounded annually and due on demand. As of March 31, 2007 the Company owed
RCAR $298,399.



Sucanon is manufactured on behalf of
the Company by a private company controlled by R. Rieveley. The manufacturing
process is performed by employees of the Company. The private company transfers
Sucanon to the Company at cost and receives no profit for this manufacturing
operation. The Company uses this private company to maintain confidentiality
regarding the manufacturing process for Sucanon. As of March 31, 2007, the
Company owed the private company $5,556.



First Choice
Communications provides the Company with office space and computer services.
Expenses paid to this company for services in the year ended March 31, 2007
totaled $47,477.



Penne Investments
Services Inc. ("Penne") provides financing to the Company via loans.
As March 31, 2007 the Company had no amounts owing to Penne.



Due to Related
Parties



The following table
summarizes amounts due to related parties on March 31 of each year:



|                                                                             | 2007        | 2006      | 2005     
|---------------------------------------------------------------------------- | ----------- | --------- | ---------
|Due to Related Parties -
      Unsecured                                     |             |           |          
|Amounts due to a director and
      companies controlled by a                |             |           |          
|director are unsecured, payable
      on demand and bear no                  |             |           |          
|interest.                                                                    | $ 11,353    | $ 33,179  | $ 33,097 
|                                                                             |             |           |          
|Notes payable to a company
      controlled by the Company`s                 |             |           |          
|president, are unsecured,
      payable on demand and bear interest          |             |           |          
|at 8% per annum compounded
      annually. During 2007 $22,104               |             |           |          
|(2006 - $20,466; 2005 -
      $18,950) in interest was accrued.              | 298,399     | 276,295   | 255,829  
|Total Unsecured                                                              | $ 309,752   | $ 309,474 | $ 288,926
|                                                                             |             |           |          
|Due to Related Parties -
      Secured                                       |             |           |          
|                                                                             |             |           |          
|Notes payable bearing interest
      at a rate of 8% per annum compounded    |             |           |          
|annually and due on demand.
      Collateralized by a general security       |             |           |          
|agreement providing a charge
      over the assets of the Company.           |             |           |          
|                                                                             |             |           |          
|During the year ended March 31,
      2007, the notes were increased by      |             |           |          
|advances of $815,442 (2006:
      $37,000, 2005: $1,100)increased
      with |             |           |          
|the addition of the $118,160
      non-interest bearing balance owing at     |             |           |          
|March 31, 2006and were reduced
      by $Nil (2006-$Nil) paid directly to    |             |           |          
|the lender.                                                                  |             |           |          
|                                                                             |             |           |          
|During the year ended March 31,
      2007, interest expense of $74,729      |             |           |          
|was accrued (2006: $36,300;
      2005: $44,289)                             | 1,532,797   | 524,466   | 451,166  
|                                                                             |             |           |          
|Amounts advanced by a company
      controlled by a Director secured by a    |             |           |          
|general security agreement,
      non-interest bearing and payable on        |             |           |          
|demand. During the year ended
      March 31, 2007, the balance was          |             |           |          
|combined with the interest
      bearing note payable                        | 0           | 118,160   | 0        
|Total Secured                                                                | 1,532,797   | 642,626   | 451,166  
|                                                                             |             |           |          
|Total Due to Related Parties                                                 | $ 1,842,549 | $ 952,100 | $ 740,092





Item 8 Financial
Information



Audited Consolidated
Financial Statements for March 31, 2007, together with the report of the
auditors are attached at the end of this filing. The Consolidated Balance Sheets
provide a two year comparison, all other statements provide three year
comparative statements.



Sales and capital
assets by geographic region are summarized in Note 15 of the Audited
Consolidated Financial Statements.



Legal Proceedings



On December 12, 2002,
the Company filed a proposal under federal creditor protection legislation in
Canada. The purpose of the filing of the proposal was to protect the interests
of all stakeholders of the Company from an action taken by the landlord of
Laboratories. The lease of the plant was in the Company`s name. The landlord
in question undertook to seize Laboratories assets and the filing of the
proposal prevented the landlord`s seizure from continuing.



On May 21, 2003, both
the Company and Laboratories received approval from the Supreme Court of British
Columbia in the matter of two proposals regarding its creditors pursuant to the
Bankruptcy and Insolvency Act of Canada. These proposals, accepted by the
required majority of creditors, allows for the operating subsidiary to maintain
operations and generate funds from those operations to pay a portion of its
pre-proposal liabilities. Under the proposal, preferred creditors shall be paid
in full in priority to all claims of unsecured creditors. Provision for payment
of claims of unsecured creditors shall be made in the lesser amount of 10% and
$25,000 on each day, which is one year, one year six months and two years,
respectively, after the end of the month of court ratification. The proposals
also allow the companies to provide ongoing business to its suppliers. Creditors
of the subsidiary after the filing of the proposal will be paid in full, in
priority to preferred and general unsecured creditors.



In July 2006 the
trustee acting in the proposal of the Company filed a certificate with the
Supreme Court of British Columbia that certified that the Company had fully
performed its obligations required under the proposal. At the same time, the
trustee acting in the proposal of Biotech Laboratories Inc. filed a notice of
default with the Supreme Court of British Columbia stating that the creditors
could take proceedings to place Biotech Laboratories Inc. in bankruptcy at their
own expense.



The Company is the
subject of legal disputes arising from the normal course of business. In 1998,
Cheron Holdings Ltd., one of Holdings` previous suppliers, filed a claim
against Biotech Holdings Inc. in B.C. Supreme Court, Kamloops Division, for
$711,000 which exceeds the payable amount on Holdings` books by approximately
$250,000. This supplier is claiming non-payment of outstanding amounts.
Management has issued a $1 million counter claim to this suit. On September 11,
1998 Holdings sold the operational assets to Biotech Laboratories Inc., another
subsidiary of Biotech, in exchange for the assumption of $2,000,000 in
collateralized debts on the books of Holdings. This action was taken in order to
continue operations until settlement of both the claim and the counter suit. The
operations of Holdings are now being carried on by Laboratories. The outcome of
the legal disputes is not determinable; however, in the opinion of management,
they would not have a material adverse financial impact on the Company. There
has been no legal activity on this claim since the filing of the Company`s $1
million counter claim.



Dividend Policy



The Company has not
paid dividends on the common shares in any of its last three fiscal years. The
directors of the Company will determine if and when dividends should be declared
and paid in the future based on the Company`s financial position at the relevant
time. All of the common shares of the Company are entitled to an equal share in
any dividends declared and paid.



Significant Changes



There have been no
significant changes to the Company`s operations since March 31, 2007.





Item 9 The Offer
and Listing



Biotech Holdings Ltd.
(the "Company") was incorporated in Alberta, Canada and is an
integrated pharmaceutical company whose common shares traded on The Alberta
Stock Exchange (the "ASE") until November 1999 at which time the ASE
was merged into The Canadian Venture Exchange (the "CDNX", now the TSX
Venture Exchange) under the symbol "BIO.V". The Company also trades on
the NASD OTC-BB under the symbol "BIOHF". In 2001 the Company was
listed on the Frankfurt Stock Exchange under the symbol "925970.F".

On December 6, 2005
it was announced that trading in the Company`s shares was halted on the TSX
Venture Exchange pending the appointment of two independent directors to the
Company`s board of directors satisfactory to the Exchange, including
possessing the requisite degree of positive public company experience.



On February 2, 2006
it was announced that the TSX Venture Exchange had upgraded its halt trading
announced in December to a suspension of trading in the Company`s shares on
the Exchange. The Company had presented one directorial candidate who was
accepted by the Exchange. (Subsequent to March 31, 2006, the Exchange accepted a
second directorial candidate.)

As of August 30,
2006, the Company shares resumed trading on the TSX Venture Exchange.



The following
summarizes the high and low prices and the combined trading volume of the
Company`s common shares on the TSX Venture Exchange from March to August, 2007.

|Calendar Period                | High (Cdn$) | Low (Cdn$) | Volume   
|------------------------------ | ----------- | ---------- | ---------
|                               |             |            |          
|Monthly Data (last six months) |             |            |          
|March 2007                     | 0.075       | 0.060      | 189,400  
|April 2007                     | 0.150       | 0.070      | 2,964,500
|May 2007                       | 0.150       | 0.100      | 1,483,100
|June 2007                      | 0.240       | 0.130      | 3,287,600
|July 2007                      | 0.200       | .0150      | 619,300  
|August 2007                    | 0.190       | 0.120      | 770,500  



|                         |             |            |           
|------------------------ | ----------- | ---------- | ----------
|Calendar Period          | High (Cdn$) | Low (Cdn$) | Volume    
|                         |             |            |           
|Quarterly Data           |             |            |           
|June 30, 2007            | 0.240       | 0.070      | 7,735,200 
|March 31, 2007           | 0.085       | 0.055      | 3,178,593 
|December 31, 2006        | 0.075       | 0.045      | 2,000,820 
|September 30, 2006       | 0.130       | 0.055      | 1,509,607 
|June 30, 2006            |             |            | Halted    
|March 31, 2006           |             |            | Halted    
|December 31, 2005        | 0.270       | 0.110      | 7,049,200 
|September 30, 2005       | 0.420       | 0.190      | 5,006,900 
|June 30, 2005            | 0.590       | 0.380      | 3,940,550 
|                         |             |            |           
|Calendar Period          | High (Cdn$) | Low (Cdn$) | Volume    
|                         |             |            |           
|Past 5 Years Annual Data |             |            |           
|Year ended March 31,     |             |            |           
|2007                     | 0.130       | 0.045      | 6,689,020 
|2006                     | 0.420       | 0.110      | 12,056,100
|2005                     | 1.230       | 0.350      | 30,815,600
|2004                     | 1.030       | 0.040      | 48,052,010
|2003                     | 0.140       | 0.020      | 14,685,088



