U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(MARK ONE)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
           OF THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2007

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13
            OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

        FOR THE TRANSITION PERIOD FROM _______________ TO _______________


COMMISSION FILE NUMBER

                       EDGEWATER FOODS INTERNATIONAL, INC.
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               Nevada                                   20-3113571
               ------                                   ----------
  (STATE OR OTHER JURISDICTION OF            (IRS EMPLOYER IDENTIFICATION NO.)
  INCORPORATION)

                            US REPRESENTATIVE OFFICE
           5552 West Island Highway, Qualicum Beach, British Columbia,
                                 Canada V9K 2C8
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                 (250) 757-9811
                           (ISSUER'S TELEPHONE NUMBER)

                                (FORMER ADDRESS)

CHECK  WHETHER THE ISSUER (1) FILED ALL REPORTS  REQUIRED TO BE FILED BY SECTION
13 OR 15(D) OF THE  EXCHANGE  ACT OF 1934 DURING THE PAST 12 MONTHS (OR FOR SUCH
SHORTER PERIOD THAT THE  REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS),  AND (2)
HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X ] NO [ ]

INDICATE BY CHECK MARK WHETHER THE  REGISTRANT IS A SHELL COMPANY (AS DEFINED IN
RULE 12B-2 OF THE SECURITIES EXCHANGE ACT OF 1934) YES [ ] NO [X]

AS OF APRIL 13, 2007,  THERE WERE 23,285,291  SHARES OF COMMON STOCK,  PAR VALUE
$0.0001 OUTSTANDING,  8,010,133 SHARES OF SERIES A PREFERRED STOCK, PAR VALUE IS
$.001 AND 207 SHARES OF SERIES B PREFERRED STOCK, PAR VALUE IS $.001.



<PAGE>



                                TABLE OF CONTENTS

                                                                           PAGE

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

  Unaudited Consolidated Balance Sheet at February 28,
                                                  2007                       3

   Unaudited Consolidated Statements of Operations for
    the three and six month periods ended February 28,
                                         2007 and 2006                       5

   Unaudited Consolidated Statements of Cash Flows for
                                                   the
     six month period ended February 28, 2007 and 2006
                                                                             6

  Unaudited notes to Consolidated Financial Statements
                                                                             8

Item 2.  Management's Discussion and Analysis or Plan
of Operation                                                                23

Item 3.  Controls and Procedures                                            27

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                  29

Item 2.  Unregistered Sales of Equity Securities And
Use Of Proceeds                                                             29

Item 3.  Defaults Upon Senior Securities                                    30

Item 4.  Submission Of Matters To A Vote Of Security
Holders                                                                     30

Item 5.  Other Information                                                  30

Item 6.  Exhibits                                                           31





                                                                               2
<PAGE>



PART I - FINANCIAL INFORMATION

                       EDGEWATER FOODS INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEET
                                FEBRUARY 28, 2007
                                   (unaudited)
                                                                        2007
                                                                        ----
ASSETS

Current assets:
       Cash                                                        $  2,225,647
       Accounts receivable, net                                          53,586
       Inventory                                                      1,416,432
       Loans receivable, related party                                   56,684
       Other current assets                                              82,988
                                                                   ------------

       Total current assets                                           3,835,337

Property, plant and equipment, net                                    2,287,545

Investments in other assets                                               3,444
                                                                   ------------

       Total assets                                                $  6,126,326
                                                                   ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
       Short term debt                                             $    287,692
       Current portion of long term debt                                428,752
       Accounts payable and accrued liabilities                         648,378
                                                                   ------------

       Total current liabilities                                      1,364,822

Long term debt, net of current portion                                  383,074
                                                                   ------------

       Total liabilities                                              1,747,896
                                                                   ------------

Commitments and contingencies

Stockholders' equity
       Series A Preferred  stock, par $0.001, 9,999,780
         authorized, 7,821,333 issued and outstanding                     7,821
       Series B Preferred  stock, par $0.001, 220
         authorized, 207 issued and outstanding                            --
       Common stock, par $0.0001, 100,000,000
         authorized, 21,721,824 issued and outstanding                    2,172

       Additional paid in capital                                    20,782,333
       Accumulated deficit                                          (16,066,813)
       Accumulated other comprehensive income -
        foreign currency translation                                   (347,083)
                                                                   ------------



                                                                               3

<PAGE>


       Total stockholders' equity                                     4,378,430
                                                                   ------------

       Total liabilities and stockholders' equity                  $  6,126,326
                                                                   ============



See accompanying notes to consolidated financial statements







                                                                               4
<PAGE>

<TABLE>

<CAPTION>


                       EDGEWATER FOODS INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  THREE AND SIX MONTH PERIOD ENDING FEBRUARY 28
                                   (unaudited)

                                                   THREE MONTHS ENDED              SIX MONTHS ENDED
                                                      FEBRUARY 28,                   FEBRUARY 28,
                                            ----------------------------    ----------------------------
                                                2007             2006            2007            2006
                                            ------------    ------------    ------------    ------------
<S>                                                                         <C>             <C>
Revenue                                     $    182,212    $    143,372    $    305,399    $    303,551
Cost of goods sold                               274,699         133,466         465,768         305,547
                                            ------------    ------------    ------------    ------------

Gross profit (loss)                              (92,487)          9,906        (160,369)         (1,996)
                                            ------------    ------------    ------------    ------------

Expenses:
      General and administrative expenses        244,795          62,804         420,726         105,867
      Salaries and benefits                       72,229          35,571         160,610          79,666
      Stock compensation expense                    --              --              --           182,500
                                            ------------    ------------    ------------    ------------


Total expenses                                   317,024          98,375         581,336         368,033
                                            ------------    ------------    ------------    ------------

Loss from operations                            (409,511)        (88,469)       (741,705)       (370,029)
                                            ------------    ------------    ------------    ------------

Other income (expense):
      Interest (expense), net                     (4,876)        (52,573)        (11,636)       (106,096)
      Change in fair value of warrants         8,595,107            --         5,826,630            --
      Other income (expense)                     158,948        (517,468)        161,256        (513,350)
                                            ------------    ------------    ------------    ------------


Total other income (expense), net              8,749,179        (570,041)      5,976,250        (619,446)
                                            ------------    ------------    ------------    ------------

Net income (loss)                              8,339,668        (658,510)      5,234,545        (989,475)

Dividend on preferred stock                     (234,497)           --          (234,497)           --
                                            ------------    ------------    ------------    ------------

Net income (loss) applicable to common
  shareholders                                 8,105,171        (658,510)      5,000,048        (989,475)

Foreign currency translation                     (46,731)        (28,205)        (90,763)       (221,553)
                                            ------------    ------------    ------------    ------------

Accumulated other comprehensive
  income (loss)                             $  8,058,440    $   (686,715)   $  4,909,285    $ (1,211,028)
                                            ============    ============    ============    ============

Net income (loss) per Share
      Basic and diluted                     $       0.38    $      (0.03)   $       0.25    $      (0.05)

Weighted average shares outstanding
      Basic and diluted                       21,782,245      20,689,289      21,091,042      20,626,422

</TABLE>

See accompanying notes to consolidated financial statements
                                                                               5

<PAGE>

<TABLE>

<CAPTION>


                                  EDGEWATER FOODS INTERNATIONAL, INC.
                                  CONSOLIDATED STATEMENTS OF CASHFLOWS
                                      SIX MONTHS ENDED FEBRUARY 28
                                              (unaudited)

                                                                  2007             2006
                                                              ------------    ------------
<S>                                                                           <C>

Cash flows from operating activities:

     Net income (loss)                                        $  5,234,545    $   (989,475)

     Adjustments to reconcile net income (loss) to net cash
     used in operating activities:

       Depreciation and amortization                               147,017         135,923

       Changes in fair value of warrants                        (5,826,630)           --
       Stock option expense                                         56,827            --

       Common stock issued for services                               --           702,500
       Gain on disposal of debt                                   (158,211)           --

     Changes in current assets and liabilities:

       Accounts receivable                                         (14,736)        (27,320)

       Prepaid expenses                                            (38,407)         11,307

       Loan receivable                                             (33,669)          5,405
       Inventory                                                  (164,381)       (280,142)

       Accounts payable                                            (39,705)        120,808

       Bank overdrafts                                                --           (12,610)
                                                              ------------    ------------


Net cash used in operating activities                             (837,350)       (333,604)
                                                              ------------    ------------

Cash flows from investing activities:


     Purchase of property, plant and equipment                    (697,602)        (18,113)
                                                              ------------    ------------


Net cash used in investing activities                             (697,602)        (18,113)
                                                              ------------    ------------

Cash flows from financing activities:


     Net proceeds from line of credit                                 --             4,623

     Proceeds from short term debt                                    --           405,036

     Payment of short term debt                                     (3,232)           --

     Proceeds of long term debt                                       --             2,178

     Payment of long term debt                                    (127,647)        (13,292)

     Proceeds from exercise of warrants                            276,000            --

     Proceeds from sale of preferred stock                       1,864,501            --
                                                              ------------    ------------


                                                                               6
<PAGE>


Net cash provided by financing activities                        2,009,622         398,545
                                                              ------------    ------------


Foreign currency translation effect                                (65,765)        (47,265)
                                                              ------------    ------------


Net increase (decrease) in cash                                    408,905            (437)


Cash, beginning of period                                        1,816,742             560
                                                              ------------    ------------

Cash, end of period                                           $  2,225,647    $        123
                                                              ============    ============

Supplemental disclosure of cash flow information

Net cash paid during year ended
Interest                                                      $       --      $       --
                                                              ============    ============

Income taxes                                                  $       --      $       --
                                                              ============    ============


Supplemental disclosure of non-cash flow information
Issuance of stock for dividends                               $    234,497    $       --
                                                              ============    ============
Warrant liability incurred in connection with financing       $  4,116,739    $       --
                                                              ============    ============
Reclassification of warrant liability                         $(20,449,559)   $       --
                                                              ============    ============
</TABLE>

See accompanying notes consolidated to financial statements

                                                                               7
<PAGE>



                      EDGEWATER FOODS INTERNATIONAL , INC.

