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 MAY 31, 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     IRS EMPLOYER IDENTIFICATION NO.)
        OF 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 JULY 12, 2006,  THERE WERE 20,983,260  SHARES OF COMMON STOCK  OUTSTANDING
AND 7,877,999 SHARES OF PREFERRED SERIES A STOCK. ALL STOCK PAR VALUE IS $.001.



<PAGE>


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

Item 1.  Financial Statements Note:

Unaudited Balance Sheet at May 31, 2006........................................3

Unaudited Statements of Operations for the three and nine month periods
ended May 31, 2006, and 2005...................................................4

Unaudited Statements of Cash Flows for the
  nine month periods ended May 31, 2006 and 2005...............................5

Notes to Financial Statements..................................................6

Item 2 - Management's Discussion and Analysis of Results of Operations
and Financial Condition........................................................7

Item 3 - Controls and Procedures..............................................16

PART II - OTHER INFORMATION...................................................17

Item 1.  LEGAL PROCEEDINGS....................................................17

Item 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS............................17

Item 3.  DEFAULTS UPON SENIOR SECURITIES......................................17

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................17

Item 5.  OTHER INFORMATION....................................................18

Item 6.  EXHIBITS.............................................................18




                                                                               2
<PAGE>


PART I - FINANCIAL INFORMATION

                          EDGEWATER FOODS INTERNATIONAL
                           CONSOLIDATED BALANCE SHEET
                                    UNAUDITED
                                  MAY 31, 2006


ASSETS

Current assets:
     Cash                                                          $  1,371,392
     Accounts receivable, net                                            16,176
     Inventory                                                          986,850
     Other current assets                                                94,305
                                                                   ------------

       Total current assets                                           2,468,723

Property, plant and equipment, net                                    1,249,556

Investments in other assets                                               3,629
                                                                   ------------

     Total assets                                                  $  3,721,908
                                                                   ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Bank indebtedness                                             $      4,536
     Short term debt                                                  1,932,311
     Current portion of warrant liabilities                           1,757,884
     Current portion of long term debt                                1,014,169
     Accounts payable and accrued liabilities                           312,342
                                                                   ------------

     Total current liabilities                                        5,021,242

Warrant liabilities, net current portion                             12,336,175
Long term debt, net current portion                                      45,259

     Total liabilities                                               17,402,676
                                                                   ------------

Stockholders' deficit

     Series A Preferred  stock,  par $0.001,10,000,000
     authorized, 3,888,000 issued and outstanding at May 31, 2006         3,888
     Common stock, par $0.001, 100,000,000 authorized,
     20,960,400 issued and outstanding at May 31, 2006                    2,096
     Additional paid in capital                                               0
     Accumulated deficit                                            (13,412,942)




                                                                               3
<PAGE>

     Accumulated other comprehensive income -                          (273,810)
      foreign exchange adjustment
                                                                   ------------

     Total stockholders' deficit                                    (13,680,768)
                                                                   ------------

     Total liabilities and stockholders' deficit                   $  3,721,908
                                                                   ============

See  accompanying   summary  of  accounting  policies  and  notes  to  financial
statements


                                                                               4
<PAGE>

<TABLE>


                          EDGEWATER FOODS INTERNATIONAL
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                THREE AND NINE MONTHS PERIOD ENDING MAY 31, 2006


                                                   THREE MONTHS ENDED              NINE MONTHS ENDED
                                                        MAY 31,                           MAY 31,
                                               ---------------------------   ---------------------------
                                                  2006             2005            2006           2005
                                              ------------    ------------    ------------    ------------
                                               (unaudited)     (unaudited)     (unaudited)     (unaudited)
<S>                                                                           <C>           <C>


Revenue                                       $    133,120    $     35,444    $    437,045    $    307,915
Cost of goods sold                                 170,485          29,287         475,767         288,282
                                              ------------    ------------    ------------    ------------

Gross profit (loss)                                (37,365)          6,157         (38,722)         19,633
                                              ------------    ------------    ------------    ------------

Expenses:
      General and administrative expenses          286,449          51,876         393,550         122,550
      Salaries and benefits                         38,316          18,190         118,015          54,661
      Stock compensation expense                      --              --           182,500            --
                                              ------------    ------------    ------------    ------------

                             Total                 324,765          70,066         694,065         177,211
                                              ------------    ------------    ------------    ------------