The following summarizes the high,
low and closing prices of the Company`s common shares on the NASD - OTC-BB:

Monthly Data (last six months):

|Date        | High (US$) | Low (US$) | Close (US$)
|----------- | ---------- | --------- | -----------
|August 2007 | 0.16       | 0.12      | 0.14       
|July 2007   | 0.17       | 0.15      | 0.16       
|June 2007   | 0.21       | 0.12      | 0.17       
|May 2007    | 0.13       | 0.08      | 0.11       
|April 2007  | 0.14       | 0.05      | 0.12       
|March 2007  | 0.06       | 0.05      | 0.06       
|            |            |           |            

Quarterly Data:

|Date Range                | High (US$) | Low (US$) | Close (US$)
|------------------------- | ---------- | --------- | -----------
|                          |            |           |            
|April - June
      2007   | 0.21       | 0.08      | 0.17       
|January - Mar.
      2007 | 0.07       | 0.04      | 0.06       
|October - Dec.
      2006 | 0.06       | 0.05      | 0.05       
|July - Sept.
      2006   | 0.11       | 0.05      | 0.06       
|April - June
      2006   | 0.11       | 0.06      | 0.07       
|January - Mar.
      2006 | 0.15       | 0.08      | 0.10       
|October - Dec.
      2005 | 0.22       | 0.08      | 0.10       
|July - Sept.
      2005   | 0.34       | 0.17      | 0.21       
|April - June
      2005   | 0.48       | 0.29      | 0.32       



On August 23, 2006, 92,238,112 Common
Shares and 13,806,907 Series I Convertible Preferred Shares were outstanding.



There have been no
significant trading suspensions on the OTC-BB in the past three years. However,
as mentioned previously, on December 6, 2005 it was announced that trading in
the Company`s shares was halted on the TSX Venture Exchange pending the
appointment of two independent directors to the Company`s board of directors
satisfactory to the Exchange, including possessing the requisite degree of
positive public company experience.



On February 2, 2006
it was announced that the TSX Venture Exchange had upgraded its halt trading
announced in December to a suspension of trading in the Company`s shares on
the Exchange. The Company had presented one directorial candidate who was
accepted by the Exchange. (Subsequent to March 31, 2006, the Exchange accepted a
second directorial candidate.)

As of August 30,
2006, the Company shares resumed trading on the TSX Venture Exchange.



Item 10 Additional
Data



A Share Capital



This information is
not required to be provided because it is an annual report filing.



B Memorandum and
Articles of Association



The Company`s
Articles of Incorporation. Bylaws and other agreements were filed with the
Company`s original 20-F filing received by the SEC on March 11, 1997.



CMaterial
Contracts



The Company has not
entered into any material contracts in the past two years other than during the
ordinary course of business or have been previously disclosed in this filing.





D Exchange
Controls



Canada has no system of currency
exchange controls. There are no governmental laws, decrees or regulations in
Canada that restrict the export or import of capital, including but not limited
to, foreign exchange controls, or that affect the remittance of dividends,
interest or other payments to non-resident holders of the Company`s
securities.

There is no limitation on the right
of non-resident or foreign owners to hold such securities or vote, imposed by
Canadian law or by the charter or other constituent documents of the Company, as
to the common shares of the Company to be registered hereunder.



The Company`s
accounts are maintained in Canadian dollars. In this Annual Report, all dollar
amounts are expressed in Canadian dollars except where otherwise indicated.



E Taxation



Under the
Canada-United States Tax Convention Act of 1984, dividends paid by a Canadian
company to residents of the United States are subject to a 15% withholding tax
in Canada. However, the withholding tax is reduced to 10% of the gross amount if
the beneficial owner in the United States is a company which owns at least 10%
of the voting stock of the Canadian company.



F Dividends and
Paying Agents



This information is
not required to be provided because it is an annual report filing.



G Statement of
Experts



This information is
not required to be provided because it is an annual report filing.



H Documents on
Display



The Company`s
Articles of Incorporation. Bylaws and other agreements were filed with the
Company`s original 20-F filing received by the SEC on March 11, 1997.



Item 11 Quantitative
and Qualitative Disclosures About Market Risk



Not applicable at
this time.



Item 12 Description
of Securities Other than Equity Securities



Not applicable.



Item 13 Defaults,
Dividend Arrearages and Delinquencies



No Preference shares
have been issued by the Company and therefore has not had any dividends.



Item 14 Material
Modifications to the Rights of Security Holders and Use of Proceeds



There have been no
material modifications to the rights of Security Holders.



Item 15 [Reserved]



Not applicable.



Item 16 [Reserved]



Not applicable.



CONTROLS AND
PROCEDURES



As of March 31, 2007,
we, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, performed an
evaluation of the effectiveness of our disclosure controls and procedures. Based
on this evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective for
gathering, analyzing and disclosing the information we are required to disclose
in the reports we file under the Securities Exchange Act of 1934, within the
time periods specified in the SEC`s rules and forms. Our management
necessarily applied its judgement in assessing the costs and benefits of those
controls and procedures, which by their nature can provide only reasonable
assurance regarding management`s control objectives.



There have been no
changes in our internal controls over financial reporting that occurred during
the period covered by this annual report that have materially affected, or are
reasonably likely to materially affect, our internal controls over financial
reporting.



Item 17 Financial
Statements



The financial statements of the
Company are annexed hereto and have been prepared by the Company in accordance
with generally accepted accounting principles in Canada, which differ in certain
respects from generally accepted accounting principles in the United States as
outlined in the financial statements. The table of contents to the consolidated
financial statements and accompanying notes to the consolidated financial
statements is attached to this Form 20-F.

The Consolidated Financial Statements
are filed as part of this registration statement.



Financial Statements



The following financial statements
are attached to and form part of this Annual Report:



|Consolidated Financial
      Statements of the Company                                              | Page(s)
|--------------------------------------------------------------------------------------------------- | -------
|                                                                                                    |        
|Report of Independent
      Registered Chartered Accountants                                        | 50     
|                                                                                                    |        
|Comments by Independent
      Registered Chartered Accountants for U.S. Readers                     |        
|on Canada-United States of
      America Reporting Differences                                      | 51     
|                                                                                                    |        
|Consolidated Balance Sheets as
      of 31 March 2007 and 2006                                      | 52     
|                                                                                                    |        
|Consolidated Statements of
      Operations for the fiscal years ended March 31, 2007, 2006         |        
|and 2005                                                                                            | 53     
|                                                                                                    |        
|Consolidated Statement of
      Changes in Shareholders` Deficiency for the fiscal years            |        
|ended March 31, 2007, 2006 and
      2005                                                           | 54     
|                                                                                                    |        
|Consolidated Statements of Cash
      Flows for the fiscal years ended March 31, 2007, 2006         |        
|and 2005                                                                                            | 55     
|                                                                                                    |        
|Summary of Significant
      Accounting Policies and Notes to the Consolidated Financial Statements | 56 - 80



All financial statement schedules
described in Regulation S-X are omitted because the information is not required,
is not material or is otherwise included in the consolidated financial
statements or the related notes thereto.



Item 19 Exhibits



No Exhibits are
attached to this filing



CERTIFICATION required
by Rule 13a-14(b) (17 CFR 240.13a-14(a)) or Rule 15d-14(a)
(17 CFR 240.15d-14(a)) under the Securities and Exchange Act of 1934, as amended



I, Robert B. Rieveley, the President
and Chief Executive Officer of Biotech Holdings Ltd., certify that:

I have reviewed this Annual
    Report ("report")on Form 20-F for the fiscal year ended March 31,
    2007 of Biotech Holdings Ltd. (the "Company")



Based on my knowledge, this
    report does not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in light of the
    circumstances under which such statements were made, not misleading with
    respect to the period covered by this report;



Based on my knowledge, the
    financial statements, and other financial information included in this
    report, fairly present in all material respects the financial condition,
    results of operations and cash flows of the company as of, and for, the
    periods presented in this report;



The company`s other certifying
    officer(s) and I are responsible for establishing and maintaining disclosure
    controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
    15d-15(e)) for the company and have:



Designed such
        disclosure controls and procedures, or caused such disclosure controls
        and procedures to be designed under our supervision, to ensure that
        material information relating to the company, including its consolidated
        subsidiaries, is made known to us by others within those entities,
        particularly during the period in which this report is being prepared;



Designed such
        internal control over financial reporting, or caused such internal
        control over financial reporting to be designed under our supervision,
        to provide reasonable assurance regarding the reliability of financial
        reporting and the preparation of financial statements for external
        purposes in accordance with generally accepted accounting principles;



Evaluated the
        effectiveness of the company`s disclosure controls and procedures and
        presented in this report our conclusions about the effectiveness of the
        disclosure controls and procedures, as of the end of the period covered
        by his report based on such evaluation; and



Disclosed in
        this report any change in the company`s internal control over
        financial reporting that occurred during the period covered by the
        annual report that has materially affected, or is reasonably likely to
        materially affect, the company`s internal control over financial
        reporting; and



The company`s
    other certifying officer(s) and I have disclosed, based on our most recent
    evaluation of internal control over financial reporting, to the company`s
    auditors and the audit committee of the company`s board of directors (or
    persons performing the equivalent functions):



All
        significant deficiencies and material weaknesses in the design or
        operation of internal control over financial reporting which are
        reasonably likely to adversely affect the company`s ability to record,
        process, summarize and report financial information; and



Any fraud,
        whether or not material, that involves management or other employees who
        have a significant role in the company`s internal control over
        financial reporting.



