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 NOVEMBER 30, 2006

  [ ]     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 OR ORGANIZATION)

                            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 JANUARY 16, 2006, THERE WERE 21,188,491  SHARES OF COMMON STOCK, PAR VALUE
$0.0001  OUTSTANDING AND 7,821,333 SHARES OF PREFERRED SERIES A STOCK, PAR VALUE
IS $.001.


<PAGE>



PART I-FINANCIAL INFORMATION ............................................     3

Item 1. Financial Statements Note:

Unaudited Consolidated Balance Sheet at November 30, 2006................     3

Unaudited Consolidated Statements of Operations for the three months
ended November 30, 2006 and 2005 ........................................     5

Unaudited Consolidated Statements of Cash Flows or the three months
ended November 30, 2006 and 2005.........................................     6

Unaudited notes to Consolidated Financial Statements.....................     8

Item 2-Management's Discussion and Analysis of Results of Operations
and Financial Condition .................................................    19


Item 3-Controls and Procedures ..........................................    22

PART II-OTHER INFORMATION................................................    24

Item 1.  LEGAL PROCEEDINGS...............................................    24

Item 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.....    24

Item 3.  DEFAULTS UPON SENIOR SECURITIES.................................    24

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ............    25

Item 5.  OTHER INFORMATION...............................................    25

Item 6.  EXHIBITS .......................................................    25








                                                                               2
<PAGE>


PART I - FINANCIAL INFORMATION

                          EDGEWATER FOODS INTERNATIONAL
                           CONSOLIDATED BALANCE SHEET
                                NOVEMBER 30, 2006
                                   (unaudited)
                                                                        2006
                                                                        ----
ASSETS

Current assets:
       Cash                                                        $    815,815
       Accounts receivable, net                                          52,133
       Inventory                                                      1,389,664
       Other current assets                                              74,469
                                                                   ------------

       Total current assets                                           2,332,081

Property, plant and equipment, net                                    2,094,598

Investments in other assets                                               3,526
                                                                   ------------

       Total assets                                                $  4,430,205
                                                                   ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
       Short term debt                                             $    456,045
       Current portion of warrant liabilities                         1,942,024
       Current portion of long term debt                                445,648
       Accounts payable and accrued liabilities                         620,220
                                                                   ------------

       Total current liabilities                                      3,463,937

Warrant liabilites, net of current portion                           22,985,903
Long term debt, net of current portion                                  425,020
                                                                   ------------

       Total liabilities                                             26,874,860
                                                                   ------------

Stockholders' deficit
       Series A Preferred stock, no par $0.001, 10,000,000
        authorized, 7,821,333 issued and outstanding                      7,821
       Common stock, no par $0.0001, 100,000,000
        authorized, 21,049,926 issued and outstanding                     2,105
       Additional paid in capital                                            60
       Accumulated deficit                                          (22,154,289)
       Accumulated other comprehensive income -
        foreign exchange adjustment                                    (300,352)
                                                                   ------------

       Total stockholders' deficit                                  (22,444,655)
                                                                   ------------


                                                                               3
<PAGE>


       Total liabilities and stockholders' deficit                 $  4,430,205
                                                                   ============


See accompanying notes to consolidated financial statements.














                                                                               4
<PAGE>



                          EDGEWATER FOODS INTERNATIONAL
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                         THREE MONTHS ENDING NOVEMBER 30


                                                       2006            2005
                                                   ------------    ------------
                                                    (unaudited)     (unaudited)

Revenue                                            $    123,187    $    160,035
Cost of goods sold                                      191,069         171,733
                                                   ------------    ------------

Gross margin                                            (67,882)        (11,698)
                                                   ------------    ------------

Expenses from operations:
      General and administrative expenses              (175,931)        (43,111)
      Salaries and benefits                             (88,381)        (44,016)
      Stock compensation expense                           --          (182,500)
                                                   ------------    ------------

Total operating expenses                               (264,312)       (269,627)
                                                   ------------    ------------

Loss from operations                                   (332,194)       (281,325)
                                                   ------------    ------------

Other income (expense):
      Interest expense, net                              (6,760)        (53,519)
      Change in fair value of warrants               (2,768,477)           --
      Other income                                        2,308           4,102
                                                   ------------    ------------

                Other income (expense), net          (2,772,929)        (49,417)
                                                   ------------    ------------

Net loss                                             (3,105,123)       (330,742)

Foreign currency translation                            (44,032)        (23,177)

Total comprehensive loss                           $ (3,149,155)   $   (353,919)
                                                   ============    ============

Net loss per share
      Basic and diluted                            $      (0.15)   $      (0.02)

Weighted average shares outstanding
      Basic and diluted                              21,000,842      20,564,246



See accompanying notes to consolidated financial statements.