Loss from operations                              (362,130)        (63,909)       (732,787)       (157,578)
                                              ------------    ------------    ------------    ------------

Other income (expense):
      Interest (expense), net                      (54,178)        (49,896)       (160,269)        (51,221)
      Change in fair value of warrants          (2,525,419)           --        (2,525,419)           --
      Other income  (expense)                       12,805            --          (500,711)           --

                Other income (expense), net     (2,566,791)        (49,896)     (3,186,399)        (51,221)
                                              ------------    ------------    ------------    ------------

Net income (loss)                             $ (2,928,922)   $   (113,805)   $ (3,919,186)   $   (208,799)
                                              ============    ============    ============    ============

Foreign currency translation                       (51,467)        (80,129)       (103,417)       (201,787)
                                              ------------    ------------    ------------    ------------

                                              ============    ============    ============    ============
Total Comprehensive (loss)                    $ (2,980,389)   $   (193,934)   $ (4,022,603)   $   (410,586)
                                              ============    ============    ============    ============

Net income (loss) per Share
      Basic and diluted                       $      (0.14)   $      (0.01)   $      (0.19)   $      (0.02)

Weighted average shares outstanding
      Basic and diluted                         20,969,400      10,300,000      20,738,971      10,300,000
</TABLE>


See  accompanying   summary  of  accounting  policies  and  notes  to  financial
statements


                                                                               5
<PAGE>

<TABLE>


                          EDGEWATER FOODS INTERNATIONAL
                      CONSOLIDATED STATEMENTS OF CASHFLOWS
                         NINE MONTHS ENDED MAY 31, 2006


                                                                                       NINE MONTHS ENDED
                                                                                             MAY 31,
                                                                                   --------------------------
                                                                                      2006            2005
                                                                                   -----------    -----------
                                                                                   (unaudited)     (unaudited)
<S>                                                                                <C>            <C>

Cash flows from operating activities:

     Net income (loss)                                                             $(3,919,186)   $  (208,799)

     Adjustments to reconcile net loss to net cash used in operating activities:
        Depreciation, depletion and amortization                                        90,003         51,220

        Changes in fair value of warrants                                            2,525,419           --

        Common stock issued for services                                               702,500           --

     Changes in current assets and liabilities:
        Accounts receivable                                                            (16,176)        18,103
        Prepaid expenses                                                               (65,785)        (1,289)

        Other current assets                                                              --             --
        Loan receivable                                                                 20,387          1,126
        Inventory                                                                     (446,724)      (237,371)
        Accounts payable                                                              (177,382)        75,081

        Bank overdrafts                                                                (38,538)          --
                                                                                   -----------    -----------

Net cash used in operating activities                                               (1,325,482)      (301,930)
                                                                                   -----------    -----------

Cash flows from investing activities:

     Purchase of property, plant and equipment                                        (158,170)      (315,818)
                                                                                   -----------    -----------

Net cash provided by (used in) investing activities                                   (158,170)      (315,818)
                                                                                   -----------    -----------

Cash flows from financing activities:


     Line of credit, net                                                               (60,828)          --
     Proceeds from short term debt                                                     504,198        664,606

     Payment of short term debt                                                       (148,408)          --

     Proceeds of long term debt                                                          2,268           --
     Payment of long term debt                                                         (19,624)       (21,797)

     Proceeds from sale of preferred Stock                                           2,562,000           --
                                                                                   -----------    -----------

Net Cash provided by financing activities                                            2,839,606        642,809
                                                                                   -----------    -----------

Foreign currency translation effect                                                     14,878         (9,256)



                                                                               6
<PAGE>


Net increase in cash                                                                 1,370,832         15,805


Cash, beginning of period                                                                  560         12,910
                                                                                   -----------    -----------

Cash, end of period                                                                $ 1,371,392    $    28,715
                                                                                   ===========    ===========

Supplemental disclosure of cash flow information

Net cash paid during nine months
Interest                                                                           $   160,269    $    51,221
                                                                                   ===========    ===========

Income taxes                                                                       $      --      $      --
                                                                                   ===========    ===========
</TABLE>


See  accompanying   summary  of  accounting  policies  and  notes  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. ("Edgewater"),  a Nevada Corporation,  is the
parent company of Island Scallops Ltd., a Vancouver Island aquaculture  company.
Island Scallops Ltd. ("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.  Scallop farming is
relatively new to North America and Island Scallops is the only producer of both
live-farmed  Pacific  scallops and live  sablefish (or  blackcod).  Given Island
Scallops' unique hatchery technology and extensive research and development,  we
believe that there is no significant competition for the farming of these marine
species  in our  geographic  area.  Island  Scallops  is  committed  to  rapidly
expanding  production  and profits while  continuing  to finance our  aggressive
growth and maintaining a healthy respect for the marine environment.