Date: 22 September, 2007







/s/ Robert B. Rieveley

Robert B. Rieveley,

President and Chief Executive
    Officer



CERTIFICATION required
by Rule 13a-14(b) (17 CFR 240.13a-14(a)) or Rule 15d-14(a)
(17 CFR 240.15d-14(a)) under the Securities and Exchange Act of 1934, as amended



I, Lorne D. Brown, the Chief
Financial Officer of Biotech Holdings Ltd., certify that:

I have reviewed this Annual Report
  ("report")on Form 20-F for the fiscal year ended March 31, 2007 of
  Biotech Holdings Ltd. (the "Company")



Based on my knowledge, this report
  does not contain any untrue statement of a material fact or omit to state a
  material fact necessary to make the statements made, in light of the
  circumstances under which such statements were made, not misleading with
  respect to the period covered by this report;



Based on my knowledge, the
  financial statements, and other financial information included in this report,
  fairly present in all material respects the financial condition, results of
  operations and cash flows of the company as of, and for, the periods presented
  in this report;



The company`s other certifying
  officer(s) and I are responsible for establishing and maintaining disclosure
  controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
  15d-15(e)) for the company and have:



Designed such
        disclosure controls and procedures, or caused such disclosure controls
        and procedures to be designed under our supervision, to ensure that
        material information relating to the company, including its consolidated
        subsidiaries, is made known to us by others within those entities,
        particularly during the period in which this report is being prepared;



Designed such
        internal control over financial reporting, or caused such internal
        control over financial reporting to be designed under our supervision,
        to provide reasonable assurance regarding the reliability of financial
        reporting and the preparation of financial statements for external
        purposes in accordance with generally accepted accounting principles;



Evaluated the
        effectiveness of the company`s disclosure controls and procedures and
        presented in this report our conclusions about the effectiveness of the
        disclosure controls and procedures, as of the end of the period covered
        by his report based on such evaluation; and



Disclosed in
        this report any change in the company`s internal control over
        financial reporting that occurred during the period covered by the
        annual report that has materially affected, or is reasonably likely to
        materially affect, the company`s internal control over financial
        reporting; and



The company`s
  other certifying officer(s) and I have disclosed, based on our most recent
  evaluation of internal control over financial reporting, to the company`s
  auditors and the audit committee of the company`s board of directors (or
  persons performing the equivalent functions):



All
        significant deficiencies and material weaknesses in the design or
        operation of internal control over financial reporting which are
        reasonably likely to adversely affect the company`s ability to record,
        process, summarize and report financial information; and



Any fraud,
        whether or not material, that involves management or other employees who
        have a significant role in the company`s internal control over
        financial reporting.



Date: 22 September, 2007

/s/ Lorne D. Brown

Lorne D. Brown,

Chief Financial Officer





CERTIFICATION PURSUANT TO
    18 U.S.C. Section 1350 as adopted pursuant to Section 906
    Of the Sarbanes-Oxley Act of 2002



In connection with the Annual
    Report of Biotech Holdings Ltd. (the "Company") on Form 20-F for
    the year ended March 31, 2007, as filed with the Securities Exchange
    Commission on the date hereof (the "REPORT"), I, Robert B.
    Rieveley, Chief Executive Officer of the Company, certify, pursuant to 18
    U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002, that to the best of my knowledge:



The Annual Report fully
        complies with the requirements of Section 13(a) or 15(d) of the
        Securities Exchange Act of 1934; and



The information contained in
        the Annual Report fairly presents, in all material respects, the
        financial condition and results of operations of the Company.



Dated: September __22___,
    2007





/s/ Robert B. Rieveley

______________________________________

Robert B. Rieveley, President and
    C.E.O.



CERTIFICATION
    PURSUANT TO
    18 U.S.C. Section 1350 as adopted pursuant to Section 906
    Of the Sarbanes-Oxley Act of 2002



In connection with the Annual
    Report of Biotech Holdings Ltd. (the "Company") on Form 20-F for
    the year ended March 31, 2007, as filed with the Securities Exchange
    Commission on the date hereof (the "REPORT"), I, Lorne D. Brown,
    Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
    Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002, that to the best of my knowledge:



The Annual Report fully
      complies with the requirements of Section 13(a) or 15(d) of the Securities
      Exchange Act of 1934; and



The information contained in
      the Annual Report fairly presents, in all material respects, the financial
      condition and results of operations of the Company.



Dated: September _22__,
    2007



/s/ Lorne D. Brown

______________________________________

Lorne D. Brown, C.F.O.



SIGNATURES

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



Date _22 September, 2007



Biotech
Holdings Ltd.



/s/ Robert B. Rieveley

__________________________

Robert B. Rieveley, President

and Chief Executive
Officer







Biotech Holdings Ltd.

Consolidated Financial Statements

(Expressed in Canadian Dollars)

For the years ended March 31, 2007 and 2006



Biotech Holdings Ltd.

Consolidated Financial Statements

(Expressed in Canadian Dollars)

For the years ended March 31, 2007 and 2006

Contents



Report of Independent Registered Chartered Accountants
3



Consolidated Financial Statements

Balance Sheets                                                                                                        
4

Statements of Operations                                                                                     
5

Statement of Changes in
Shareholders` (Deficiency)                                      
6

Statements of Cash Flows                                                                                    
7

Summary of Significant Accounting Policies                                           
8 - 12

Notes to the Financial Statements                                                          
13 - 33



Cinnamon Jang Willoughby & Company

Chartered Accountants

A Partnership of Incorporated Professionals

AUDITORS` REPORT

To the Shareholders of Biotech Holdings Ltd.:

We have audited the consolidated balance sheet of Biotech Holdings Ltd. as at March 31, 2007 and the consolidated statement of operations and deficit, changes in
shareholders` equity, and cash flow for the year then ended.  These consolidated financial statements are the responsibility of the
company`s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards and with the standards of the Public Company Accounting Oversight Board ("PCAOB")(United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the consolidated financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated  financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the company as at March 31, 2007 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

The audited financial statements as at March 31, 2006 and for the year then ended were examined by other auditors who expressed an opinion without reservation on those statements in their report dated July 26, 2006.

Comments by Auditors for U.S. Readers on Canada - United States Reporting Differences

United States reporting standards for auditors require the addition of an explanatory paragraph following the opinion paragraph when the financial statements are affected by conditions and events that cast substantial doubt on the
company`s ability to continue as a going concern, such as those described in Note 1 to the financial statements.  Our report to the shareholders dated July 20, 2007 is expressed in accordance with Canadian reporting standards which do not permit reference to such conditions and events in the
auditors` report these are adequately disclosed in the financial statements.

"Cinnamon Jang Willoughby & Company"

Chartered Accountants

Burnaby, BC, Canada

July 20, 2007

MetroTower II - Suite 900 - 4720 Kingsway, Burnaby, BC Canada V5H 4N2.  Telephone: +1 604 435 4317.  Fax: +1 604 435 4319.

HLB Cinnamon Jang Willoughby & Company is a member of



Biotech Holdings Ltd.

Consolidated Balance Sheets

(Expressed in Canadian Dollars)

|March 31                                   |                                                           | 2007    |              | 2006   
|------------------------------------------ | --------------------------------------------------------- | ------- | ------------ | -------
|                                          
|Assets                                    
|                                           |                                                           |         |              |        
|Current                                    |                                                           |         |              |        
|                                           | Cash and cash equivalents                                 |         | $ 23,358     |        
|                                           | Accounts receivable - net                                 |         | 164,573      |        
|                                           | Advances - net (Note 2)                                   |         | 0            |        
|                                           | Inventory                                                 |         | 10,823       |        
|                                           |                                                           |         |              |        
|                                           |                                                           |         | 198,754      |        
|Property and equipment                     |                                                           |         |              |        
|                                           | Continuing operations (Note 3)                            |         | 115,264      |        
|                                           | Held for resale (Notes 3 and 14)                          |         | 1            |        
|                                           |                                                           |         |              |        
|Technology interests(Note 4)               |                                                           | 1       |              | 421,937
|                                           |                                                           |         |              |        
|                                           |                                                           |         | $	314,020    |        
|                                           |                                                           |         |              |        
|Liabilities and Shareholders` (Deficiency)
|Liabilities                                |                                                           |         |              |        
|                                           |                                                           |         |              |        
|Current                                    |                                                           |         |              |        
|                                           | Accounts payable and accrued liabilities (Notes 13 and17) |         | $ 1,256,139  |        
|                                           | Due to related parties (Note 6)                           |         | 1,842,549    |        
|                                           |                                                           |         |              |        
|                                           |                                                           |         | 3,098,688    |        
|                                           |                                                           |         |              |        
|Notes payable(Note 7)                      |                                                           | 224,343 |              | 224,343
|                                           |                                                           |         |              |        
|                                           |                                                           |         | 3,323,031    |        
|Shareholders` (deficiency)                 |                                                           |         |              |        
|                                           | Share capital (Note 8) - common shares                    |         | 25,733,318   |        
|                                           | - convertible preferred shares                            |         | 1,380,691    |        
|                                           | Contributed surplus                                       |         | 1,150,790    |        
|                                           | Deficit                                                   |         | (31,273,810) |        
|                                           |                                                           |         |              |        
|                                           |                                                           |         | (3,009,011)  |        
|                                           |                                                           |         |              |        
|                                           |                                                           |         | $ 314,020    |        

Commitments and contractual agreements (Note 12); Contingency (Note 13);

Approved by the Board: /s/  Robert Rieveley Director    /s/  Gale Belding
Director

The accompanying summary of significant accounting policies and notes are an integral part of these consolidated financial statements.



|
|



Biotech Holdings Ltd.