                                                                               5
<PAGE>


                          EDGEWATER FOODS INTERNATIONAL
                      CONSOLIDATED STATEMENTS OF CASHFLOWS
                         THREE MONTHS ENDED NOVEMBER 30

                                                         2006           2005
                                                     -----------    -----------
                                                     (unaudited)    (unaudited)
Cash flows from operating activities:

     Net loss                                        $(3,105,123)   $  (330,742)

     Adjustments to reconcile net loss to net cash
     used in operating activities:
       Depreciation, depletion and amortization           49,055         79,869
       Changes in fair value of warrants               2,768,477           --
       Common stock issued for services                     --          182,500

     Changes in current assets and liabilities:
       Accounts receivable                               (13,283)       (36,995)
       Other current assets                               (6,873)         4,404
       Inventory                                        (137,613)      (173,051)
       Accounts payable                                  (67,874)        70,387
       Bank overdrafts                                      --           11,964
                                                     -----------    -----------

Net cash used in operating activities                   (513,234)      (191,664)
                                                     -----------    -----------

Cash flows from investing activities:

     Purchase of property, plant and equipment          (360,571)        (2,499)
                                                     -----------    -----------

Net cash used in investing activities                   (360,571)        (2,499)
                                                     -----------    -----------

Cash flows from financing activities:

     Proceeds from short term debt                          --          244,433
     Payment of short term debt                             (522)          --
     Proceeds of long term debt                             --            1,069
     Payment of long term debt                           (90,839)        (6,523)
                                                     -----------    -----------

Net cash provided by (used in) financing activities      (91,361)       238,979
                                                     -----------    -----------

Foreign currency translation effect                      (35,761)       (45,223)

Net decrease in cash                                  (1,000,927)          (407)

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

Cash, end of period                                  $   815,815    $       153
                                                     ===========    ===========

Supplemental disclosure of cash flow information


                                                                               6
<PAGE>


Net cash paid
Interest                                             $      --      $      --
                                                     ===========    ===========
Income taxes                                         $      --      $      --
                                                     ===========    ===========


See accompanying notes to consolidated 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


                                                                               8
<PAGE>

accounting  principles  generally  accepted in the United  States of America for
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 months ended November
30, 2006, 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 November 30, 2006, inventory consisted of the following:

Biomass (Scallops):                         $1,389,664

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



                                                                               9
<PAGE>

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
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 November 30, 2006 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 2005 amounts have been reclassified to conform to 2006 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



                                                                              10
<PAGE>

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
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. The Company is 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. The Company does not expect the adoption of
this  interpretation  to have an impact on its financial  position or results of
operations.

NOTE 3.  PROPERTY, PLANT AND EQUIPMENT

Property, Plant and Equipment at November 30, 2006 consisted of the following:



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

Land                               $  222,163     $        -        $  222,163
Buildings                             501,896        222,957           278,939
Seawater piping and tanks             527,219        268,731           258,488
Boats and Barge                       329,282        120,863           208,419
Field equipment                     1,839,960        738,283         1,101,677
Office equipment                       14,585         12,268             2,317
Vehicles                               37,297         32,618             4,679
Computer equipment                     23,801          5,885            17,916
                                    ------------------------------------------
                                   $3,496,203     $1,401,605        $2,094,598


Depreciation expenses for the three month ended November 30, 2006 was $49,055.



                                                                              11
<PAGE>


NOTE 4.  RELATED PARTY TRANSACTIONS

We have five secured notes receivable from RKS  Laboratories,  Inc., a Vancouver
research and development that is working towards developing  superior strains of
scallops  with  beneficial  traits such as higher  meat yield and rapid  growth.
(Robert Saunders owns 100% of RKS.) The first  non-interest  bearing note in the
amount of $17,632  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 $4,858 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 $17,632 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 $13,224 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
$2,379 is also  secured  by all assets of RKS is due on or before  November  30,
2007. These amounts are included in other current assets.

NOTE 5.  INVESTMENTS IN TENURES

Edgewater carries its Investment in Tenures at $3,526 at November 30, 2006. This
amount  represents the carrying costs of certain  shellfish  tenures acquired by
Island   Scallops'   subsidiary,   377332  B.C.  Ltd.   Shellfish   tenures  are
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
$15,902 at November  30,  2006.  We used these  credit cards as a means of short
term financing and incurs interest charges on such unpaid balances.

Included in accounts payable and accrued liabilities at November 30, 2006, is an
amount of $116,247 in respect to an agreement  to purchase  geoduck seed from us
(for additional information see Note 10 - Contingent Liabilities).