On June 29, 2005,  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.  As a result of the share exchange,  Island Scallops 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  Foods after the  exchange,  although  Edgewater  is the legal  parent
company.  The share  exchange  was treated as a  recapitalization  of  Edgewater
Foods. 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 ("Heritage"), 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  Heritage  issued  19,000,000  shares of
common  stock on a one to one  ratio for a 100%  equity  interest  in  Edgewater
Foods.  Per the terms of the Share Exchange and Bill of Sale of Heritage Funding
Corporation  and E. Lee Murdoch,  Heritage  delivered  will 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  Heritage 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



                                                                               8
<PAGE>

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
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, 2005. Results of operations for the three and nine months ended
May 31, 2006 are not  necessarily  indicative of the  operating  results for the
full accounting year or any future period.


Inventory

We maintain  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).

Raw  materials  are reported at the lesser of purchase  cost and  estimated  net
realizable value.

Biomass and finished  goods are reported at the lesser of cost and estimated net
realizable  value.  Cost 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 May 31, 2006, inventory consisted of the following:

Biomass (Scallops):                         $986,850

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.



                                                                               9
<PAGE>


The Company  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,  the Company  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
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.  All derivative
financial instruments held by the Company as May 31, 2006 were not designated as
hedges.


Recent accounting pronouncements


In May  2005,  SFAS No.  154,  "Accounting  Changes  and Error  Corrections"  (a
replacement  of APB  Opinion No. 20 and SFAS No. 3) was  issued.  Statement  154
requires  that all  voluntary  changes  in  accounting  principles  and  changes
required  by a  new  accounting  pronouncement  that  do  not  include  specific
transition  provisions be applied  retrospectively  to prior periods'  financial
statements,  unless it is  impracticable to do so. Opinion 20 required that most
voluntary  changes in  accounting  principle  be  recognized  by  including  the
cumulative effect of changing to the new accounting  principle as a component of
net income in the period of change. Statement 154 is effective prospectively for



                                                                              10
<PAGE>

accounting  changes and  corrections  of errors made in fiscal  years  beginning
after  December  15,  2005,  with  earlier   application   encouraged.   Earlier
application is permitted for accounting  changes and  corrections of errors made
in fiscal years  beginning  after the date the  Statement was issued (May 2005).
Statement  154  does  not  change  the  transition  provisions  of any  existing
accounting pronouncements,  including those that are in a transition phase as of
the  effective  date  of the  Statement.  Accordingly,  we  will  implement  the
provisions  of this  accounting  pronouncement  in the fiscal  reporting  period
ending August 31, 2007.  We do not  currently  believe that the adoption of SFAS
145  No.  154  will  have  a  material  impact  on  our  consolidated  financial
statements.

NOTE 3.  PROPERTY, PLANT AND EQUIPMENT

Property, Plant and Equipment at May 31, 2006 consisted of the following:



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

Land                        $  228,613     $     --       $  228,613
Buildings                      449,530        228,966        220,564
Seawater piping and tanks      470,942        267,401        203,541
Boats and Barge                284,128        112,272        171,856
Field equipment              1,112,886        699,725        413,161
Office equipment                13,748         12,373          1,375
Vehicles                        36,413         33,228          3,185
Computer equipment              11,848          4,587          7,261
                            ----------------------------------------
                            $2,608,108     $1,358,552     $1,249,556


Depreciation  expenses  for the nine  months  ended  May 31,  2006 and 2005 were
$90,003 and $51,220.

NOTE 4.  INVESTMENTS IN OTHER ASSETS (TENURES)

We carry our  investment  in other  assets  (tenures) at $3,629 at May 31, 2006.
This amount  represents the carrying costs of certain shellfish tenures acquired
by our  wholly-owned  subsidiary  Island  Scallops  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.  One tenure has an


                                                                              11
<PAGE>

expiration  date of July  10,  2021.  Other  shellfish  tenures  that we and our
subsidiaries hold 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 5.  ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Included in accounts  payable and accrued  liabilities are balances  outstanding
related to credit cards held in the name of the shareholder  totaling $10,298 at
May 31, 2006. 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 May 31, 2006 is an
amount of $119,622  related to deposits  paid by two third parties in respect to
an agreement to purchase  geoduck seed from us (for  additional  information see
Note 9 - Contingent Liabilities).