Consolidated Statements of Operations

(Expressed in Canadian Dollars)





|For the years ended March 31                         |                                                  | 2007             | 2006
(Restated - See Note 20) | 2005
Restated - See Note 20)
|---------------------------------------------------- | ------------------------------------------------ | ---------------- | ----------------------------- | ----------------------------
|                                                     |                                                  |                  |                               |                             
|Sales                                                |                                                  | $ 336,595        | $ 482,840                     | $        -                  
|                                                     |                                                  |                  |                               |                             
|Cost of sales                                        |                                                  | 111,748          | 129,287                       | -                           
|                                                     |                                                  |                  |                               |                             
|Gross profit                                         |                                                  | 224,847          | 353,553                       | -                           
|                                                     |                                                  |                  |                               |                             
|Expenses                                             |                                                  |                  |                               |                             
|                                                     | General, administrative and selling              |                  | 631,963                       | 658,529                     
|                                                     | Amortization                                     |                  | 436,446                       | 610,112                     
|                                                     | Stock-based compensation                         |                  | 283,383                       | 366,277                     
|                                                     | Product marketing costs                          |                  | 321,426                       | 571,985                     
|                                                     | Professional fees                                |                  | 112,800                       | 64,728                      
|                                                     | Interest- current debt and other                 |                  | 96,833                        | 60,796                      
|                                                     | Foreign exchange                                 |                  | 13,488                        | 60,101                      
|                                                     | Office rent, utilities and maintenance           |                  | 62,497                        | 56,627                      
|                                                     | Plant set-up costs                               |                  | -                             | -                           
|                                                     |                                                  |                  |                               |                             
|                                                     |                                                  |                  | 1,958,836                     | 2,449,155                   
|                                                     |                                                  |                  |                               |                             
|Loss from continuing operations                      |                                                  | (1,733,989)      | (2,095,602)                   | (1,815,867)                 
|                                                     |                                                  |                  |                               |                             
|Loss from discontinued operations                    |                                                  |                  |                               |                             
|                                                     | - gain from settlement of debt and restructuring | 199,094          | 63,000                        | 240,161                     
|                                                     | - gain from sale of equipment                    |                  | -                             | 13,224                      
|                                                     | - write-down of assets                           |                  | -                             | -                           
|                                                     |                                                  |                  |                               |                             
|Net loss for the year                                |                                                  | $ (1,534,895)    | $ (2,019,378)                 | $  (1,576,810)              
|                                                     |                                                  |                  |                               |                             
|Basic and diluted loss per common share              |                                                  |                  |                               |                             
|                                                     |                                                  |                  |                               |                             
|                                                     | From continuing operations                       |                  | $         (0.02)              | $        (0.02)             
|                                                     |                                                  |                  |                               |                             
|                                                     | From discontinued operations                     |                  | (0.00)                        | (0.00)                      
|                                                     |                                                  |                  |                               |                             
|Net loss for the year                                |                                                  | $         (0.02) | $         (0.02)              | $           (0.02)          
|                                                     |                                                  |                  |                               |                             
|Weighted average number of common shares outstanding |                                                  | 92,229,512       | 91,829,966                    | 88,691,806                  
|                                                     |                                                  |                  |                               |                             

The accompanying summary of significant accounting policies and notes are an integral part of these consolidated financial statements.





Biotech Holdings Ltd.

Consolidated Statement of Changes in
Shareholders` (Deficiency)

(Expressed in Canadian Dollars)





|For the years ended March 31, 2007, 2006 and 2005   
|----------------------------------------------------
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|Balance, March 31, 2004                             
|Common shares issued:                               
|For cash -                                          
|by private placement                                
|by stock options exercised                          
|by warrants exercised                               
|Stock-based compensation                            
|Options exercised for which stock-based compensation
|has been recorded                                   
|Net loss                                            
|Balance, March 31, 2005                             
|Common shares issued:                               
|For cash -                                          
|by private placement                                
|by stock options exercised                          
|Stock-based compensation                            
|Private placement finders fee                       
|Options exercised for which stock-based compensation
|has been recorded                                   
|Net loss                                            
|Balance, March 31, 2006                             
|Stock-based compensation                            
|Net loss                                            
|Balance, March 31, 2007                             

The accompanying summary of significant accounting policies and notes are an integral part of these consolidated financial statements.





Biotech Holdings Ltd.

Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

|For the years ended March 31                                           |                                                                | 2007            |             | 2006
(Restated - See Note 20) |             | 2005
(Restated - See Note 20) |            
|---------------------------------------------------------------------- | -------------------------------------------------------------- | --------------- | ----------- | ----------------------------- | ----------- | ----------------------------- | -----------
|Cash provided by (used in):                                            |                                                                |                 |             |                               |             |                               |            
|Operating activities                                                   |                                                                |                 |             |                               |             |                               |            
|                                                                       | Net loss for the period                                        |                 | (1,534,895) |                               | (2,019,378) |                               | (1,576,810)
|                                                                       | (Gain) from discontinued operations                            |                 | (199,904)   |                               | (76,224)    |                               | (239,057)  
|                                                                       |                                                                |                 |             |                               |             |                               |            
|                                                                       | Net loss from continuing operations                            |                 | (1,733,989) |                               | (2,095,602) |                               | (1,815,867)
|                                                                       | Items not involving cash:                                      |                 |             |                               |             |                               |            
|                                                                       | Amortization                                                   |                 | 436,446     |                               | 610,112     |                               | 612,430    
|                                                                       | Accrued interest                                               |                 | 96,833      |                               | 60,796      |                               | 71,005     
|                                                                       | Stock-based compensation                                       |                 | 283,383     |                               | 366,277     |                               | 447,243    
|                                                                       | Write-down of advances                                         |                 | 54,053      |                               | -           |                               | -          
|                                                                       | Changes in non-cash operating working capital items (Note 9)   |                 | 26,019      |                               | (81,842)    |                               | (67,869)   
|                                                                       | Net cash (used in) operating activities from                   |                 |             |                               |             |                               |            
|                                                                       | continuing operations                                          |                 | (837,255)   |                               | (1,140,259) |                               | (753,058)  
|                                                                       |                                                                |                 |             |                               |             |                               |            
|Financing activities                                                   |                                                                |                 |             |                               |             |                               |            
|                                                                       | Due to related parties (decrease)                              |                 | 793,616     |                               | 151,212     |                               | (211,688)  
|                                                                       | Private placement finders fee paid                             |                 | -           |                               | (64,645)    |                               | -          
|                                                                       | Issuance of common shares                                      |                 | -           |                               | 638,431     |                               | 1,007,647  
|                                                                       |                                                                |                 |             |                               |             |                               |            
|                                                                       |                                                                |                 | 793,616     |                               | 724,998     |                               | 795,959    
|Investing activities                                                   |                                                                |                 |             |                               |             |                               |            
|                                                                       | Purchase of property and equipment                             |                 | (1,282)     |                               | (3,794)     |                               | (5,422)    
|                                                                       | Proceeds on disposal of property and equipment held for resale |                 | -           |                               | 46,730      |                               | 26,494     
|                                                                       |                                                                |                 |             |                               |             |                               |            
|                                                                       |                                                                | (1,282)         |             | 42,936                        |             | 21,072                        |            
|                                                                       |                                                                |                 |             |                               |             |                               |            
|Increase (Decrease) in cash and cash equivalents                       |                                                                | (44,921)        |             | (372,325)                     |             | 63,973                        |            
|Cashand cash equivalents, beginning of year                            |                                                                | 68,279          |             | 440,604                       |             | 376,631                       |            
|Cashand cash equivalents, end of year                                  |                                                                | $ 23,358        |             | $ 68,279                      |             | $ 440,604                     |            
|                                                                       |                                                                |                 |             |                               |             |                               |            
|Cashand cash equivalents are comprised of:
Cash
Short-term investments |                                                                | $      23,358
- |             | $ 68,279
-                    |             | $       179,621
260,983       |            
|                                                                       |                                                                |                 |             |                               |             |                               |            
|                                                                       |                                                                | $ 23,358        |             | $ 68,279                      |             | $ 440,604                     |            

Supplemental disclosure of cash flow information

and non-cash transactions  (Note 9)

The accompanying summary of significant accounting policies and notes are an integral part of these consolidated financial statements.





Biotech Holdings Ltd.

Summary of Significant Accounting Policies

(Expressed in Canadian Dollars)



March 31, 2007 and 2006

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"), which in these circumstances conform in all material respects with United States generally accepted principles ("US GAAP") except as described in Note 18.

Basis of Consolidation

These consolidated financial statements include the accounts of Biotech Holdings Ltd. ("Biotech") (the "Company") and its subsidiaries:  401718 B.C. Ltd. (formerly Biotech Holdings Inc.) ("Holdings"), Biotech Laboratories Inc. ("Laboratories"), 314202 B.C. Ltd. ("314202"), Biotech Pharmaceutical Ltd., Echo Health & Beauty Ltd. ("Echo"), Volque Pharmaceutical Company Ltd. ("Volque"), and 75% of Smith Rothe Pharmaceutical, Inc. ("Smith Rothe"). The Mexican operating company,Pharmaroth Latin America S.A. de C.V., is owned by Smith Rothe.Smith Rothe has been granted an exclusive license to sub-contract the manufacture and marketing of the
Company`s Type II diabetes drug known variously as DIAB II, Sucanon and Glucanin make claims and to use all patent rights in countries outside Oriental Asia.  The 25% non-controlling interest of Smith Rothe is held by a company that is controlled by a Director of Biotech.  All significant intercompany transactions and balances have been eliminated on consolidation.

Use of Estimates

The preparation of financial statements in conformity with Canadian 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 revenue and expenses during the reporting periods.  Actual results may differ from those estimates.

Going Concern

These consolidated financial statements have been prepared on a going concern basis which contemplates that Biotech will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business.  The
Company`s ability to continue as a going concern is dependent upon the raising of additional financing, if, as, and when required, and, ultimately, the attainment of profitable operations.

These consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classifications of assets and liabilities should the Company be unable to continue as a going concern.

Cash and Cash Equivalents

Cash and cash equivalents consist of deposits in banks and highly liquid money market securities and investment deposits issued by banks with an original maturity of three months or less.