                   NOTES TO CONSOLIDATED Financial Statements
                                   (unaudited)

NOTE 1.  BASIS OF PRESENTATION, ORGANIZATION AND NATURE OF OPERATIONS

Edgewater Foods International Inc., a Nevada Corporation,  is the parent company
of Island Scallops Ltd., a Vancouver Island aquaculture company. Island Scallops
was  established  in 1989 and for  over 15 years  has  successfully  operated  a
scallop  farming and marine hatchery  business.  Island Scallops is dedicated to
the  farming,  processing  and  marketing  of high  quality,  high value  marine
species: scallops and sablefish.

On June 29, 2005, Edgewater Foods International,  Inc. ("Edgewater"),  a holding
private company  established under the laws of Nevada in order to acquire assets
in the  aquaculture  industry,  issued  10,300,000  shares  of  common  stock in
exchange for a 100% equity interest in Island Scallops,  Ltd. As a result of the
share  exchange,  Island  Scallops,  Ltd.  become the wholly own  subsidiary  of
Edgewater.  As a result,  the  shareholders  of Island Scallops owned a majority
(54.21%) of the voting stock of  Edgewater.  The  transaction  was regarded as a
reverse  merger  whereby  Island  Scallops was  considered to be the  accounting
acquirer as its  shareholders  retained control of Edgewater after the exchange,
although  Edgewater is the legal parent company.  The share exchange was treated
as a recapitalization of Edgewater. As such, Island Scallops (and its historical
financial statements) is the continuing entity for financial reporting purposes.

On August 15, 2005, we completed a reverse  acquisition  of Heritage  Management
Corporation,  a public shell  company,  as that term is defined in Rule 12b-2 of
the Exchange  Act,  established  under the laws of Nevada on June 12,  2000.  To
accomplish the share exchange we issued  19,000,000  shares of common stock on a
one to one ratio for a 100% equity  interest in Edgewater.  Per the terms of the
Share  Exchange  and Bill of Sale of  Heritage  Funding  Corporation  and E. Lee
Murdoch, Heritage was delivered with zero assets and zero liabilities at time of
closing.  Following  the  reverse  acquisition,  we changed the name of Heritage
Management Corporation to "Edgewater Foods International,  Inc." The transaction
was regarded as a reverse  merger  whereby  Edgewater  was  considered to be the
accounting  acquirer as it  retained  control of  Heritage  after the  exchange.
Although  Edgewater is the legal parent company,  the share exchange was treated
as a  recapitalization  of  Edgewater.  Edgewater is the  continuing  entity for
financial reporting  purposes.  The Financial  Statements  contained herein have
been prepared as if Edgewater had always been the reporting  company and then on
the share exchange date, had changed its name and reorganized its capital stock.

NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our unaudited  consolidated financial statements are prepared in conformity with
accounting  principles  generally  accepted in the United  States of America for


                                                                               8
<PAGE>

reporting  interim  financial  information  and the rules and regulations of the
Securities  and  Exchange  Commission.   In  the  opinion  of  management,   all
adjustments  necessary for a fair  presentation  of the  financial  position and
results of operations for the periods  presented  have been  included.  All such
adjustments  are of a normal  recurring  nature.  These  unaudited  consolidated
financial statements should be read in conjunction with the audited consolidated
financial  statements  included in our Annual Report on Form 10-KSB for the year
ended August 31, 2006.  Results of operations for the three and six months ended
February 28, 2007, are not necessarily  indicative of the operating  results for
the full accounting year or any future period.

Inventory

Edgewater maintains  inventories of raw materials for its aquaculture  products,
of biomass  (inventory of live aquaculture  product being actively  cultivated),
and of finished goods (aquaculture product ready for sale).

Inventories  are  reported  at the lesser of cost or  estimated  net  realizable
value.  Biomass and finished goods includes  direct and reasonably  attributable
indirect  production  costs related to hatchery,  cultivation,  harvesting,  and
processing  activities.  Carrying  costs per unit are  determined  on a weighted
average basis.

At February 28, 2007, inventory consisted of the following:

Biomass (Scallops):                  $1,416,432

Derivative Financial Instruments

In connection with the sale of debt or equity  instruments,  we may sell options
or  warrants to  purchase  our common  stock.  In certain  circumstances,  these
options or warrants may be classified as derivative liabilities,  rather than as
equity.  Additionally,  the debt or  equity  instruments  may  contain  embedded
derivative instruments,  such as embedded derivative features,  which in certain
circumstances  may  be  required  to be  bifurcated  from  the  associated  host
instrument and accounted for separately as a derivative instrument liability.

Edgewater accounts for all derivatives  financial instruments in accordance with
SFAS No. 133.  Derivative  financial  instruments are recorded as liabilities in
the consolidated balance sheet,  measured at fair value. When available,  quoted
market  prices are used in  determining  fair value.  However,  if quoted market
prices are not  available,  Edgewater  estimates  fair value using either quoted
market prices of financial  instruments  with similar  characteristics  or other
valuation techniques.

The  identification of, and accounting for,  derivative  instruments is complex.
Our derivative instrument liabilities are re-valued at the end of each reporting
period,  with changes in the fair value of the derivative  liability recorded as
charges  or credits to income,  in the period in which the  changes  occur.  For
options, warrants and bifurcated embedded derivative features that are accounted
for as derivative  instrument  liabilities,  we estimate fair value using either



                                                                               9
<PAGE>

quoted market prices of financial  instruments with similar  characteristics  or
other valuation techniques. The valuation techniques require assumptions related
to the remaining  term of the  instruments  and risk-free  rates of return,  our
current  common  stock  price and  expected  dividend  yield,  and the  expected
volatility  of  our  common  stock  price  over  the  life  of the  option.  The
identification   of,  and  accounting  for,   derivative   instruments  and  the
assumptions  used  to  value  them  can   significantly   affect  our  financial
statements.

Derivative  financial  instruments  that are not designated as hedges or that do
not meet the  criteria for hedge  accounting  under SFAS No. 133 are recorded at
fair  value,  with  gains or losses  reported  currently  in  earnings.  None of
Edgewater's  derivative financial  instruments held as of February 28, 2007 were
designated as hedges.

Change in Depreciation Method

Effective  September  1,  2006,  as  a  result  of  management's  evaluation  of
long-lived   depreciable   assets,  we  adopted  the  straight-line   method  of
depreciation for all property, plant and equipment.  Under the new provisions of
SFAS No. 154  "Accounting  Changes and Error  Corrections,  a replacement of APB
Opinion  No.  20 and FASB  Statement  No.  3,"  which  becomes  effective  as of
September  1, 2006,  a change in  depreciation  method is treated as a change in
estimate. The effect of the change in depreciation method will be reflected on a
prospective basis beginning September 1, 2006, and prior period results will not
be restated.  As the results of  management's  evaluation  indicated the current
estimated useful lives of our assets were appropriate,  the depreciable lives of
property,  plant and equipment  will not be changed.  We believe that the change
from the declining balance  depreciation method to the straight-line method will
better reflect the pattern of  consumption of the future  benefits to be derived
from those assets being  deprecated and will provide a better  matching of costs
and revenues over the assets' estimated useful lives.

Reclassifications

Certain 2006 amounts have been reclassified to conform to 2007 presentation.

Recent accounting pronouncements

In June  2006,  the FASB  issued  FASB  Interpretation  No. 48,  Accounting  for
Uncertainty in Income Taxes - An  Interpretation of FASB Statement No. 109 ("FIN
48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized
in a company's financial  statements and prescribes a recognition  threshold and
measurement attribute for the financial statement recognition and measurement of
a tax position  expected to be taken in a tax return.  The  Interpretation  also
provides  guidance on  de-recognition,  classification,  interest and penalties,
accounting in interim  periods,  disclosure and transition.  FIN 48 is effective
for fiscal years beginning after December 15, 2006. Currently, there would be no
effect  of  this  Interpretation  on  our  financial  position  and  results  of
operations.

During  September  2006,  the FASB  issued  Statement  of  Financial  Accounting
Standards  ("SFAS")  No.  157,  Fair Value  Measurements  ("FAS  157").  FAS 157


                                                                              10
<PAGE>

establishes a standard definition for fair value,  establishes a framework under
generally accepted  accounting  principles for measuring fair value and requires
enhanced  disclosures about fair value measurements.  This standard is effective
for financial  statements  issued for fiscal years  beginning after November 15,
2007. We are currently  evaluating  the impact,  if any, the adoption of FAS 157
will have on its financial position and results of operations.

During  September  2006,  the Securities  and Exchange  Commission  issued Staff
Accounting  Bulletin No. 108 ("SAB 108"),  Considering the Effects of Prior Year
Misstatements   when   Quantifying   Misstatements  in  Current  Year  Financial
Statement.  This SAB  provides  guidance on how the effects of the  carryover or
reversal of prior year  misstatements  should be  considered  in  quantifying  a
current year misstatement. This interpretation is effective for the first fiscal
year ending  after  November  15,  2006.  We do not expect the  adoption of this
interpretation  to have an  impact  on our  financial  position  or  results  of
operations.