Included in accounts payable and accrued  liabilities at November 30, 2006 is an
amount of $64,922 payments due and interest accrued in respect to the loan from


                                                                              12
<PAGE>

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 $1,984 per month  including  interest  calculated at the greater of
10% and (Canadian)  prime plus 6% (12% as of November 30, 2006). The loan, which
is due on April 1, 2007,  is secured by a second  charge on the real property of
Island Scallops. At November 30, 2006, the principal due is $188,145.

These consolidated  financial  statements include 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,
which is due  January 1, 2007.  If we did not  generate  sufficient  revenues to
repay the original  amount of $160,503 by the due date,  the  remaining  portion
($160,139  as of  November  30,  2006)  of the loan is to be  forgiven.  Amounts
currently due bear interest  based on the published  rates of 90 day  (Canadian)
treasury bills.

Included in  short-term  debt at November  30, 2006,  is estimated  royalties of
$58,674 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  from the Company 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 inventory of the
Company  (including  broodstock)  in the  amount of  $308,560  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
$58,674 as a current liability and we plan to pay it with available funds in the
near future.

Included  in  short-term  notes  payable at November 30, 2006,  is an  unsecured
non-interest bearing demand loan from an individual with a face value of $44,226
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 $458 per month plus
interest calculated at (Canadian) prime plus 3% per annum (9% as of November 30,
2006),  that is unsecured and is due October 23, 2007. At November 30, 2006, the
principal due is $4,861.


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,



                                                                              13
<PAGE>

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 November  30, 2006,  the balance due is
$514,686,  of which  $119,420 is reflected  in the current  portion of long term
debt and the remaining balance of $395,266 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  black cod  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  $388,857,  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 August
31, 2006, bear interest at a rate of 1% per month. At November 30, 2006,  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 $64,922 that they claim is owed under this loan  agreement.  As such,  at
November  30,  2006,  $61,183  is  included  in  accounts  payable  and  accrued
liabilities and the remaining full principal balance of $326,228 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 loans to Island  Scallops.  The bank loan
is repayable at $1,102 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
November  30,  2006),  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 $44,080 by our
Chairman,  President and CEO, and former sole shareholder of Island Scallops. At
November 30, 2006, the principal due is $29,754.

NOTE 9.  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  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



                                                                              14
<PAGE>

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 30, 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
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.

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 10.  CONTINGENT LIABILITIES



                                                                              15
<PAGE>


Our wholly owned subsidiary,  Island Scallops, entered into an agreement in 1998
year 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
$116,247, 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 $33,914.

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.

NOTE 11.  STOCK-COMPENSATION EXPENSE

During the three months ended  November 30, 2006, our Board of Directors did not
authorize   the  issuance  of  shares  of  our   restricted   common  stock  for
compensation. Therefore, we did not incur any stock compensation expense for the
three months ended November 30, 2006.

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.



                                                                              16
<PAGE>


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 orginally
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 amended and restated PR Global's  agreement and PR Global
rescinded the orginal  500,000  options,  at strike prices ranging from $1.40 to
$2.20  that  were  issuable  under  the  original  agreement.   (For  additional
information please see Note 14 - Subsequent Events.)

Stock option activity during the period ending November 30, 2006 was as follows:

                                                                    Weighted
                                                Number of           Average
                                                  Shares          Exercise Price
                                              ----------------------------------
Outstanding, September 1, 2006                    282,000       $
                                                                            1.50
    Granted                                            --                     --
    Exercised                                          --                     --
    Forfeited                                          --                     --
    Expired                                            --                     --
                                              ----------------------------------
Outstanding, November 30, 2006                    282,000       $
                                                                            1.50
                                              ==================================
Exercisable, November 30, 2006                    282,000       $           1.50
                                              ==================================

At November 30, 2006,  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 12.  SERIES A PREFERRED STOCK CONVERSION

On November 7, 2007, 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 chares of our series A.

NOTE 13.  GOING CONCERN

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  November  30,  2006,  we had a cash  balance of  approximately


                                                                              17
<PAGE>

$816,000.  Although  management believes that we have adequate funds to maintain
our business operations into the second and third quarter and/or until we become
cash flow  positive,  we  continued  to suffer  operational  losses in the first
quarter 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 14.  SUBSEQUENT EVENTS

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
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 December 31, 2006, we issued  138,565 shares of common stock to the investors
of our April 12, May 30, June 30 and July 11, 2006  financings as payment of the
semi-annual  dividend  (8%  per  annum)  per the  terms  of the  Certificate  of
Designation of the Relative  Rights and  Preferences of the Series A Convertible
Preferred  Stock  (see  Note 13 -  Preferred  Shares  Financing  for  additional
information on the Series A Convertible  Preferred Stock).  The number of shares
issued was based on the Dividend Payment at a rate of 8% per annum (subject to a



                                                                              18
<PAGE>

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  $211,000  and the total  aggregate  value of the
transaction was recorded as a preferred stock dividend.