Biotech Holdings Ltd.

Summary of Significant Accounting Policies

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

Allowance for Doubtful Accounts

The Company provides an allowance for doubtful accounts when management estimates collectibility to be uncertain. Accounts receivable are continually reviewed to determine which, if any, accounts are doubtful of collection. In making the determination of the appropriate allowance amount, the Company considers current economic and industry conditions, relationships with each significant customer, overall customer credit-worthiness and historical experience.

Property and Equipment

Property and equipment are recorded at cost less any impairment losses recognized in accordance with the policy for impairment of long-lived assets as set out below.

Amortization of property and equipment used in continuing operations is provided over the estimated useful lives of the assets using the following bases and annual rates:

Furniture and fixtures          - 10% declining-balance basis

Laboratory equipment         - 10% declining-balance basis

Production equipment         - 10% declining-balance basis

Computer equipment           - 30% declining-balance basis

No amortization is provided for property and equipment held for resale.

The Company reviews the carrying value of its property and equipment on a regular basis and where these carrying values are estimated to exceed the net recoverable amounts, provision is made for these decreases in value.

Revenue Recognition

The Company`s principal revenue will be derived from its Type II diabetes drug currently distributed in Mexico. The Company has entered into agreements with two non-related companies in Mexico.  The first company manufactures and packages the tablets from a pre-mix of active ingredients manufactured by the Company in Canada.  The second company markets the drug.

Revenue from product sales will be recognized upon the delivery of the product to a retailer or final consumer when persuasive evidence of an arrangement exists, the price is fixed or determinable and collection is reasonably assured and the Company has no future performance obligations under any licensing agreement or other significant post-delivery obligations.

Inventory

Inventory is valued at the lower of cost and market. The market value is determined based on the net realizable value of finished goods and the replacement cost for raw materials.  Cost is determined on a first-in, first-out basis.

Product Marketing Costs

Product marketing costs of $321,426 were expensed in the year (2006 - $571,985 and 2005 - $Nil).

Biotech Holdings Ltd.

Summary of Significant Accounting Policies

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

Foreign Exchange Translation

The Company`s functional currency is the Canadian dollar. Monetary assets and liabilities denominated in foreign currencies are translated to Canadian dollars at the year-end exchange rate and all income and expenses are translated at average exchange rates prevailing during the period.  Non-monetary assets and liabilities are translated at the rates prevailing at the dates the assets were acquired or liabilities incurred.  Exchange gains and losses arising on translation are included in earnings.

Exchange rates between the United States dollar and the Canadian dollar for the years reported in these financial statements are as follows:

| |                        | 2007       | 2006       | 2005      
| | ---------------------- | ---------- | ---------- | ----------
| | Average for year`s end | $   1.1388 | $   1.1676 | $   1.2787
| | As at end of year      | $   1.1559 | $   1.1943 | $   1.2173

Exchange rates between the Mexican peso and the Canadian dollar for the years reported in these financial statements are as follows:

| |                        | 2007       | 2006       | 2005       | 
| | ---------------------- | ---------- | ---------- | ---------- | 
| | Average for year`s end | $   0.1036 | $   0.1112 | $   0.1130 | 
| | As at end of year      | $   0.1049 | $   0.1068 | $   0.1086 | 

Technology Interests

Technology interests are stated at amortized cost less any impairment losses recognized in accordance with the policy for impairment of long-lived assets as set out below.  The Company evaluates the recoverability of these interests when facts and circumstances suggest the asset could be impaired.  Amortization of technology interests is being recorded on a straight-line basis over the shorter of the estimated useful lives or ten years.

Biotech Holdings Ltd.

Summary of Significant Accounting Policies

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

Impairment of Long-Lived Assets

Property and equipment and other long-lived assets are regularly reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.  Impairment is assessed by comparing the carrying amount of an asset to be held and used with the sum of undiscounted cash flows expected from its use and disposal.  If such assets are considered impaired, the impairment loss to be recognized is measured by the amount by which the carrying amount of the assets exceeds its fair value generally determined on a discounted cash flow basis.  Any impairment results in a write-down of the asset and a charge to income during the year.

Loss Per Share

Common equivalent shares (consisting of shares issuable on exercise of stock options and warrants) totaling 3,506,000 (2006 - 5,963,682) were not included in the computation of diluted earnings per share because the effect was anti-dilutive.

Undeclared 8% cumulative dividends on convertible preferred shares, aggregating $399,265 to March 31, 2007, have no significant effect on loss per share calculations

Fair Value of Financial Instruments

Financial instruments include cash and cash equivalents, accounts receivable, advances, accounts payable and accrued liabilities and amounts due to related parties.  Management of the Company does not believe that the Company is subject to significant interest, currency or credit risks arising from these financial instruments.  Unless otherwise stated, the respective carrying values of financial instruments approximate their fair values. Fair values were assumed to approximate carrying values since they are short-term in nature or they are receivable or payable on demand.  The fair values of notes payable was not practicable to determine. The Company does not use any derivative instruments to reduce its exposure to fluctuations in interest rates and foreign currency exchange rates.

Biotech Holdings Ltd.

Summary of Significant Accounting Policies

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

Stock-Based Compensation

The Company applies the fair value method for valuing stock option grants. Under this method, compensation costs, attributable to share options granted to employees, contractors, officers and directors, are measured at fair value at the grant date and recorded to stock compensation expense over the vesting period of the related option with a corresponding increase to contributed surplus. Upon the exercise of the stock options, consideration paid, together with the amount previously recognized in contributed surplus, is recorded as an increase to share capital.

Change in Accounting Policy

Effective April 1, 2004, the Company adopted the new Canadian accounting standard for stock-based compensation to employees, officers and directors on a retroactive basis without restatement of prior years. This change resulted in an increase to accumulated deficit of $nil, and an increase to share capital and contributed surplus of $nil. The effect on the current
year`s financial statements was an increase of $nil (2006: $nil) to net loss and a corresponding increase to contributed surplus.

The Company had adopted this standard for stock-based compensation to non-employees in the prior year.

Future Income Taxes

Income taxes are accounted for by the asset and liability method.  Under this method, future income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Future income tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. Management believes that it is not sufficiently likely that the Company will generate sufficient taxable income to allow the  realization of future tax assets and therefore the Company has fully provided for these assets.

Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

1. Nature of Business and Ability to Continue Operations

The Company`s business focus is on developing the distribution of the
Company`s Type II diabetes  drug known variously as DIAB II, Sucanon and Glucanin, particularly in Mexico and Latin America.  The operations of the Company are not subject to any seasonal or cyclical factors

These consolidated financial statements are stated in Canadian dollars and have been prepared in accordance with generally accepted accounting principles in Canada, on a going-concern basis, which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business.  They do not include any adjustments to the recoverability and classification of recorded asset amounts and liabilities that might be necessary should the Company be unable to continue as a going concern.  The Company has incurred recurring operating losses and has an accumulated deficit of $31,273,810 and a
Shareholders` Deficiency of $3,009,011 at March 31, 2007.  These factors, among others, raise substantial doubt about the
Company`s ability to be able to continue as a going concern.  The future of the Company and the realization of its asset values will depend upon the
Company`s ability to obtain adequate financing and continuing support from shareholders and creditors including refinancing and to attain profitable operations.

Management plans to raise debt and equity capital on a private placement basis to finance the operating and capital requirements of the Company.  It is
management`s intention to continue using debt and equity to finance planned capital expansion and initial market development in Mexico and Latin America and other markets and operations until such time as the
Company`s operations are self-sustaining.

While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate sufficient funds for operations.

2. Advances

| |                               | 2007 | 2006    
| | ----------------------------- | ---- | --------
| | Advances to marketing company | $ -  | $ 75,000
| |                               | $ -  | $ 75,000

Advances are expenditures incurred by the Company on behalf of its non-related Mexican marketing company.  The advances are recoverable pursuant to contractual obligations (Note 12 (a))

Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

Property and Equipment

a) Continuing Operations



|2007                                                                                | Cost                                    | Accumulated
Amortization                | Net Book
Value                      
|----------------------------------------------------------------------------------- | --------------------------------------- | --------------------------------------- | ------------------------------------
|Production equipment
Laboratory equipment
Furniture and fixtures
Computer equipment | $ 46,779
240,627
6,000119,458
$ 412,864 | $ 12,678
169,632
2,063113,227
$ 297,600 | $ 34,101
70,995
3,9376,231
$ 115,264



|2006                                                                                | Cost                                    | Accumulated
Amortization               | Net Book
Value                      
|----------------------------------------------------------------------------------- | --------------------------------------- | -------------------------------------- | ------------------------------------
|Production equipment
Laboratory equipment
Furniture and fixtures
Computer equipment | $ 46,779
240,627
6,000118,176
$ 411,582 | $ 8,888
161,744
1,626110,832
$ 283,090 | $ 37,891
78,883
4,3747,344
$ 128,492

b) Held for Resale



|2007                 | Cost        | Accumulated
Amortization | Net Book
Value
|-------------------- | ----------- | ------------------------ | --------------
|Production equipment | $ 1,063,936 | $ 1,063,935              | $ 1           

|2006                 | Cost         | Accumulated
Amortization | Net Book
Value
|-------------------- | ------------ | ------------------------ | --------------
|Production equipment | $  1,063,936 | $ 1,063,935              | $ 1           

During the year ended March 31, 2007, amortization expense for the continuing operations was $14,510 (2006: $16,398, and 2005: $18,350) and $Nil (2006: $Nil, and 2005: $Nil) for property and equipment held for resale.



Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

4. Technology Interests



|2007 | Cost        | Accumulated
Amortization | Net Book
Value
|---- | ----------- | ------------------------ | --------------
|     | $ 4,461,282 | $ 4,461,281              | $ 1           

|2006 | Cost        | Accumulated
Amortization | Net Book
Value
|---- | ----------- | ------------------------ | --------------
|     | $ 4,461,282 | $ 4,039,345              | $ 421,937     

During the year ended March 31, 2007, amortization expense for technology interests was $421,936 (2006: $593,713 and 2005: $593,713).

5. Deferred Costs

During the year ended March 31, 2007, amortization expense for deferred costs was $Nil (2006: $Nil, and 2005: $368) and the balance of $1,104 was written off in 2005.

Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

6. Due to Related Parties

|   |                                                                                                                                                                                                                                                                   |  | 2007      |  | 2006     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- |  | ---------
|a) | Unsecured                                                                                                                                                                                                                                                         |  |           |  |          
|   | (i) Notes payable to RCAR Investment Ltd., a company controlled by the
Company`s president, are unsecured, payable on demand and bear interest at 8% per annum compounded annually.  During 2007 $22,104 (2006 -$20,466, 2005 - $18,950) in interest was accrued. |  | $ 298,399 |  | $ 276,295
|   | (ii) Amounts payable to a Director are unsecured, payable on demand and bear no interest.                                                                                                                                                                         |  | 4,551     |  | 20,422   
|   | (iii) Amounts payable to companies controlled by a Director are unsecured, payable on demand and bear no interest.                                                                                                                                                |  | 6,802     |  | 12,757   
|   |                                                                                                                                                                                                                                                                   |  | 309,752   |  | 309,474  

b) Secured

| | Notes payable bearing interest at the rate of 8% per annum compounded annually and due on demand.  Collateralized by a general security agreement providing a charge over the assets of the Company.                                                                       |  |             |  |          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- |  | ---------
| |                                                                                                                                                                                                                                                                            |  |             |  |          
| | During the year ended March 31, 2007, the notes were increased by advances of $815,442 (2006: $37,000); increased with the addition of the $118,160 non-interest bearing balance owing at March 31, 2006 and were reduced by $Nil (2006-$Nil) paid directly to the lender. |  |             |  |          
| | During the year, interest expense of $74,729 was accrued (2006: $36,300; 2005: $44,289)                                                                                                                                                                                    |  | 1,532,797   |  | 524,466  
| | Amounts advanced by a company controlled by a Director secured by a general security agreement, non-interest bearing and payable on demand.  During the year ended March 31, 2007, the balance was combined with the interest bearing note payable.                        |  | -           |  | 118,160  
| |                                                                                                                                                                                                                                                                            |  | 1,532,797   |  | 642,626  
| | Total                                                                                                                                                                                                                                                                      |  | $ 1,842,549 |  | $ 952,100



Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

7. Notes Payable - long term

|These amounts are unsecured, non-interest bearing and repayable only from a pro-rata share of profits commencing January 26, 2001.  Payments will be limited to the principal amounts of the notes outstanding and no principal repayments are anticipated in 2008.  The fair value of these notes was not practicable to determine. |  | $ 224,343 |  | $ 224,343
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------- |  | ---------

8. Share Capital

Authorized

The Company is authorized to issue an unlimited number of Series Convertible Preferred shares and common shares without par value.  The preferred shares are voting and are convertible into common shares on a 1:1 basis.  They have a cumulative cash dividend of 8% of the original amount contributed plus accrued interest, and no redemption provisions.  The
Company`s Articles of Incorporation were amended in 2005 to amend the cumulative cash dividend rate of the Series I Convertible Preferred shares from $0.0368 per share to 8% per annum.

Private Placements of Common Shares

During the year ended March 31, 2007, no private placements were issued.

During the year ended March 31, 2007, the Company cancelled a private placement application previously announced on November 7, 2005 for 984,666 shares to be issued for funds was cancelled effective February 16, 2007. On this date, the Board of Directors approved the conversion of the funds, which had been advanced by an insider, from a secured non-interest bearing loan to a secured loan bearing interest at 8% from the effective date.

During the year ended March 31, 2006, the Company completed with related party investors ("the Investors") a private placement of 2,020,202 common shares for gross proceeds of $621,181 cash (net proceeds of $556,536 after a finders fee of $64,645).  The Investors also received 2,020,202 warrants to acquire common shares at $ 0.40 per share, expiring on October 6, 2006.

In November 2005, the Company agreed to a private placement with a related party. The private placement was subject to the approval of the TSX Venture Exchange and was for the purchase of 984,666 common shares at $0.12 per share.  The purchase includes warrants to purchase 984,666 common shares at $0.16 per share until November 7, 2007.  In January 2006 the TSX Venture Exchange approved this private placement but as at March 31, 2006 the shares were not issued and the amount received has been included in amounts due to related parties.  The private placement was cancelled in February 2007.

Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

8. Share Capital (continued)

Warrants to Purchase Common Shares

The following table summarizes the number of fully exercisable common share warrants outstanding and the exercise price thereof:

| |                                 |  | 2007        |  | 2006        |  | 2005     
| | ------------------------------- |  | ----------- |  | ----------- |  | ---------
| |                                 |  |             |  |             |  |          
| | Outstanding, beginning of year  |  | 3,548,682   |  | 3,244,146   |  | 1,826,777
| | Issued at $0.400 per share      |  |             |  |             |  |          
| | expiring October 6, 2006        |  | -           |  | 2,020,202   |  | -        
| | Issued at $0.55 per share       |  |             |  |             |  |          
| | expiring December 16, 2006      |  | -           |  | -           |  | 1,528,480
| | Expired January 27, 2006 $0.375 |  | -           |  | (1,715,666) |  | -        
| | Expired October 6, 2006 $0.400  |  | (2,020,202) |  |             |  |          
| | Expired December 16, 2006 $0.55 |  | (1,528,480) |  |             |  |          
| | Exercised $0.375                |  | -           |  | -           |  | (111,111)
| |                                 |  |             |  |             |  |          
| | Outstanding, end of year        |  | Nil         |  | 3,548,682   |  | 3,244,146

There were no outstanding warrants to purchase common shares at March 31, 2007.

Stock Options - Common Shares

On July 25, 2005 the Board of Directors approved a "fixed" Stock Option Plan which limits the number of options to be granted. At the Annual General Meeting held on September 30, 2005, the shareholders approved a "fixed" Stock Option Plan (the "Plan"). The highlights of the Plan are as follows:

The maximum number of options granted in any one year is fixed at 8,803,571;

No one person may hold options of more than 5% of the issued and outstanding Shares;

Options granted under the plan may be exercised for a term of up to five years from the date of grant;

Shares issued on exercise of the stock options are payable in full on exercise, and;

Under the Plan, a stock option is non-assignable and terminates the day the Optionee ceases to be a director, officer or employee of the Corporation or for any reason other than death of the Optionee, in which case the stock option terminates ninety (90) days after the death of the Optionee.



Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

8. Share Capital (continued)

c) Stock Options - Common Shares (cont`d)

The following table summarizes the number of shares under option and the exercise price thereof:



|                                 |           | 2007      | 2006             | 2005 | 
|-------------------------------- | --------- | --------- | ---------------- | ---- | 
|                                 |           |           |                  |      | 
|Balance, beginning of year       | 2,415,000 | 3,851,000 | 2,723,500        |     
|Granted (per share)              |           |           |                  |     
|$0.54 (expiring August 11, 2006) | -         | -         | 75,000           |     
|$0.66 (expiring August 26, 2006) | -         | -         | 150,000          |     
|$0.55 (expiring March 24, 2006)  | -         | -         | 545,000          |     
|$0.55 (expiring March 24, 2007)  | -         | -         | 770,000          |     
|$0.55 (expiring March 24, 2008)  | -         | -         | 1,290,000        |     
|$0.135 (expiring Feb. 22, 2008)  | -         | 300,000   | -                |     
|$0.16 (expiring June 22, 2008)   | 896,000   | -         | -                |     
|$0.10 (expiring June 22, 2008)   | 545,000   | -         | -                |     
|$0.10 (expiring June 25, 2008)   | 300,000   | -         | -                |     
|US$0.10 (expiring Nov 23, 2008)  | 275,000   | -         | -                |     
|Exercised in year (per share)    |           |           |                  |     
|$0.12 (expiring May 21, 2004)    | -         | -         | (90,000)         |     
|$0.14 (expiring Dec. 15, 2005)   | -         | -         | (183,500)        |     
|$0.23 (expiring May 3, 2005)     | -         | (75,000)  | (225,000)        |     
|$0.25 (expiring January 2, 2006) | -         | -         | (454,000)        |     
|Expired (per share) $0.88        | -         | -         | (750,000)        |     
|Expired (per share) $0.55        | -         | (495,000) | -                |     
|Expired (per share) $0.25        | -         | (896,000) | -                |     
|Expired (per share) $0.14        | -         | (50,000)  | -                |     
|Expired (per share) $0.54        | (75,000)  | -         | -                |     
|Expired (per share) $0.66        | (150,000) | -         | -                |     
|Expired (per share) $0.55        | (700,000) | -         | -                |     
|Cancelled (per share) $0.55      | -         | (220,000) | -                |     
|Balance, end of year             | 3,506,000 | 2,415,000 | 3,851,000        |     
|                                 |           |           |                  |     
|Exercisable, end of year         | 2,316,000 | 225,000   | 1,096,000        |     
|                                 |           |           |                  |     
|Weighted average exercise price  | $ 0.27    | $ 0.50    | $           0.47 |     

Using the fair value method to value stock options, $283,383 was recorded to stock-based compensation expense. This amount was determined using a Black-Scholes option pricing model assuming no dividends are to be paid, vesting occurring on the date of grant, exercising on the last day before expiry, a weighted average volatility of the
Company



Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

8. Share Capital (continued)

c) Stock Options - Common Shares (cont

Stock options outstanding at March 31, 2007 were as follows:

|Exercise Price | Number    | Expiry           
|-------------- | --------- | -----------------
|$0.135         | 300,000   | February 22, 2008
|$0.55          | 1,190,000 | March 24, 2008   
|$0.16          | 896,000   | June 22, 2008    
|$0.10          | 545,000   | June 22, 2008    
|$0.10          | 300,000   | June 25, 2008    
|$0.10 US       | 275,000   | November 23, 2008
|               | 3,506,000 |                  

Convertible Preferred Shares and Warrants to Purchase Preferred Shares

At March 31, 2007 and 2006, 13,806,907 convertible preferred shares were outstanding from the exercise of preferred share warrants during 2004.  No cash dividend has been declared to date.  However, the 8% per annum dividend on these shares for the year ended March 31, 2006 would have amounted to $110,455 (2006: $110,455; 2005: $110,455).  The cumulative effect to March 31, 2007 of the dividend at 8% per annum from date of issuance would have amounted to $399,265.  This would have an insignificant effect on net loss or on basic and diluted loss per share.