In December 2006,  the FASB issued FASB Staff Position EITF 00-19-2,  Accounting
for Registration  Payment  Arrangements  ("FSP EITF 00-19-2").  FSP EITF 00-19-2
specifies  that the contingent  obligation to make future  payments or otherwise
transfer consideration under a registration payment arrangement,  whether issued
as a separate agreement or included as a provision of a financial  instrument or
other agreement, should be separately recognized and measured in accordance with
FASB Statement No. 5,  Accounting  for  Contingencies.  A  registration  payment
arrangement  is defined in FSP EITF 00-19-2 as an  arrangement  with both of the
following  characteristics:  (1) the arrangement  specifies that the issuer will
endeavor  (a) to file a  registration  statement  for the  resale  of  specified
financial  instruments  and/or for the resale of equity shares that are issuable
upon  exercise or  conversion of specified  financial  instruments  and for that
registration statement to be declared effective by the US SEC within a specified
grace  period,  and/or (b) to maintain  the  effectiveness  of the  registration
statement  for a  specified  period  of  time  (or in  perpetuity);  and (2) the
arrangement requires the issuer to transfer consideration to the counterparty if
the  registration  statement  for the  resale  of the  financial  instrument  or
instruments  subject  to  the  arrangement  is  not  declared  effective  or  if
effectiveness of the registration statement is not maintained.  FSP EITF 00-19-2
is effective for registration payment arrangements and the financial instruments
subject to those  arrangements  that are entered into or modified  subsequent to
December  21,  2006.  For  registration   payment   arrangements  and  financial
instruments  subject to those  arrangements  that were entered into prior to the
issuance  of  FSP  EITF  00-19-2,  this  guidance  is  effective  for  financial
statements  issued for fiscal years  beginning  after  December  15,  2006,  and
interim  periods within those fiscal years. We do not expect the adoption of FSP
EITF 00-19-2 to have a material impact on our consolidated financial statements.

In  February  2007,  the FASB issued  SFAS No.  159,  The Fair Value  Option for
Financial Assets and Financial  Liabilities  ("SFAS 159") which permits entities
to choose to measure many financial  instruments and certain other items at fair
value that are not  currently  required to be  measured at fair value.  SFAS 159
will be effective  for us on January 1, 2008. We are  currently  evaluating  the
impact of adopting SFAS 159 on our financial  position,  cash flows, and results
of operations.


                                                                              11
<PAGE>


NOTE 3.  PROPERTY, PLANT AND EQUIPMENT

Property, Plant and Equipment at February 28, 2007 consisted of the following:


                                                       Accumulated      Net Book
                                              Cost     Amortization     Value
                                           -------------------------------------

Land                                       $  216,998   $     --     $  216,998
Buildings                                     738,236      220,338      517,898
Seawater piping and tanks                     537,720      268,105      269,615
Boats and Barge                               333,939      124,047      209,892
Field equipment                             1,853,843      799,349    1,054,494
Office equipment                               14,406       12,654        1,752
Vehicles                                       36,430       34,938        1,492
Computer equipment                             24,352        8,948       15,404
                                           ----------   ----------   ----------
                                           $3,755,924   $1,468,379   $2,287,545
                                           ==========   ==========   ==========


Depreciation  expenses  for the six month ended  February  28, 2007 and 2006 was
$147,017 and $135,923.

NOTE 4.  RELATED PARTY TRANSACTIONS

We have six secured notes  receivable from RKS  Laboratories,  Inc.  ("RKS"),  a
Vancouver  research and development  company that is working towards  developing
superior  strains of scallops with  beneficial  traits such as higher meat yield
and rapid growth.  (Robert  Saunders,  our President and CEO, owns 100% of RKS.)
The first  non-interest  bearing note in the amount of $17,222 is secured by all
assets of RKS is due on or before June 15, 2007. The second non-interest bearing
note in the  amount of $4,745 is also  secured by all assets of RKS is due on or
before  August 31, 2007.  The third  non-interest  bearing note in the amount of
$17,222 is also secured by all assets of RKS is due on or before  September  15,
2007.  The  fourth  non-interest  bearing  note in the amount of $12,916 is also
secured by all assets of RKS is due on or before  September 21, 2007.  The fifth
non-interest  bearing note in the amount of $2,324 is also secured by all assets
of RKS is due on or before  November 30, 2007.  The sixth  non-interest  bearing
note in the  amount of $2,255 is also  secured by all assets of RKS is due on or
before February 28, 2008.  These amounts are included in current assets as loans
receivable.

NOTE 5.  INVESTMENTS IN TENURES

Edgewater carries its Investment in Tenures at $3,444 at February 28, 2007. This
amount  represents the carrying costs of certain  shellfish  tenures acquired by
Island   Scallops'   subsidiary,   377332  B.C.  Ltd.   Shellfish   tenures  are


                                                                              12
<PAGE>

government-granted  rights  allowing  limited  use of  offshore  waters  for the
purposes of  cultivation of shellfish.  The granting of shellfish  tenure rights
are the responsibility of the Provincial  (British Columbia)  Government and not
the Canadian  Federal  Government.  As such, the government  assistance  that we
receive via loan  agreement with various  Federal  Agencies has no effect on our
ability to renew  and/or  modify  these  tenure  agreements.  The tenure held by
377332 B.C.  Ltd.  has an  expiration  date of July 10,  2021.  Other  shellfish
tenures held by Edgewater and our  subsidiaries  have  expiration  dates ranging
from 2021 to 2024.

These tenures are considered to have an indefinite  useful life because  renewal
on expiration is anticipated, and therefore are not subject to amortization.


NOTE 6.  ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Included in accounts  payable and accrued  liabilities are balances  outstanding
related  to credit  cards held in the name of one of our  shareholders  totaling
$17,240 at February  28,  2007.  We used these  credit cards as a means of short
term financing and incur interest charges on such unpaid balances.

Included in accounts payable and accrued liabilities at February 28, 2007, is an
amount of $113,544 in respect to an agreement  to purchase  geoduck seed from us
(for additional information see Note 13 - Contingent Liabilities).

Included in accounts payable and accrued  liabilities at February 28, 2007 is an
amount of $69,947  payments due and interest accrued in respect to the loan from
the National Research Council of Canada Industrial  Research  Assistance Program
(see Note 8 - Long Term Debt for additional information).

NOTE 7.  SHORT TERM DEBT

These consolidated  financial  statements include Island Scallop's mortgage loan
repayable at $1,937 per month  including  interest  calculated at the greater of
10% and  (Canadian)  prime plus 6% (11.5% as of February  28,  2007).  The loan,
which  was due on April 1,  2007,  is  secured  by a second  charge  on the real
property of Island Scallops.  The company is currently finalizing the terms of a
new loan for this mortgage payable and the current due date has been extended by
the lender until the new loan in completed.  At February 28, 2007, the principal
due is $183,771.

Included in  short-term  debt at February  28, 2007,  is estimated  royalties of
$57,310 payable to a third party from whom the former sole shareholder of Island
Scallops  originally  acquired  the  shares of Island  Scallops.  The 1992 share
purchase  agreement (for Island  Scallops)  provided that the third party was to
receive 3% of revenues  from Island  Scallops as earned,  on a quarterly  basis,
throughout  the period from  December 1, 1992 to November  30,  2002.  The third
party  holds a first  charge  (or  first  lien)  over our  inventory  (including
broodstock) in the amount of $301,360 in support of its royalty entitlement. The
third  party has not taken  further  action to enforce  payment  of the  arrears
liability.  To date, we have accrued the entire  balance of $57,310 as a current
liability and we plan to pay it with available funds in the near future.


                                                                              13
<PAGE>


Included in  short-term  notes  payable at February  28,  2007,  is an unsecured
non-interest bearing demand loan from an individual with a face value of $43,198
and no specific terms of repayment. However, the lender has informally requested
that the loan be repaid in full by October 6, 2008.

Included  in  short-term  debt is a bank loan  repayable  at $448 per month plus
interest calculated at (Canadian) prime plus 3% per annum (9% as of February 28,
2007),  that is unsecured and is due October 23, 2007. At February 28, 2007, the
principal due is $3,413.

These consolidated financial statements formerly included a non-interest bearing
loan to Island Scallops from Industry  Science and Technology  Canada  requiring
repayment  equal  to 0.5% of  Island  Scallops'  gross  scallop  sales  for each
preceding  year.  Per the  terms of the  loan,  if we were  unable  to  generate
sufficient revenues to repay the original amount of the loan by January 1, 2007,
the remaining  balance  would be forgiven.  As such,  the  remaining  balance of
approximately $159,000 was forgiven on January 1, 2007.

NOTE 8. LONG TERM DEBT

These  consolidated  financial  statements  include  a  Western  Diversification
Program  non-interest  bearing loan to Island  Scallops that requires  repayment
equal to 12% of gross  revenues from our scallop sales,  payable  semi-annually,
with no  specified  due date.  In September  2006,  we entered into a Settlement
Agreement  with the Minister of Western  Economic  Diversification  to amend the
repayment  terms  of our  non-interest  bearing  loan  of  $597,103  (to  Island
Scallops)  with the  Western  Diversification  Program.  We  agreed to repay the
$170,981  due as of August  31,  2006,  in  accordance  with a payment  schedule
beginning  with a payment of  $62,736  in  September  2006 and  continuing  with
monthly  payments of roughly  $9,840 until August 15, 2007.  The parties  agreed
that the  remaining  balance  of the  $426,122  shall be  repaid  via  quarterly
payments  equal to the  greater  of  $30,856  or 4% of the gross  scallop  sales
starting the quarter beginning on June 1, 2007 and subsequent quarters until the
balance is repaid. Under the terms of this agreement,  the first quarter payment
will be due on  September  30, 2007.  At February  28, 2007,  the balance due is
$473,884,  of which  $116,643 is reflected  in the current  portion of long term
debt and the remaining balance of $357,241 is reflected as long term debt.

These  consolidated  financial  statements  include Island  Scallops'  unsecured
non-interest   bearing  loan  from  the  National  Research  Council  of  Canada
Industrial   Research  Assistance  Program  which  requires  quarterly  payments
commencing  March 1, 2003 equal to 3% of gross revenues of Island Scallops until
the earlier of full repayment or December 1, 2012. The amount repayable is up to
150% of the  original  advance of $379,424,  if repayment is before  December 1,
2007. If at December 1, 2012, Island Scallops has not earned sufficient revenues
to be required to repay the original loan amount,  the remaining  portion of the
loan is to be  forgiven.  Amounts  currently  due at  February  28,  2007,  bear
interest at a rate of 1% per month. At February 28, 2007,  Island Scallops is in
arrears in respect to the  payment of these  amounts.  The  National  Council of
Canada  Industrial  Research  Assistance  Program has  requested  payment of the


                                                                              14
<PAGE>

$69,947 that they claim is owed under this loan agreement.  As such, at February
28, 2007,  $69,947 is included in accounts  payable and accrued  liabilities and
the  remaining  full  principal  balance of $312,109 is reflected in the current
portion of long term debt. We are seeking to renegotiate the repayment terms.