ITEM 2
MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF RESULTS OF  OPERATIONS  AND  FINANCIAL
CONDITION

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
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,  which is
almost  complete,  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  remaining
ear-hung  product indoors 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. Additionally,  future scallops (starting with the 2005 scallop class)



                                                                              19
<PAGE>

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
March 2007.  Sales of the remainder of our 2004 scallop  class between  December
2006 and April 2007 are  expected  to produce  more than  $300,000  of  revenue.
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 2006, 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.

We  anticipate  commencing  harvesting  up to  approximately  four  million 2005
year-class  scallops during April of 2007.  During the first 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 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 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 ENDED  NOVEMBER 30, 2006 TO THE THREE
MONTHS ENDED NOVEMBER 30, 2005.



                                                                              20
<PAGE>


Revenues.   Revenues  for  the  three  months  ended  November  30,  2006,  were
approximately  $123,000. We had revenues of approximately $160,000 for the three
months ended November 30, 2005. This is a decrease of  approximately  $37,000 or
23%.  The  decrease  in our  revenue  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. In addition,  handling and harvesting of our 2004 ear-hung scallops
proved to be tougher and more time consuming than originally  expected,  thereby
slowing our  anticipated  harvest  rates.  Revenue during the three months ended
November 30, 2005 was also  bolstered by a one-time sale on inventory  equipment
and larger scallop seed sales.  Scallop-only  sales were slightly  higher in the
three months ended  November 30, 2006 as opposed to the period  ending  November
20, 2005.  As in the previous  year,  management  continued  its emphasis on the
development  and  production of larger 2005 and 2006 scallop  crops.  Management
believes  that our emphasis on  expansion  of future crops  coupled with the 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  November 30, 2006,
was approximately  $68,000, an increase of approximately  $56,000 as compared to
gross loss of roughly $12,000, for the three months ended November 30, 2005. The
increase in the amount of gross loss for this  quarter (as  compared to the same
quarter 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 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 November 30, 2006,  were  approximately  $264,000.  Our general and
administrative  expenses were  approximately  $87,000 for the three months ended
November 30, 2005.  This is an increase of  approximately  $177,000 or 203%. Our
increase  in general  and  administrative  expenses  for the thee  months  ended
November  30, 2006 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 months ended November 30, 2006, 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  November 30, 2006.  During the
three months ended  November 30,  2005,  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


                                                                              21
<PAGE>

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
November 30, 2006,  was  approximately  $7,000.  Interest  expense for the three
months ending  November 30, 2005,  was  approximately  $54,000.  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  November 30,
2006,  was  approximately  $2,300 as  opposed to other  income of  approximately
$4,100 for the three months ended  November  30, 2005.  We  recognized a loss of
approximately  $2,768,000  which was  related to the change in 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 and July 11 and the
market price of the common stock  underlying such warrants at November 30, 2006.
No such loss was recorded for the period ended November 30, 2005.

As a result,  other  expense for the three months ended  November 30, 2006,  was
approximately  $2,773,000 as compared to other expense of approximately  $49,000
for the three  months  ended  November 30,  2005.  This  increase was  primarily
attributed  to loss  associated  with the change in fair  value of the  recently
issued warrants.

Net profit (loss). As a result of the above, the net loss for three months ended
November 30, 2006,  was  approximately  $3,105,000  as compared to a net loss of
approximately $331,000 for the three months ended November 30, 2005.

Liquidity  and Cash  Resources.  At November 30, 2006,  we had a cash balance of
approximately  $815,000.  During the year ending  August 31, 2006,  we completed
four private equity  financings  that resulted in net proceeds of  approximately
$5,140,000.  These  financings  contain  warrants which if fully exercised could
raise approximately an additional $34,350,000.  The exercise of the 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.



ITEM 3.  CONTROLS AND PROCEDURES


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



                                                                              22
<PAGE>


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  November  30,  2006 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.



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<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

We did not sell any of our  securities  during the quarter  ended  November  31,
2006, which is the period covered by this report.

(b)      Not Applicable.

(c)      Not Applicable.

(d)      Not Applicable.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

(a)      Not Applicable.

(b)      Not Applicable.



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<PAGE>


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

         Not applicable.

ITEM 5. OTHER INFORMATION

(a) During the quarter ended November 30, 2006, we did not submit any matters to
a vote of our security holders.

(b)      Not applicable.

ITEM 6.  EXHIBITS

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

Exhibit No.           Document

 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:  January 16, 2007                  EDGEWATER FOODS INTERNATIONAL, INC.

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

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








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