No preferred share purchase warrants were outstanding or exercisable as of March 31, 2007, 2006 or 2005.



Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

9. Supplemental Disclosure of Cash Flow Information and Non-Cash Transactions

a) Changes in non-cash operating working capital items:



| |                                          |  | For the years ended March 31
| | ---------------------------------------- |  | ----------------------------
| |                                          |  | 2007                        
| |                                          |  |                             
| | Accounts receivable                      |  | $ (112,359)                 
| | Advances                                 |  | 20,947                      
| | Inventory                                |  | 38,824                      
| | Deposits and prepaid expenses            |  | -                           
| | Accounts payable and accrued liabilities |  | 78,607                      
| |                                          |  |                             
| |                                          |  | $ 26,019                    

b) Other Supplemental Information

| |                                                                                                                                        |  | For the years ended March 31
| | -------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------
| |                                                                                                                                        |  | 2007                        
| | Issuance (reversal) of preferred shares through the exercising of preferred sharewarrants for settlement of debt due torelated parties |  | -                           

No income taxes were paid and no interest was received in any of the periods presented.

Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

10. Related Party Transactions

Amounts paid to related parties were based on exchange amounts which represented the amounts agreed upon by the related parties.  No cash compensation is paid to directors in their capacity as directors.  Amounts paid or payable to related parties not disclosed elsewhere include:

| |                                                   |  | 2007      |  | 2006      |  | 2005     
| | ------------------------------------------------- |  | --------- |  | --------- |  | ---------
| |                                                   |  |           |  |           |  |          
| | Management fees paid to an related party          |  | $ 144,000 |  | $ 144,000 |  | $ 144,000
| | Salaries and benefits paid to related parties     |  | 173,481   |  | 172,976   |  | 127,032  
| | Interest accrued on Notes Payable (Note 6)        |  | 96,833    |  | 56,766    |  | 63,239   
| | Rent and services paid to companies controlled by |  |           |  |           |  |          
| | related parties (Note 6)                          |  | 81,943    |  | 86,216    |  | 98,795   

11. Income Taxes

The provision for income taxes differs from the amount estimated using the Canadian federal and provincial statutory income tax rates for fiscal years ended as follows:



| |                                                |  | 2007           |  | 2006           |  | 2005          
| | ---------------------------------------------- |  | -------------- |  | -------------- |  | --------------
| |                                                |  |                |  |                |  |               
| | Provision (benefit) at Canadian statutory rate |  | $    (552,000) |  | $    (331,000) |  | $    (632,000)
| | Stock-based compensation                       |  | 102,000        |  | 102,000        |  | 139,000       
| | Effect of changes in effective tax rates       |  | -              |  | -              |  | 31,000        
| | Expiry of loss carry forwards                  |  | 621,000        |  | 396,000        |  | 543,000       
| | Temporary differences                          |  | 157,000        |  | -              |  | -             
| | Permanent differences and other                |  | 11,000         |  | 65,000         |  | 3,000         
| | (Decrease) increase in valuation allowance     |  | (339,000)      |  | (232,000)      |  | (84,000)      
| |                                                |  | $ -            |  | $ -            |  | $      -      

The tax effects of temporary differences that give rise to significant components of the
Company

| |                         |  | 2007        |  | 2006       
| | ----------------------- |  | ----------- |  | -----------
| |                         |  |             |  |            
| | Tax loss carry forwards |  | $ 3,604,000 |  | $ 3,952,000
| | Property and equipment  |  | 626,000     |  | 617,000    
| | Technology interests    |  | 1,240,000   |  | 1,240,000  
| | Deferred costs          |  | 256,000     |  | 256,000    
| | Valuation allowance     |  | (5,726,000) |  | (6,065,000)
| | Net future tax asset    |  | $ -         |  | $ -        



Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

11. Income Taxes

The Company evaluates its valuation allowance requirements based on projected future operations.  When circumstances change and this causes a change in
management

The Company has non-capital losses carry forwards available to reduce future taxable income.  These loss carry forwards expire as follows:



|2008
2009
2010
2011
2015
2016
2017 | $ 2,014,621
1,993,713
1,378,313
2,367,554
1,149,702
308,607796,616$ 10,009,126
|---------------------------------- | ------------------------------------------------------------------------------

No benefit (if any) of these tax losses has been recorded in these financial statements.

12. Commitments and Contractual Agreements

a) In May 2004, the Company entered into a 5 year agreement with a marketing company in Mexico for the sale of Sucanon in Mexico.  The agreement, among other items, grants the marketing company the exclusive rights to sell Sucanon in Mexico, specifies the price at which the Company will sell Sucanon to the marketing company, establishes a maximum retail price and minimum monthly sales levels and sets out the terms of repayment for amounts advanced for advertising by the Company.  The agreement has a 5 year renewal clause.  Upon any breach of the terms specified in the agreement, the Company has the option to terminate the agreement.  In September 2006, the marketing company waived its exclusive rights to sell Sucanon in Mexico.  The Company assumed responsibility for advertising in Mexico and the marketing company agreed to a price increase to compensate the Company for the advertising costs.

b) In November 2004, the Company entered into an agreement with a Mexican manufacturing company for the production of Sucanon.  The agreement specifies that the Company will provide the manufacturer with pre-mix and the manufacturer will tablet the product within production specifications and package Sucanon for a per package price as specified in the agreement.

c) The Company pays rent on a month-to-month basis.

d) During the year ended March 31, 2002, the Company entered into a world-wide patent licensing agreement with the President of the Company regarding the use of DIAB II (also known under the trademarks Sucanon and Glucanin) as a combination therapy. Combination therapies as defined in the agreement include those therapies for Type II Diabetes in which DIAB II is combined with or used together with other Type II Diabetes drugs.  This agreement would require payment by the Company, to the President, of 25% of such royalty revenue received by the Company, either from licensing such combinations to third parties or from the Company itself producing such a combination.  The payment of this royalty for combination therapy use was determined by agreement between outside directors and the President.  This agreement will have no impact on revenues received by the Company on sales of DIAB II as a monotherapy, and, in the opinion of the management, this agreement is not anticipated to have a significant impact on expected total revenues.



Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

13. Contingency

The Company is the subject of legal disputes which have arisen in the normal course of business.  In June 1998, one of the
Company

14. Segmented Information

The Company currently operates in one business segment, being the development  and distribution of its Type II diabetes drug.

Sales (returns) by geographic region are summarized as follows:

|       |  | For the years ended March 31
|------ |  | ----------------------------
|       |  | 2007                        
|       |  |                             
|Mexico |  | $  336,595                  
|       |  |                             
|       |  | $ 336,595                   

Property and equipment by geographic region as of March 31, are summarized as follows:

|                               |  | 2007      | 2006      | 
|------------------------------ |  | --------- | --------- | 
|                               |  |           |           | 
|Canada (continuing operations) |  | $ 115,264 | $ 128,492 | 
|Canada (held for resale)       |  | 1         | 1         | 
|                               |  |           |           | 
|                               |  | $ 115,265 | $ 128,493 | 

Major Customers

Current Operations

The Company

In September 2006, the marketing company waived its exclusive rights to sell Sucanon in Mexico.  The Company assumed responsibility for advertising in Mexico and the marketing company agreed to a price increase to compensate the Company for the advertising costs.

During 2007, 37.3% of the Company



Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

March 31, 2007 and 2006

15. Reclassifications

Certain comparative figures have been reclassified to conform to the current
year

16. Discontinued Operations

The Company

The remaining assets and liabilities of the discontinued operations at March 31, 2007 are as follows:

| | Current assets                          |  | $     -     |  | 
| | --------------------------------------- |  | ----------- |  | 
| | Property and equipment - net book value |  | 1           |  | 
| |                                         |  |             |  | 
| |                                         |  | 1           |  | 
| | Less: current liabilities               |  | (636,382)   |  | 
| |                                         |  |             |  | 
| |                                         |  | $ (636,381) |  | 

Revenue for the year ended March 31, 2007 from the discontinued operations was $Nil, (2006 - $Nil; 2005 - $Nil) resulting in an operating loss of $Nil (2006 - $Nil; 2005 - $Nil).



Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

17. Proposal to Creditors

On May 21, 2003, the Company

In July 2006 the trustee acting in the proposal of the Company filed a certificate with the Supreme Court of British Columbia that certified that the Company had fully performed its obligations required under the proposal.  At the same time, the trustee acting in the proposal of Biotech Laboratories Inc. filed a notice with the Supreme Court of British Columbia stating that Biotech Laboratories Inc. was in default in performing its obligations required under its proposal and its creditors could take proceedings to place Biotech Laboratories Inc. in bankruptcy at their own expense.