Included in long-term debt is one bank loan to Island Scallops. The bank loan is
repayable at $1,076 per month,  plus  interest  calculated  at the floating base
rate of the  Business  Development  Bank of Canada  plus 1.5% annum  (9.5% as of
February  28,  2007),  is due  February  23,  2009 and is  secured  by a General
Security  Agreement  over the assets of Island  Scallops,  a mortgage  charge on
Island  Scallops'  real  property  and a  personal  guarantee  of $43,055 by our
Chairman,  President and CEO, and former sole shareholder of Island Scallops. At
February 28, 2007, the principal due is $25,833.

NOTE 9.  SERIES B PREFERRED STOCK FINANCING

We completed a private equity  financing of $2,070,000 on January 16, 2007, with
two  accredited  investors.  Net proceeds  from the  offering are  approximately
$1,864,500.  We issued  207 shares of our Series B  Preferred  Stock,  par value
$0.001 per share and stated  value of $10,000 per share and each  investor  also
received  one of each of the  following  warrants:  (i) Series A  Warrant,  (ii)
Series B Warrant,  (iii) Series C Warrant,  (iv) Series J Warrant,  (v) Series D
Warrant,  (vi) Series E Warrant, and (vii) Series F Warrant,  each to purchase a
number of shares of common stock equal to fifty  percent  (50%) of the number of
shares of common stock  issuable upon  conversion of the  purchaser's  preferred
stock,  except for the Series J Warrants,  which shall  entitle the  investor to
purchase a number of shares of our common  stock  equal to one  hundred  percent
(100%) of the number of shares of common stock  issuable upon  conversion of the
purchaser's  preferred stock. Each of the Warrants has a term of 6 years, except
for the  Series  J  Warrants,  which  have a term of 1 year.  Each  share of the
preferred  stock is  convertible  into a number of fully paid and  nonassessable
shares of our common stock equal to the quotient of the  liquidation  preference
amount per share ($10,000) divided by the conversion  price,  which initially is
$1.15 per share, subject to certain  adjustments,  or approximately 8,696 shares
of common  for each share of  converted  preferred  stock.  We issued a total of
7,200,345 Warrants.

In connection  with this  financing,  we paid cash  compensation  to a placement
consultant  in the  amount of  $165,600  and  issued  him  placement  consultant
warrants,  exercisable  for a period of three years from the date of issue.  The
placement  consultant's  warrants  allow him to  purchase up to (i) 20 shares of
Series  B  Preferred  Stock,  and  each of the  following  warrants,  which  are
identical to the warrants issued to the investors of the financing: (i) Series A
Warrant,  (ii) Series B Warrant,  (iii) Series C Warrant, (iv) Series D Warrant,
(v) Series J Warrant, (vi) Series E Warrant, and (vii) Series F Warrant, each to
purchase 90,004 shares of common stock, except for the Series J Warrants,  which
shall entitle the  Consultant to purchase  180,008  shares of common stock.  The
placement consultant warrant is exercisable at a price of $1.15, for a period of
three years. The fees were recorded as a cost of capital.

The net proceeds from the January 16, 2007  financing are to be used for capital
expenditures  necessary  to expand our  operations  into clam farming in Morocco
(any remaining  proceeds may be used for working  capital and general  corporate


                                                                              15
<PAGE>

purposes).  We are currently  conducting  due diligence on a North African based
aquaculture  company  that farms  shellfish  products in Morocco and pending the
successful completion of such inquiry, may acquire a majority ownership interest
in the company. At the date of this filing, we have not entered into any binding
agreements  for the  purchase of such company and may or may not do so depending
on the results of our due diligence investigation.

NOTE 10.  SERIES A PREFERRED STOCK WARRANT LIABILITIES

The warrants  that each  investor  received as a result of our April 12, May 30,
June 30 and July 11  Preferred  Stock  Financing  contained a cashless  exercise
provision  that becomes  effective one year after the original  issuance date of
such warrants if our registration  statement (that we are required to file under
the Series A  Preferred  Stock  Financing's  corresponding  registration  rights
agreement)  is not then in effect by the date such  registration  statement  was
required to be effective  pursuant to the  Registration  Rights Agreement of the
Preferred Stock Financing or not effective at any time during the  Effectiveness
Period (as defined in the Registration  Rights Agreement) in accordance with the
terms of the Registration  Rights Agreement.  As such and in accordance with the
accounting guidelines under SFAS No. 133, we valued the warrants as a derivative
financial  instrument and the  corresponding  liabilities  were entered onto our
consolidated balance sheet, measured at fair value. We determined the fair value
of the warrants as follows as of April 12, 2006, May 30, 2006, June 30, 2006 and
July 11, 2006 (the issuance dates).

We used the Black Scholes  option-pricing model with the following  assumptions:
an expected life equal to the  contractual  term of the warrants (one,  three or
five),  underlying  stock price of $1.10 (at April 12), $1.40 (at May 30), $1.35
(at June 30) and $1.40 (July 11) no dividends;  a risk free rate of 4.91%, 4.90%
and 4.91%,  which equals the one, three and five-year yield on Treasury bonds at
constant (or fixed)  maturity  (for those  warrants  issued on April 12), a risk
free rate of 4.99%,  which equals three and five-year yield on Treasury bonds at
constant (or fixed)  maturity (for those warrants issued on May 30), a risk free
rate of 4.71% and 4.70%,  which equals the three and five-year yield on Treasury
bonds at constant (or fixed) maturity (for those warrants issued on June 30) and
a risk free rate of 4.71% and 4.70%,  which equals the three and five-year yield
on Treasury bonds at constant (or fixed)  maturity (for those warrants issued on
July 11); and volatility of 93%. Under the assumptions, the Black-Scholes option
pricing model yielded an aggregate  value of  approximately  $19,494,000  with a
current portion of approximately $1,225,000.

We  performed  the same  calculations  as of August 31,  2006,  to  revalue  the
warrants as of that date. In using the Black Scholes  option-pricing  model,  we
used an underlying  stock price of $1.40 per share;  no  dividends;  a risk free
rate of 5.01%,  4.71% and 4.70%, which equals the one, three and five-year yield
on Treasury  bonds at constant (or fixed);  and maturity  volatility of 93%. The
resulting aggregate allocated value of the warrants as of August 31 2006 equaled
approximately $22,160,000.  The change in fair value of approximately $2,666,000
(with a current  portion of roughly  $519,000) was recorded for the period ended
August 31, 2006.

We performed  the same  calculations  as of November  30,  2006,  to revalue the
warrants as of that date. In using the Black Scholes  option-pricing  model,  we


                                                                              16
<PAGE>

used an underlying  stock price of $1.50 per share;  no  dividends;  a risk free
rate of 4.94%,  4.52% and 4.45%, which equals the one, three and five-year yield
on Treasury bonds at constant (or fixed);  and maturity  volatility of 100%. The
resulting  aggregate  allocated  value of the  warrants as of November  30, 2006
equaled  approximately  $24,928,000.  The change in fair value of  approximately
$2,768,000  (with a current  portion of roughly  $198,000)  was recorded for the
period ended November 30, 2006.

We  performed  the  same   calculations   as  of  February  21,  2007  (date  of
reclassification of warrant liability,  see Note 12 for additional information),
to  revalue  the  warrants  as  of  that  date.   In  using  the  Black  Scholes
option-pricing  model, we used an underlying  stock price of $1.15 per share; no
dividends;  a risk free rate of 5.05%,  4.74% and 4.68%,  which  equals the one,
three and five-year yield on Treasury bonds at constant (or fixed); and maturity
volatility of 96%. The resulting aggregate allocated value of the warrants as of
February 21, 2007 equaled  approximately  $17,365,000.  The change in fair value
(gain) of approximately  $7,563,000 (with a current portion of roughly $994,000)
was recorded for the period ended February 21, 2007.

Upon the earlier of the warrant  exercise or the  expiration  date,  the warrant
liability will be reclassified into shareholders'  equity.  Until that time, the
warrant  liability  will be  recorded  at fair  value  based on the  methodology
described above. Liquidated damages under the registration rights agreement will
be expensed as incurred and will be included in operating expenses.

NOTE 11.  SERIES B PREFERRED STOCK WARRANT LIABILITIES

The  warrants  that each  investor  received as a result of our January 16, 2007
Series B Preferred Stock Financing  contained a cashless exercise provision that
becomes  effective one year after the original issuance date of such warrants if
our  registration  statement  (that we are  required  to file under the Series B
Preferred Stock Financing's corresponding registration rights agreement) is then
in  effect  by the  required  date  or not  effective  at any  time  during  the
Effectiveness Period (as defined in the Registration Rights Agreement).  As such
and in accordance with the accounting  guidelines  under SFAS No. 133, we valued
the  warrants  as  a  derivative  financial  instrument  and  the  corresponding
liabilities were entered onto our consolidated  balance sheet,  measured at fair
value. We determined the fair value of the warrants as follows as of January 16,
2007 (the issuance date):

We used the Black Scholes  option-pricing model with the following  assumptions:
an expected life equal to the  contractual  term of the warrants (one,  three or
six), underlying stock price of $1.40 (at January 16), no dividends; a risk free
rate of 5.06%,  4.79% and 4.74%,  which equals the one, three and six-year yield
on Treasury  bonds at constant (or fixed)  maturity and volatility of 93%. Under
the  assumptions,  the  Black-Scholes  option pricing model yielded an aggregate
value of  approximately  $4,117,000  with a  current  portion  of  approximately
$1,058,000.