Included in  accounts  payable  and  accrued  liabilities  at May 31, 2006 is an
amount of $3,683  related  to  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).

Other accounts  payable and accrued  liabilities at May 31, 2006 carry a balance
of $178,739.

As a result,  at May 31, 2006, we had accounts  payable and accrued  liabilities
balance of $312,342.

NOTE 6.  SHORT TERM DEBT

Included in  short-term  debt is a loan with an  authorized  limit of $1,451,510
secured by our assets,  including a mortgage  charge in the amount of $1,451,510
on our land and building,  and by a personal  guarantee of Robert Saunders,  our
Chairman, President and CEO, and former sole shareholder of Island Scallops. The
note bears interest at a rate of 1% per month,  payable monthly, and is due June
30, 2006. As of May 31, 2006, the entire authorized limit of $1,451,510 had been
lent to Island Scallops.  In addition,  Island Scallops was currently in arrears
on interest payment for $14,785.  As a result, the debt is carried as $1,466,295
of short term debt on the balance sheet.

Included in  short-term  debt is Island  Scallop's  mortgage  loan  repayable at
$1,918  per  month  including  interest  calculated  at the  greater  of 10% and
(Canadian) prime plus 6%. The loan, which is due on April 1, 2007, is secured by
a second charge on the real property of Island  Scallops.  At May 31, 2006,  the
principal due is $194,314.




<PAGE>

                                                                              12

Included in short-term  debt is 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 at the due date we have not generated sufficient revenues to
be required to repay the original amount of $165,814,  the remaining  portion 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 May 31, 2006 is estimated  royalties of $60,378
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 us 3% of our revenues 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 $317,518 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 $60,738 as short term debt and we plan to
pay it with available funds in the near future.

Included in short-term  notes debt at May 31, 2006 is an unsecured  non-interest
bearing  demand  loan from an  individual  with a face value of  $45,510  and no
specific terms of repayment.  However,  the lender has informally requested that
the loan be repaid in full by October 6, 2008.

As a result, at May 31, 2006, we had $1,932,311 of short-term notes.

NOTE 7. 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. At May 31, 2006 as Island Scallops is  approximately
$173,000  in  arrears  in respect  to the  payment  of these  amounts,  the full
principal  balance of $614,437 is  reflected  as a current  liability as current
portion of long-term  debt. Our  management is seeking to  renegotiate  terms of
repayment of this 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 the Island
Scallops  until the earlier of full  repayment  or December 1, 2012.  The amount
repayable  is up to 150% of the original  advance of  $399,732,  if repayment is
before December 1, 2007. If at December 1, 2012,  Island Scallops has not earned
sufficient  revenues  required to repay the original loan amount,  the remaining
portion of the loan is to be forgiven. The $39,917 currently due at May 31, 2006
bears interest at a rate of 1% per month. At May 31, 2006, Island Scallops is in



                                                                              13
<PAGE>

arrears in respect to the payment of these amounts,  the full principal  balance
of $399,732 is reflected as a current  liability as current portion of long-term
debt.

These  consolidated  financial  statements  include  two bank  loans for  Island
Scallops.  The first bank loan is repayable at $1,134 per month,  plus  interest
calculated at the floating base rate of the Business  Development Bank of Canada
plus 1.5% annum, is due February 23, 2009, and is secured by a General  Security
Agreement over Island  Scallops'  assets , a mortgage charge on Island Scallop's
real property and a personal guarantee of $45,360 by our Chairman, President and
CEO,  and former sole  shareholder  of Island  Scallops.  At May 31,  2006,  the
principal  due is $37,422.  The second bank loan is  repayable at $472 per month
plus interest calculated at (Canadian) prime plus 3% per annum, is unsecured and
is due October 23, 2007. At February 28, 2006, the principal due is $7,837.

As a result, at May 31, 2006, we had $1,059,428 of long-term debt less a current
portion of $1,014,169 for a balance of $45,259.