18. Reconciliation of Certain Differences Between U.S and Canadian Generally Accepted Accounting Principles

The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP") which, in the case of the Company, conform in all material respects with those of the United States ("US GAAP") and with the requirements of the Securities and Exchange Commission ("SEC"), except as follows:

The Company had a policy of capitalizing a portion of its development costs which relate to the development of proprietary formulas for the
Company

The effect of the above on total assets (per US GAAP) would be to reduce total assets at March 31, 2007 by $Nil (2006 - $Nil, 2005 - $1,472).

Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

18. Reconciliation of Certain Differences Between U.S and Canadian Generally Accepted Accounting Principles

| | The impact of material differences is as follows:                                          
| | -------------------------------------------------------------------------------------------
| |                                                                                            
| |                                                                                            
| | Net loss for the year per Canadian GAAP                                                    
| | Amortization and write-off of deferred costs,net of development expenses duringthe year (a)
| | Net loss and comprehensive loss                                                            
| | per US GAAP                                                                                
| |                                                                                            
| | Loss per share in accordance with USGAAP                                                   

| | The impact of the above-noted differences on total shareholders`deficiency is as follows:
| | -----------------------------------------------------------------------------------------
| |                                                                                          
| |                                                                                          
| | Shareholders`equity (deficiency) perCanadian GAAP                                        
| | Unamortized balance of deferred costs (a)                                                
| |                                                                                          
| | Shareholders`(capital deficit) per US GAAP                                               

19. Subsequent Events

In April, 2007, the Company announced that it had granted a total of 5,034,000 options allocated among officers, directors, employees and consultants.   All of the options have an exercise price of $.11 per share, would vest October 12, 2007 and expire April 12, 2009.

In May, 2007, Company has signed an agreement for distribution of Sucanon, a Type II diabetes drug, in four markets in Latin America.  The four additional markets - Colombia, Peru, Ecuador and Costa Rica - will be served by a private company based in Bogota, Colombia.  The private company, unrelated to Biotech Holdings, focuses on sales of antibiotic products and has subsidiary operations in several Latin American countries.
.. There is no assurance that regulatory approval will be obtained in any specific market, nor any assurance that sales, once begun, will be material.

Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

20. Restatements as a Result of Correcting Stock Compensation Expense

The Company

To correctly account for the stock options granted to employees,  the stock based compensation expense should have been recognized over the service period, which is presumed to be the period from the grant date to the date that the award is vested and its exercisability does not depend on continued employee service.

The following presents the effect on the Company

Balance sheet as at March 31, 2006 -



|                    | Previously Reported | Increase (Decrease) | Restated    
|------------------- | ------------------- | ------------------- | ------------
|Contributed Surplus | 723,935             | 143,472             | 867,407     
|Deficit             | (29,595,443)        | (143,472)           | (29,738,915)

Statement of operations for the year ended March 31, 2006 -



|                         | Previously Reported | Increase (Decrease) | Restated   
|------------------------ | ------------------- | ------------------- | -----------
|Stock-based compensation | 283,544             | 82,733              | 366,277    
|Loss from continuing     |                     |                     |            
|operations               | (2,012,869)         | (82,733)            | (2,095,602)
|Net loss for the year    | (1,936,645)         | (82,733)            | (2,019,378)

Statement of cash flows for the year ended March 31, 2006 -



|                                | Previously Reported | Increase (Decrease) | Restated   
|------------------------------- | ------------------- | ------------------- | -----------
|Loss from continuing operations | (2,012,869)         | (82,733)            | (2,095,602)
|Stock-based compensation        | 283,544             | 82,733              | 366,277    

Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

Statement of operations for the year ended March 31, 2005 -



|                                | Previously Reported | Increase (Decrease) | Restated   
|------------------------------- | ------------------- | ------------------- | -----------
|Stock-based compensation        | 386,504             | 60,739              | 447,243    
|Loss from continuing operations | (1,755,128)         | (60,739)            | (1,815,867)
|Net loss for the year           | (1,516,071)         | (60,739)            | (1,576,810)

Statement of cash flows for the year ended March 31, 2005 -



|                                | Previously Reported | Increase (Decrease) | Restated   
|------------------------------- | ------------------- | ------------------- | -----------
|Loss from continuing operations | (2,012,869)         | (82,733)            | (2,095,602)
|Stock-based compensation        | 283,544             | 82,733              | 366,277    

21. Recent Accounting Pronouncements:

Canadian GAAP:

(i)       Financial instruments, recognition and measurement:

In January 2005, the Canadian Institute of Chartered Accountants ("CICA") issued new Handbook Section 3855, Financial Instruments, Recognition and Measurement, effective for annual and interim periods beginning on or after October 1, 2006.  This new section establishes standards for the recognition and measurement of all financial instruments, provides a characteristics-based definition of a derivative financial instrument, provides criteria to be used to determine when a financial instrument should be recognized, and provides criteria to be used when a financial instrument is to be extinguished. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial position and results of operations.

(ii) Comprehensive income and equity:

In January 2005, the CICA issued new Handbook Section 1530, Comprehensive Income ("Section 1530"), and Section 3251, Equity ("Section 3251"), effective for annual and interim periods beginning on or after October 1, 2006.  Section 1530 establishes standards for reporting comprehensive income.  The section does not address issues of recognition or measurement for comprehensive income and its components.  Section 3251 establishes standards for the presentation of equity and changes in equity during the reporting period. The requirements in Section 3251 are in addition to Section 1530.  The Company has not yet determined the effect of these new standards on its consolidated financial position and results of operations.

Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

(iii) Hedges

In January 2005, the CICA issued new Handbook Section 3865, Hedges, effective for annual and interim periods beginning on or after October 1, 2006.  This new section establishes standards of when and how hedge accounting may be applied. Hedge accounting is optional.

(iv) Non-monetary transactions:

In June 2005, the CICA issued new Handbook Section 3831, Non-monetary Transactions, effective for fiscal periods beginning on or after January 1, 2006. This standard requires all non-monetary transactions to be measured at fair value unless they meet one of four very specific criteria.  Commercial substance replaces culmination of the earnings process as the test for fair value measurement.  A transaction has commercial substance if it causes an identifiable and measureable change in the economic circumstances of the entity.  Commercial substance is a function of the cash flows expected by the reporting entity. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial position and results of operations.

Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

21. Recent Accounting Pronouncements (continued)

(b) United States GAAP:

(i) Fair value measurement

In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 157, "Fair Value Measurement" ("SFAS 157"). The Statement provides guidance for using fair value to measure assets and liabilities. The Statement also expands disclosures about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurement on earnings. This Statement applies under other accounting pronouncements that require or permit fair value measurements. This Statement does not expand the use of fair value measurements in any new circumstances. Under this Statement, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. SFAS 157 is effective for the Company for fair value measurements and disclosures made by the Company in its fiscal year beginning on January 1, 2008. The Company is currently reviewing the impact of this statement.

(ii) Employers accounting for defined benefit pension and other postretirement plans

In September 2006, the FASB issued SFAS No. 158,
"Employers

(iii) Accounting for servicing of financial assets

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets", which amends SFAS No. 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". SFAS No. 156 may be adopted as early as 1 January 2006, for calendar year-end entities, provided that no interim financial statements have been issued. Those not choosing to early adopt are required to apply the provisions as of the beginning of the first fiscal year that begins after 15 September 2006 (e.g. 1 January 2007, for calendar year-end entities).  The intention of the new statement is to simplify accounting for separately recognized servicing assets and liabilities, such as those common with mortgage securitization activities, as well as to simplify efforts to obtain hedge-like accounting.  Specifically, the FASB said SFAS No. 156 permits a service using derivative
financial instruments to report both the derivative financial instrument and related servicing asset or liability by using a consistent measurement attribute, or fair value.  The adoption of SFAS No. 156 is not expected to have a material impact on the
Company

Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

(iv) Accounting for certain hybrid instruments

In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments", which amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" and SFAS No. 140. SFAS No. 155 permits fair value measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or hybrid financial instruments containing embedded derivatives. The adoption of SFAS No. 155 is not expected to have a material impact on the
Company

(v) Accounting for stock-based compensation:

In December 2004, the FASB revised SFAS No. 123R to require companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation issued to employees, but expressed no preference for a type of valuation model.  The way an award is classified will affect the measurement of compensation cost.  Liability-classified awards are re-measured to fair value at each balance sheet date until the award is settled. Equity-classified awards are  measured at grant-date fair value and the grant-date fair value is recognized over the requisite service period.  Such awards are not subsequently re-measured.

In April 2005, the staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 ("SAB 107") to provide additional guidance regarding the application of SFAS 123R.  SAB107 permits registrants to choose an appropriate valuation technique or model to estimate the fair value of share options, assuming consistent application, and provides guidance for the development of assumptions used in the valuation process. Based upon SEC rules issued in April 2005, SFAS 123R is effective for fiscal years that begin after June 15, 2005 and will be adopted by the Company effective April 1, 2006.  Additionally, SAB 107 discussed disclosures to be made under "Management

(vi) Accounting for non-monetary transactions:

In December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary Assets, that amends APB Opinion No. 27, Accounting for Non-monetary Transactions.  The new standard requires non-monetary exchanges to be accounted for at fair value, recognizing any gains or loss, if the transactions meet a commercial substance criterion and fair value is determinable.  The amendment will be effective for non-monetary transactions occurring in fiscal periods beginning after June 15, 2005.  The Company does not expect the adoption of this standard to have a material impact on its consolidated financial position and results of operations.

Biotech Holdings Ltd.

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

March 31, 2007 and 2006

(vii) Accounting for inventory costs:

In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment to Accounting Research Bulletin No. 43, Chapter 4 ("ARB 43").  This statement amends the guidance in ARB 43, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage).  ARB 43 previously stated that these expenses may be so abnormal as to require treatment as current-period charges.  SFAS No. 151 requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal".  In addition, SFAS No. 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities.  Prospective application of this statement is required beginning January 1, 2006. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial position and results of operations.