We  performed   the  same   calculations   as  of  February  2,  2007  (date  of
reclassification of warrant liability,  see Note 12 for additional information),
to  revalue  the  warrants  as  of  that  date.   In  using  the  Black  Scholes
option-pricing  model, we used an underlying  stock price of $1.15 per share; no
dividends;  a risk free rate of 5.05%,  4.74% and 4.68%,  which  equals the one,
three and six-year yield on Treasury bonds at constant (or fixed);  and maturity


                                                                              17
<PAGE>

volatility of 96%. The resulting aggregate allocated value of the warrants as of
February 21, 2007  equaled  approximately  $3,085,000.  The change in fair value
(gain) of approximately  $1,033,000 (with a current portion of roughly $342,000)
was recorded for the period ended February 21, 2007.

Upon the earlier of the warrant  exercise or the  expiration  date,  the warrant
liability will be reclassified into shareholders'  equity.  Until that time, the
warrant  liability  will be  recorded  at fair  value  based on the  methodology
described above. Liquidated damages under the registration rights agreement will
be expensed as incurred and will be included in operating expenses.

NOTE 12.  RECLASSIFICATION OF WARRANT  LIABILITIES  ASSOCIATED WITH SERIES A AND
SERIES B PREFERRED FINANCINGS

The warrants  that each  investor  received as a result of our April 12, May 30,
June 30 and July 11, 2006 Series A Preferred Stock Financing and our January 16,
2007 Series B Preferred Stock Financing  contained a cashless exercise provision
that  becomes  effective  one year  after  the  original  issuance  date of such
warrants if our registration  statements (that we are required to file under the
registration rights agreement for both financings) are not then in effect by the
date such  registration  statement was required to be effective  pursuant to the
each  Registration  Rights  Agreement of the Preferred  Stock  Financings or not
effective at any time during the Effectiveness Period (as defined in each of the
Registration  Rights  Agreements)  in  accordance  with the terms of each of the
Registration  Rights  Agreement.  As such and in accordance  with the accounting
guidelines  under  SFAS  No.  133 and  ETIF  Issue  No.  00-19  (Accounting  for
Derivative  Financial  Instruments  Indexed  to, and  Potentially  Settled in a,
Company's  Own Stock),  we  classified  the warrants as a liability  because the
cashless  exercise  provision  did not  specify  whether the  contract  could be
settled via the delivery of unregistered shares of our common stock. As such and
per the terms of  paragraph 14 of ETIF 00-19 (see  below),  we assumed  net-cash
settlement and the warrants were classified as a derivative financial instrument
and the  corresponding  liabilities were entered onto our  consolidated  balance
sheet,  measured at fair value.  We determined the fair value of the warrants as
follows as of April 12,  2006,  May 30, 2006,  June 30, 2006,  July 11, 2006 and
January 16, 2007 (the issuance  dates) and we preformed the same  calculation as
of May 31, August 31, November 30 and February 28 to revalue the warrants at the
end of each period (as  described  above in Notes 9 and 10).  The change in fair
value was then recorded for each period.

On February 28, 2007, the cashless exercise provision for all warrants issued in
conjunction  with both the Series A and Series B Preferred Stock  financings was
modified  to clarify  that any shares  issued in  connection  with the  cashless
exercise  will be  "restricted."  As a  result,  we  determined  that  (per  the
accounting  guidelines  under SFAS No. 133 and ETIF Issue No.  00-19) we are now
able to  net-share  settle the contract by delivery of  unregistered  shares and
that the warrant liability should be reclassified as permanent equity.

The initial fair value of the Series A warrant  liability  was  determined to be
approximately $19,494,000 (with a current portion of approximately  $1,225,000).
Since this value  exceeded  our  additional  paid in capital  ("APIC")  balance,
approximately  $9,021,000  of the  liability  was  allocated  to  APIC  and  the


                                                                              18
<PAGE>

remaining  $10,472,000 was allocated to retained deficit.  We made this decision
because the  changes in the fair value of the  warrants  are marked  through our
profit and loss.

The initial fair value of the Series B warrant  liability  was  determined to be
approximately  $4,117,000 (with a current portion of approximately  $1,058,000).
Since this value exceeded our additional paid in capital ("APIC"), approximately
$2,099,000 of the  liability was allocated to APIC and the remaining  $2,018,000
was allocated to retained deficit.  We made this decision because the changes in
the fair value of the warrants are marked through our profit and loss.

As described  above,  a portion of the fair value of the warrant  liability  was
allocated to APIC and the remaining  balance was allocated to retained  deficit.
Subsequent  changes in the fair  value of the  warrants  (at May 31,  August 28,
November 30, and February  28), were marked  through our profit and loss.  Since
the terms of the cashless  provision  have been  clarified and the warrants were
reclassified as equity, we reversed the liabilities and allocated  approximately
$20,450,000  to APIC  ($17,365,000  from the  Series A  financing  warrants  and
$3,085,000 from the Series B financing warrants).

NOTE 13.  CONTINGENT LIABILITIES

Our wholly owned subsidiary,  Island Scallops, entered into an agreement in 1998
with two parties,  under which  Island  Scallops was to produce and sell geoduck
seed to the two parties.  Island Scallops received advance payments from each of
the two  parties in the 2002 of  approximately  $64,140 and  recognized  related
revenue of $43,705 in respect to seed delivered in the 2002 year. The balance of
the deposits received (advance payments),  net of sales,  totaling $113,544,  is
included in accounts payable and accrued liabilities.

Management's  position  is that  the  two  parties  violated  the  terms  of the
agreement and we are  therefore  entitled to retain the balance of the deposits.
Per the terms of the original agreement, Island Scallops was entitled to make up
any shortfall in the product  produced in the following year.  Although  product
was available  and offered by Island  Scallops in the  following  year,  the two
parties  refused  to honor the terms of the  agreement  and would not accept the
product (to make up the shortfall) in the following year.

As of August 31, 2004,  one of the two parties made claims that Island  Scallops
owed it an amount  totaling  $88,925.  This  particular  party believed that the
agreement  required  Island  Scallops to deliver the product in year one and did
not allow Island Scallops to make up any shortfall with product  produced in the
following year. The balance included in accounts payable and accrued liabilities
related to this party is $33,126.

Any  additional  liability to us, or any reduction of the  currently  recognized
liability,  in  respect  to  these  deposits  will  be  recorded  at the  time a
conclusion to this matter can be determined.

Neither we nor our wholly  owned  subsidiary  maintain  insurance  covering  the
replacement of our inventory.  Consequently,  we are exposed to financial losses
or failure as a result of this risk.


                                                                              19
<PAGE>


NOTE 14.  STOCK-COMPENSATION EXPENSE

On December 31, 2006, we issued  138,565  shares of common stock to the Series A
Convertible  Preferred  Stock holders.  The number of shares issued was based on
the  Dividend  Payment  at a  rate  of 8%  per  annum  (subject  to a  pro  rata
adjustment) of the Liquidation  Preference  Amount  ($1,416,000 for the April 12
financing,  $1,500,000  for the May 30  financing,  $1,550,000  for the  June 30
financing and $1,450,000  for the July 11 financing)  payable in shares equal to
90% of the quotient of (i) the Dividend  Payment  divided by (ii) the average of
the VWAP for the twenty (20) trading  days  immediately  preceding  the date the
Dividend  Payment is due, but in no event less than $0.65.  As such,  the shares
were  valued at  approximately  $234,000  and the total  aggregate  value of the
transaction was recorded as a preferred stock dividend.

Stock Options

In  August  2005,  our  Board  of  Directors   approved  the  "Edgewater   Foods
International  2005  Equity  Incentive  Plan." The Board of  Directors  reserved
5,000,000  shares of our  common  stock to be  issued  in the form of  incentive
and/or  non-qualified stock options for employees,  directors and consultants to
Edgewater.  As of August 31, 2006,  our Board of Directors  had  authorized  the
issuance of 282,000 options to employees.

In September  2006,  we engaged PR Global  Concept GBR to provide  international
investor  relations  services.  The initial  term of the  agreement  was for two
years. Pursuant to the consulting agreement, we were to pay PR Global $5,000 per
month for the term of the agreement. As additional  compensation,  we originally
agreed to issue a total of 500,000  options  to  purchase  our  common  stock in
quarter  installments,  the first 125,000 of which was to vest  immediately upon
signing of the  agreement  and the remainder of which was to vest in three equal
amounts  of 125,000  after 3 months,  12 months  and the final  installment,  15
months after the date of signing;  the options are  exercisable at strike prices
ranging from $1.40 to $2.25.  The options were to be exercisable for a period of
three years from the date of the vesting.

In December  2006,  we entered  into an Amended and Restated  Agreement  with PR
Global Concept GBR. Under the terms of the amended agreement, PR Global was only
eligible to receive a total of 350,000  (as  opposed to 500,000 in the  original
agreement)  options to purchase our common stock in the following  installments:
25,000  options  every 3 months  after the date of the Amended  Agreement  for a
total of four  installments;  one  installment of 125,000 options 18 months from
the date of the Amended  Agreement;  and, one  installment of 125,000 options 24
months from the date of the Amended  Agreement.  The options issued in the first
four installments were to be exercisable at a strike price of $1.52 and the last
two installments  were to be exercisable at a strike price of $2.25. The options
were to be exercisable for a period of three years from the date of the vesting.
Additionally,  PR Global would no longer receive the $5,000 monthly payment;  we
did however  pay the one month owed to PR Global  under the  original  agreement
when the Amended  Agreement  was signed.  The Amended  Agreement  was  otherwise
unchanged from the originally  entered into agreement with PR Global. On January


                                                                              20
<PAGE>

12, 2007,  however,  we terminated  our Amended and Restated  Agreement  with PR
Global and ended our  relationship  with the firm.  As such,  we  rescinded  the
350,000 options that were to be issued under the amended agreement and PR Global
is to receive no additional compensation.

On February 1, 2007 we issued  Kitsilano  Capital Corp.  four 100,000 options to
purchase our common stock,  pursuant to our Consulting  Agreement with them. The
first  option vests on May 1, 2007,  the second on August 1, 2007,  the third on
February 1, 2008 and the fourth on June 1, 2008, so long as Kitsilano  continues
to  provide  services  to us under  the  Consulting  Agreement.  Each  option is
exercisable  for a  period  of three  years  from  the  vesting  date and has an
exercise  price of  $1.20,  $1.40,  $1.60  and $1.80  respectively.  The  shares
underlying the options have piggy-back  registration  rights that required us to
register  the shares in our last  registration  statement.  The  options and the
shares  underlying the options were issued in accordance with the exemption from
the registration provisions of the Securities Act of 1933, as amended,  provided
by Section 4(2) of such Act for issuances not involving any public offering.

Stock option activity during the period ending February 28, 2007 was as follows:

                                                                     Weighted
                                                  Number of           Average
                                                   Shares         Exercise Price
                                               ---------------------------------
Outstanding, September 1, 2006                     282,000       $
                                                                            1.50
    Granted                                        400,000                  1.50
    Exercised                                           --                    --
    Forfeited                                           --                    --
    Expired                                             --                    --
                                               ---------------------------------
Outstanding, February 28, 2007                     682,000       $
                                                                            1.50
                                               =================================
Exercisable, February 28, 2007                     282,000       $
                                                                            1.50
                                               =================================

At February 28, 2007,  62,000 of the  exercisable  options expire in August 2010
with the remaining balance of 220,000 having an expiration date of August 2015.

NOTE 15.  SERIES A PREFERRED STOCK CONVERSION AND WARRANT EXERCISE

On November 7, 2006, a holder of our series A preferred  stock  exercised  their
right to covert 66,666 shares of our series A preferred  stock into 66,666 share
of common  stock.  As such, we issued 66,666 shares of common stock and canceled
66,666 shares of our series A.

On February 22, 2007, we issued 533,333 shares of common stock to an investor of
our April 12, 2006 financing in connection with the exercise of 533,333 Series J
warrants  received by such  investor as part of the  financing.  We received net
proceeds of approximately $276,000 pursuant to the exercise of these warrants.

NOTE 16.  GOING CONCERN




                                                                              21
<PAGE>

Prior to the completion of our Preferred  Stock  Financing  working  capital had
been primarily  financed with various forms of debt. We have suffered  operating
losses  since  inception  in our efforts to  establish  and execute our business
strategy.  As of  February  28,  2007,  we had a cash  balance of  approximately
$2,226,000. Although management believes that we have adequate funds to maintain
our business operations into the third and fourth quarter and/or until we become
cash flow positive,  we continued to suffer operational losses in the first half
of our 2007  fiscal  year.  Until our  operations  are able to  demonstrate  and
maintain positive cash flows, we may require  additional working capital to fund
our  ongoing  operations  and  execute  our  business  strategy.  Based on these
factors,  there is  substantial  doubt  about our ability to continue as a going
concern.

The  financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  and classification of liabilities that might be necessary should
we be unable to continue as a going concern.  Our ability to continue as a going
concern is dependent upon our ability to generate  sufficient cash flows to meet
our  obligations on a timely basis and ultimately to attain  profitability.  Our
management  intends to obtain  working  capital  through  operations and to seek
additional funding through debt and equity offerings to help fund our operations
as we expand. There is no assurance that we will be successful in our efforts to
raise additional working capital or achieve profitable operations. The financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

NOTE 17.  SUBSEQUENT EVENTS

On April 5 2007,  we issued  88,000 shares of common stock to an investor of our
April 12th financing in connection with the exercise of 88,000 Series J warrants
received by such investor as part of the financing.  We received net proceeds of
approximately $45,600 pursuant to the exercise of these warrants.

On April 12, 2007 we issued  1,266,667  shares of common stock to an investor of
our April  12th  financing  in  connection  with  such  investor's  exercise  of
1,266,667 Series J warrants he received as part of the April 12th financing.  We
received  net  proceeds of  approximately  $655,500  pursuant to the exercise of
these warrants.

On April 12, 2007, we issued 188,800 shares of our Series A Preferred  Stock and
the  followings  warrants:  (i) Series A Warrant,  (ii) Series B Warrant,  (iii)
Series C Warrant,  (iv)  Series D Warrant,  (v) Series J Warrant,  (vi) Series E
Warrant,  (vii)  Series F Warrant,  (viii)  Series G Warrant,  and (ix) Series H
Warrant, each to purchase a number of shares of Common Stock equal to 50% of the
number of shares of Series A Preferred Stock purchased,  except for the Series J
Warrants,  which  entitled  the  investor  to purchase a number of shares of our
common  stock equal to 100% of the number of shares of Series A Preferred  Stock
purchased.  We issued a total of 944,000  Warrants.  Each of the  Warrants has a
term of 5 years, except for the Series J Warrants,  which have a term of 1 year.
Each share of the Series A Preferred  Stock is  convertible  into one fully paid
and  nonassessable  share of our common  stock.  These shares and warrants  were
issued as a result of the  exercise  of 188,800  placement  consultant  warrants
received as a result of our April 12, 2006  financing.  We received net proceeds
of approximately $106,000 pursuant to the exercise of these warrants.

On April 12, 2007,  we issued  188,800  shares of common stock to the  placement
consultant of our April 12, 2006  financing in  connection  with the exercise of
188,800  Series J warrants,  which the  placement  consultant  received from his
exercise  of his  placement  consultant  warrant.  We received  net  proceeds of
approximately $106,000 pursuant to the exercise of these warrants.


ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

THE  FOLLOWING  DISCUSSION  SHOULD  BE READ IN  CONJUNCTION  WITH OUR  FINANCIAL
STATEMENTS  AND THE NOTES  THERETO  WHICH APPEAR  ELSEWHERE IN THIS REPORT.  THE
RESULTS  SHOWN  HEREIN  ARE NOT  NECESSARILY  INDICATIVE  OF THE  RESULTS  TO BE
EXPECTED  IN  ANY  FUTURE  PERIODS.  THIS  DISCUSSION  CONTAINS  FORWARD-LOOKING
STATEMENTS BASED ON CURRENT EXPECTATIONS,  WHICH INVOLVE  UNCERTAINTIES.  ACTUAL
RESULTS   AND  THE  TIMING  OF  EVENTS   COULD   DIFFER   MATERIALLY   FROM  THE
FORWARD-LOOKING  STATEMENTS AS A RESULT OF A NUMBER OF FACTORS.  READERS  SHOULD
ALSO  CAREFULLY  REVIEW  FACTORS SET FORTH IN OTHER REPORTS OR DOCUMENTS THAT WE
FILE FROM TIME TO TIME WITH THE SECURITIES AND EXCHANGE COMMISSION.

OVERVIEW

In the  first  quarter  of our 2007  fiscal  year,  we  started  harvesting  the
remaining balance of our 2004 year class of scallops and completed  transferring
our 2005  year-class  scallops that were still  maturing in our tenured  growing


                                                                              22
<PAGE>

sites and joint  venture  locations,  to final stage large  grow-out nets on our
farm sites.  We refer to the  year-class of scallops  based on when the scallops
were spawned.  Generally, the harvest occurs approximately 22 to 24 months after
spawning of the  scallops.  Originally,  we planned to ear-hang  our entire 2005
scallop crop and subsequent  year-classes,  but after inspection of growth rates
of the 2004  ear-hung  crops and an analysis  of the labor costs of  ear-hanging
versus  lantern-style  netting,  we decided  to use nets for the final  grow-out
stage of the 2005 crop and subsequent classes.

The harvest of the remaining 2004 scallop-class  started slower than expected as
we worked to develop improved processing and handling facilities and because the
handling and harvesting of these ear-hung scallops (on our farm sites) proved to
be tougher and more time consuming than originally expected.  The combination of
these two factors resulted in slower than anticipated harvest rates in the first
quarter.  Management  believes  that the improved  processing  facility that was
completed in the second  quarter of 2007 will provide us with several  important
advantages  that will lead to expedited sale  processes in the upcoming  months.
Such advantages,  which include a large onshore handling area that enables us to
bring product  indoors (when needed) for  line-removal  and mass sorting (versus
having  to do the same  onboard  boats)  and  provides  a  significantly  larger
inventory  holding and handling area,  will help prevent future weather  related
harvest  delays to our  sales.  Starting  with the 2005  scallop  class,  future
scallops  will be  grown in nets and  hung  from our new and  improved  longline
system thereby  eliminating most of the problems that we experienced  harvesting
(and handling) the ear-hung  product.  Despite the slower than expected start to
the 2004  year-class  harvest and handling  problems with our remaining ear hung
product,  we anticipate  bringing a significant number scallops to market before
the end of 2007 fiscal year. We began harvesting our 2005 scallop class in March
of 2007 and expect to bring between 3 and 4 million  scallops to market over the
next twelve months.  Additionally,  we plan on generating  additional  near term
revenues via the sale of scallop and possibly other shellfish seed.

The use of DNA  based  family  analysis  that  started  in  early  2000 and will
continue through 2007, with the goal of breeding high meat yield scallops, began
showing  results in the harvest of our 2004 scallop  class.  Average  weight per
scallop  increased from 150-180 grams to over 225-250 grams --  representing  an
increase  of over 20% from  the  previous  year.  Management  believes  that the
improved  meat yield will allow us to continue to demand higher  scallop  prices
per animal.  Also, the Pacific scallop,  farmed by us, continues to prove itself
highly  disease  resistant,  with up to a 95% survival  rate during the grow-out
phase.

During the first and second quarter of our 2007 fiscal year, we continued moving
the 2006  scallop  crop from the  onshore  ponds at our  harvest  facility  into
grow-out  nets at our tenure sites.  We anticipate  that of the over 350 million
larvae  that were  spawned  during the 2006  spawning  season,  at least 5 to 10
million  scallops could reach full maturity and thus be harvested.  We expect to
begin  harvesting  the 2006  year-class  scallops  during  the  Spring  of 2008,
however,  we could begin  harvesting  portions of the class  sooner if mortality
rates (at various points of the growth cycle) are significantly  better than our
current projection or if growth rates are substantially  higher. In addition, we


                                                                              23
<PAGE>

expect our new longline and anchor systems, scallop nets and improved processing
facility  will  continue  to improve  harvesting  rates as our  scallop  classes
increase in size.

As a result of the above, we believe that the 2005 scallop-class will produce at
least $5.5 million of gross  revenue  over a twelve  month  period  beginning in
April of 2007.  We  anticipate  that the harvest of our 2006 scallop  class will
eventually  result in total  gross  revenue of at least $14.0  million  over the
twelve month period  beginning in April 2008. If our mortality  rates are better
than our current projections,  our revenues from the 2005 and 2006 scallop class
could be higher, however,  conversely,  if our mortality rates are worse than we
anticipate  our revenues for this period could be lower than we  anticipate.  In
addition,  changes in the anticipated growth rates,  projected harvesting cycles
and large fluctuations in the price of scallops or the US-Canadian exchange rate
could impact our current projections.

COMPARISON  OF RESULTS FOR THE THREE  MONTHS AND SIX MONTHS  ENDED  FEBRUARY 28,
2007 TO THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2006.

Revenues.   Revenues  for  the  three  months  ended  February  28,  2007,  were
approximately  $182,000. We had revenues of approximately $143,000 for the three
months ended February 28, 2006. This is an increase of approximately  $39,000 or
27%.  Revenues for the six months ended  February  28, 2007,  was  approximately
$305,000 as compared to $304,000 for the six months ended February 28, 2006. The
slower than expected  increase in our revenues was mainly the result of a slower
than anticipated start to the 2004 harvest and an unexpected early season winter
storm that forced us to curtail  harvesting  operations during at least one week
in November.  Handling and harvesting of our 2004 ear-hung  scallops also proved
to be tougher and more time consuming than originally expected,  thereby slowing
our  anticipated  harvest rates.  In addition,  revenue for the six months ended
February 28, 2006, was also bolstered by a one-time sale on inventory  equipment
and large scallop seed sales.  As such,  scallop-only  sales were higher for the
six months  ending  February  28,  2007,  as  opposed  to the six months  ending
February 28, 2006. As in the previous year, management continued its emphasis on
the  development  and production of larger future (2005 and 2006) scallop crops.
Management  believes that our emphasis on expansion of future crops coupled with
the recently completed new processing facility will yield a significant increase
in revenue starting as early as our next quarter and continuing thereafter.

Gross profit  (loss).  Gross loss for the three months ended  February 28, 2007,
was approximately  $92,000, an increase of approximately $102,000 as compared to
gross profit of roughly  $10,000,  for the three months ended February 28, 2006.
For the six  months  ended  February  28,  2007,  gross  loss was  approximately
$160,000.  For the six months  ended  February  28,  2006 gross loss was roughly
$2,000.  The  increase in the amount of gross loss for this quarter (as compared
to the same  periods in our 2006  fiscal  year) was mainly  attributable  to the
slower  than  anticipated  start to our 2004  class of  scallops'  harvest as we
worked to develop  improved  processing and handling  facilities.  Additionally,
because of an unusually  large winter storm in  November,  we  experienced  some
minor weather related sale delays as harvesting operations were under way during
November. Aside from the slower than expected first quarter scallop sales, part


                                                                              24
<PAGE>

of the increase in gross loss was  attributable  to an increase in costs related
to a ramp-up of our  processing  personnel in preparation  for increased  future
harvests and sales.

General and  administrative.  General and administrative  expenses for the three
months ended February 28, 2007,  were  approximately  $245,000.  Our general and
administrative  expenses were  approximately  $63,000 for the three months ended
February  28,  2006.  This is an  increase  of  approximately  $182,000 or 289%.
General and administrative  expenses for the six months ended February 28, 2007,
were  approximately  $421,000.  Our general  and  administrative  expenses  were
approximately  $106,000 for the six months ended  February 28, 2006.  This is an
increase  of  approximately  $315,000  or 297%.  Our  increase  in  general  and
administrative  expenses  for the three and six months  ended  February 28, 2007
were  attributable  to  costs  associated  with  establishing,   building,   and
supporting our  infrastructure  and included various consulting costs, legal and
accounting fees, compensation paid as result of our recent financing,  overhead,
and salaries. We anticipate that these costs may continue to rise as we continue
to expand our operations.

Stock compensation  expense.  During the three and six months ended February 28,
2007,  our Board of Directors  did not  authorize  the issuance of shares of our
restricted  common  stock for  compensation.  As a result,  we did not incur any
stock compensation  expense for the three months ended February 28, 2007. During
the six months ended  February 28, 2006,  our Board of Directors  authorized the
issuance of shares of our restricted  common stock to two consulting  groups who
would  provide  services to us. Based upon the common stock trading price at the
times of issuance,  and FASB rules, we were required to incur non-cash  expenses
for the issuance of stock of approximately $183,000.

Other  income  (expense),  net.  Interest  expense  for the three  months  ended
February 28, 2007,  was  approximately  $5,000.  Interest  expense for the three
months ending  February 28, 2006,  was  approximately  $53,000.  The decrease in
interest  expense was mainly due to  repayment of a large short term note in the
third  quarter of 2006.  Other income for the three  months  ended  February 28,
2007, was  approximately  $159,000 as opposed to other expense of  approximately
$517,000 for the three months ended February 28, 2006.  This increase was mainly
due to a one time gain of approximately $159,000 related to the forgiveness of a
third party short-term  debt. We recognized a gain of  approximately  $8,595,000
which was  related  to a  reclassification  of  certain  liabilities  related to
warrants issued to 10 institutional and accredited investors in conjunction with
preferred  stock  financings  on April 12, May 30,  June 30,  July 11,  2006 and
January 16, 2007 and a resultant  change in the fair value of such warrants as a
result of the  reclassification  as well as the market price of the common stock
underlying such warrants at November 30, 2006. No such gain or loss was recorded
for the period  ended  February 28,  2006.  Interest  expense for the six months
ended  February  28,  2007 was  approximately  $12,000 as  compared  to interest
expense of roughly  $106,000 for the six months ending February 28, 2006.  Other
income for the six months ended  February 28, 2007 was  approximately  $161,000.
For the six months ended February 28, 2006, other expense was roughly  $513,000.
This  increase in other  income was mainly due to  issuance of 520,000  share of
restricted stock to one group in consideration for the extension of the due date
on a share  term loan to Island  Scallops  and a one time gain of  approximately
$158,000 related to the forgiveness of a third party short-term debt in 2007. We
recognized a gain of approximately $5,827,000 which was related to the change in


                                                                              25
<PAGE>

the fair value of warrants issued to 10 institutional  and accredited  investors
in  conjunction  with preferred  stock  financings on April 12, May 30, June 30,
July 11,  2006 and January  16,  2007 and the market  price of the common  stock
underlying  such  warrants for the six months ended  February 28, 2007.  No such
gain or loss was recorded for the period six months ended February 28, 2006.


As a result,  other income for the three and six months ended February 28, 2007,
was  approximately  $8,749,000  and  $5,976,000  as compared to other expense of
approximately  $570,000 and $619,000 for the three and six months ended February
28, 2006.  This increase was primarily  attributed to gain  associated  with the
reclassification  of certain  liabilities  associated  with  warrants  issued to
investors in our Series A and B Preferred  Stock  financings  and the  resultant
change in fair value of the warrants  following the  reclassification  (See Foot
Note 12 to our Financial  Statements  "Reclassification  of Warrant  Liabilities
Associated with Series A and Series B Preferred Financings.").

Net profit  (loss).  As a result of the above,  the net profit for three and six
months ended February 28, 2007, was  approximately  $8,339,000 and $5,235,000 as
compared to a net loss of approximately  $659,000 and $989,000 for the three and
six months ended February 28, 2006.

Liquidity  and Cash  Resources.  At February 28, 2007,  we had a cash balance of
approximately $2,225,000. Between April 2006 and January 2007, we completed five
private  equity  financings  that  resulted  in net  proceeds  of  approximately
$7,004,000.  These  financings  contain  warrants which if fully exercised could
raise approximately an additional $49,350,000.  In February,  2007, one investor
exercised warrants that net us an additional  $276,000.  The exercise of the any
additional  warrants is, however,  to a large extent dependent upon the price of
our stock in the public market. As a result, we cannot guarantee when any of the
warrants  will be exercised,  if at all and, as a result,  the proceeds from the
exercise of the  warrants  may not be  available to us at a time when we require
additional  financing or ever.  Prior to the  completion of the Preferred  Stock
Financing in the third quarter of 2006,  our working  capital had been primarily
financed  with various forms of debt.  Previously,  we also relied on short term
loans from certain  shareholders to assist with our working capital needs and to
meet short  term cash  requirements.  We used a portion  of our  recent  private
equity  financing  to repay  these short term loans and as a result we have been
able to deploy the bulk of the proceeds from our  financing  toward our business
strategy.  In  addition  to the  foregoing,  we  are  currently  conducting  due
diligence  regarding  the possible  acquisition  of a clam farming  operation in
Morocco. Although to date we have not entered into any definitive agreements, in
the event that we determine to go ahead with such an  acquisition it will result
in commitment of up to $1,000,000 in capital to such  acquisition  over a period
of approximately six months to one year. We anticipate that if we decide to move
forward  with such  acquisition  it would occur  sometime in the third or fourth
fiscal quarter of 2007.


ITEM 3.  CONTROLS AND PROCEDURES



                                                                              26
<PAGE>


(a)      Evaluation of disclosure controls and procedures
         ------------------------------------------------

Under the supervision and with the  participation  of our management,  including
our  principal  executive  officer  and  acting  chief  accounting  officer,  we
evaluated  the  effectiveness  of the design  and  operation  of our  disclosure
controls and  procedures,  as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities  Exchange  Act of  1934,  as of  November  30,  2006.  Based  on this
evaluation,  our  principal  executive  officer and our acting chief  accounting
officer concluded that, as of the end of the period covered by this report,  our
disclosure  controls and procedures  were  effective and adequately  designed to
ensure that the  information  required to be  disclosed  by us in the reports we
file or submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported  within the time periods  specified in applicable  rules
and forms and that our Internal  Controls are effective at that assurance  level
to  provide  reasonable  assurance  that our  financial  statements  are  fairly
presented  inconformity  with accounting  principals  generally  accepted in the
United States.


(b)      Changes in internal controls
         ----------------------------

During the quarter  ended  February  28,  2007,  there has been no change in our
internal control over financial  reporting that has materially  affected,  or is
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.

Management  does not expect that Disclosure  Controls or Internal  Controls will
prevent all error and all fraud. A control system,  no matter how well developed
and operated,  can provide only reasonable,  but not absolute assurance that the
objectives  of the control  system are met.  Further,  the design of the control
system  must  reflect  the fact that  there are  resource  constraints,  and the
benefits of controls must be considered relative to their costs.  Because of the
inherent  limitations  in all control  systems,  no  evaluation  of controls can
provide  absolute  assurance that all control issues and instances of fraud,  if
any, within the company have been detected.  These inherent  limitations include
the  realities  that  judgments  in  decision-making  can  be  faulty  and  that
breakdowns can occur because of simple error or mistake. Additionally,  controls
can be circumvented by the individual acts of some persons,  by collusion of two
or more people, or by management override of the control. The design of a system
of controls also is based in part upon certain  assumptions about the likelihood
of future events,  and there can be no assurance that any design will succeed in
achieving its stated  objectives  under all potential  future  conditions.  Over
time, control may become inadequate because of changes in conditions, or because
the degree of  compliance  with the  policies  or  procedures  may  deteriorate.
Because  of  the  inherent  limitations  in  a  cost-effective  control  system,
misstatements due to error or fraud may occur and not be detected.





                                                                              27
<PAGE>



                           PART II - OTHER INFORMATION



ITEM 1.   LEGAL PROCEEDINGS

In 1998 our wholly owned subsidiary,  Island Scallops, entered into an Agreement
with two  parties,  pursuant to which  Island  Scallops  was to produce and sell
geoduck seed to the two parties.  Island Scallops received advance payments from
each of the two parties in 2002 totaling  approximately  $64,140. As a result of
breaches of the purchase  agreements by the purchasers,  it is our position that
we may retain any unused portion of these advance payments.

As of August  31,  2004,  one of the two  purchasers  had  claimed  that  Island
Scallops  owed it amounts  totaling  $88,925.  Since it is our position that the
purchasers breached their agreements with Island Scallops,  we have no intention
of  seeking a  settlement  of this  matter at this time.  We are  unaware of any
formal  proceedings  that  may have  been  commenced  by  either  of  these  two
purchasers in regard to any claims that they may have.

Other  than  as set  forth  herein,  we are not a party  to any  material  legal
proceeding and to our knowledge; no such proceeding is currently contemplated or
pending.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


(a)      Unregistered Sales of Equity Securities

Pursuant to the financing we closed on January 16, 2007, we issued 207 shares of
our Series B Preferred Stock. The shares were issued to two accredited investors
pursuant to the  exemption  from  registration  provided by Section  4(2) of the
Securities Act for issuances not involving any public offering.

In  connection  with the  January 16, 2007  financing,  we issued the  placement
consultant a placement  consultant  warrant,  exercisable  for a period of three
years from the date of issue and has an exercise  price of $1.15 per share.  The
warrant  allows the  placement  consultant  to  purchase  up to (i) 20 shares of
Series  B  Preferred  Stock,  and  each of the  following  warrants,  which  are
identical to the warrants issued to the investors of the financing: (i) Series A
Warrant,  (ii) Series B Warrant,  (iii) Series C Warrant, (iv) Series D Warrant,
(v) Series J Warrant, (vi) Series E Warrant, and (vii) Series F Warrant, each to
purchase 90,004 shares of common stock, except for the Series J Warrants,  which
shall entitle the  consultant to purchase  180,008  shares of common stock.  The
shares  were  issued in  accordance  with the  exemption  from the  registration
provisions of the Securities  Act of 1933, as amended,  provided by Section 4(2)
of such Act for issuances not involving any public offering.


                                                                              28
<PAGE>


On February 1, 2007 we issued  Kitsilano  Capital Corp.  four 100,000 options to
purchase our common stock,  pursuant to our Consulting  Agreement with them. The
first  option vests on May 1, 2007,  the second on August 1, 2007,  the third on
February 1, 2008 and the fourth on June 1, 2008, so long as Kitsilano  continues
to  provide  services  to us under  the  Consulting  Agreement.  Each  option is
exercisable  for a  period  of three  years  from  the  vesting  date and has an
exercise  price of  $1.20,  $1.40,  $1.60  and $1.80  respectively.  The  shares
underlying the options have piggy-back  registration  rights that required us to
register  the shares in our last  registration  statement.  The  options and the
shares  underlying  were  issued  in  accordance  with  the  exemption  from the
registration  provisions of the Securities Act of 1933, as amended,  provided by
Section 4(2) of such Act for issuances not involving any public offering.


(b)      Not Applicable.

(c)      Not Applicable.

(d)      Not Applicable.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

(a)      Not Applicable.

(b)      Not Applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At our 2007 Annual  Shareholder  Meeting,  which was held on February  12, 2007,
15,591,851  (73.59%) of our  shareholders  voted to re-elect our entire board of
directors.  There were no votes against or withheld for any of the nominees, nor
were there any broker non-votes or abstentions.

ITEM 5. OTHER INFORMATION


     (a)  On March 22, 2007,  our  directors  amended and restated our bylaws by
          unanimous  written  consent  in lieu of a board  meeting.  Article  I,
          Section 1 of the bylaws was amended to  accurately  state the location
          of our current  principal  office,  which is 400  Professional  Drive,
          Suite 310, Gaithersburg,  Maryland 20878 and Article II, Section 2 was
          amended to allow for  directors  to be elected by a  plurality  of the
          votes cast at the election  (previously,  directors  were elected by a
          majority  vote).  Since  Nevada law permits  board of  directors to be
          elected  by  a  plurality,   our  directors  determined  that  it  was
          beneficial to amend our bylaws to permit same. Our amended and restate
          bylaws are attached as an exhibit to this report.


                                                                              29
<PAGE>


(b)      Not applicable.

ITEM 6.  EXHIBITS

(a) The following exhibits are filed as part of this report.

           Exhibit No.                     Document

               3.1            Articles of Incorporation, as amended

               3.2            Amended and Restated Bylaws

               4.1            Form  of  Series  B  Convertible  Preferred  Stock
                              Purchase Agreement, dated January 16, 2007, by and
                              between  the  Company  and each of the  Purchasers
                              thereto.  (Incorporated  by  reference  to Exhibit
                              10.1 to the Company's  Current  Report on Form 8-K
                              filed on January 17, 2007).

               4.2            Form  of  Registration  Rights  Agreement,   dated
                              January 16,  2007,  by and between the Company and
                              each of the Purchasers  thereto.  (Incorporated by
                              reference to Exhibit 10.2 to the Company's Current
                              Report on Form 8-K filed on January 17, 2007).

               4.3            Form of  Certificate  of Designation of Rights and
                              Preferences  of  Series  B  Convertible  Preferred
                              Stock.  (Incorporated by reference to Exhibit 10.3
                              to the Company's  Current Report on Form 8-K filed
                              on January 17, 2007).

               4.4            Form of Lock-Up  Agreement  dated January 16, 2007
                              by  and  between  the  Company  and  each  of  the
                              shareholders  listed  therein.   (Incorporated  by
                              reference to Exhibit 10.4 to the Company's Current
                              Report on Form 8-K filed on January 17, 2007).

               4.5            Form  of  Warrant   to   purchase   Common   Stock
                              (Incorporated  by  reference  to Exhibits  10.5 to
                              10.11 to the Company's  Current Report on Form 8-K
                              filed on January 17, 2007).

               4.6            Placement    Consultant   Agreement   with   Pai's
                              International  Trade,  Inc.  dated  March 9, 2006.
                              (Incorporated  by reference to Exhibit 10.7 in the
                              Company's  Registration  Statement  on  Form  SB-2
                              filed on October 10, 2006).





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<PAGE>

               4.7            Form of Common Stock  Purchase  Warrant  issued to
                              Kitsilano Capital Corp.  (Incorporate by reference
                              to  Exhibit  4.12  to the  Company's  Registration
                              Statement on Form SB-2 filed on February 9, 2007).

               10.1           Form  of   Escrow   Agreement   (Incorporated   by
                              reference  to  Exhibit   10.12  to  the  Company's
                              Current  Report on Form 8-K filed on  January  17,
                              2007).

               10.2           Consulting  Agreement  between  Kitsilano  Capital
                              Corp.  and the  Company  dated  February  1,  2007
                              (Incorporated  by reference to Exhibit 10.9 to the
                              Company's  Registration  Statement  on  Form  SB-2
                              filed on February 9, 2007).

               31.1           Certification  of  Chief  Executive   Officer  and
                              Acting Chief  Financial  Officer  required by Rule
                              13a-14/15d-14(a) under the Exchange Act

               32.1           Certification  of  Chief  Executive   Officer  and
                              Acting  Chief  Financial  Officer  pursuant  to 18
                              U.S.C.   Section  1350,  as  adopted  pursuant  to
                              Section 906 of the Sarbanes-Oxley Act of 2002.



                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


Date:  April 13, 2007                            EDGEWATER FOODS
                                                 INTERNATIONAL, INC.

                                       By:  /s/  Robert Saunders
                                                 ---------------
                                                 Robert Saunders,
                                                 Chief Executive Officer

                                       By:  /s/  Michael Boswell
                                                 ---------------
                                                 Michael Boswell,
                                                 Acting Chief Accounting Officer







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