NOTE 8.  WARRANT LIABILITIES


The warrants that each investor  received as a result of our April 12 and May 30
Preferred  Stock Financing (see Note 11 Preferred Stock Financing for additional
details)  contained a cashless exercise  provision that becomes effective if our
registration  statement  (that we are  required  to file under the  registration
rights  agreement) is not declared  effective  one-year  after the initial issue
date of each warrant.  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.  The  Company  determined  the fair value of the
warrants as follows as of April 12, 2006 and May 30, 2006 (the issuance date):

The  Company  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) and $1.40
(at May 30), 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) and 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); and volatility of 97%.
Under the  assumptions,  the  Black-Scholes  option  pricing  model  yielded  an
aggregate  value  of  approximately   $11,569,000  with  a  current  portion  of
approximately 1,240,000.

The Company  performed the same  calculations as of May 31, 2006, to revalue the
warrants as of that date. In using the Black Scholes  option-pricing  model, the
Company used an underlying stock price of $1.40 per share; no dividends;  a risk
free rate of 5.07%,  5.03% and 5.04%,  which equals the one, three and five-year
yield on Treasury bonds at constant (or fixed); and maturity  volatility of 97%.
The  resulting  aggregate  allocated  value  of the  warrants  as of May 31 2006
equaled  approximately  $14,094,000.  The change in fair value of  approximately


                                                                              14
<PAGE>

$2,525,000  (with a current  portion of roughly  $518,000)  was recorded for the
period ended May 31, 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 9.  CONTINGENT LIABILITIES

Island  Scallops  entered  into an  Agreement in the 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 year 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  $119,622,  is
included in accounts payable and accrued liabilities.

The  position of  Management  is that the two parties  violated the terms of the
agreement,  such that we are entitled to retain the balance of the deposits. Per
the terms of the original agreement,  Island Scallop 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 May 31,  2006,  one of the two  parties had made claims that we owed to it
amounts  totaling  $89,417.  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 $34,899.

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  in respect to
replacement of its inventory.  Consequently,  we are exposed to financial losses
or failure as a result of this risk.

NOTE 10.  STOCK-COMPENSATION EXPENSE

In October  2005,  we engaged  Aurelius  Consulting  to  provide  marketing  and
investor  relations  services.  The initial  term of the  agreement is one year.
Aurelius is entitled to receive 25,000 shares of our restricted common stock per
quarter during the term of its agreement,  in consideration  for their services.
The shares were  valued at $1.45 per share,  the closing bid price for shares of
our common stock on the date of the  contract.  Therefore,  the total  aggregate


                                                                              15
<PAGE>

value of the transaction  recognized by the Company in the first quarter of 2006
was $145,000.

At October 21, 2005 and  November  11,  2005,  our board  approved the issuing a
total of 25,000 shares of the Company's  common stock to The Shemano Group,  LLC
for preparing a research report for the Company. The shares were valued at $1.50
per  share,  the  closing  market  bid of our  common  stock  on the date of the
resolution.  Therefore,  the total aggregate value of the transaction recognized
by the Company in the first quarter of 2006 was $37,500.

On January 31, 2006, we issued 400,000 shares of our restricted  common stock to
World Wide  Mortgage  as  consideration  for  agreeing to extend the due date to
April 15, 2006 for us to repay our CDN  $1,500,000  loan  pursuant to the bridge
loan  agreement  dated November 9, 2004 and amended on April 15, 2005 between us
and World Wide. The shares have piggy-back  registration  rights that require us
to  register  the shares in our next  registration  statement.  The shares  were
valued at $1.30 per share,  the closing bid price for shares of our common stock
on the date we issued the shares.  Therefore,  the total  aggregate value of the
transaction is $520,000 which was recorded as other expense.

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 May 31,  2006,  our  Board of  Directors  had  authorized  the
issuance of 282,000 options to employees.

Stock option  activity  during the nine month period  ending May 31, 2006 was as
follows:

                                                             Weighted
                                           Number of          Average
                                            Shares          Exercise Price
                                         ---------------------------------
Outstanding, August 31, 2005                    282,000    $         1.50
    Granted                                          --                --
    Exercised                                        --                --
    Forfeited                                        --                --
    Expired                                          --                --
                                         ---------------------------------
Outstanding, May 31, 2006                       282,000    $         1.50
                                         =================================
Exercisable, May 31, 2006                       282,000    $          1.50
                                         =================================

At May 31, 2006,  62,000 of the  outstanding  options expire in August 2010 with
the remaining balance of 220,000 having an expiration date of August 2015.

NOTE 11.  PREFERRED STOCK FINANCING



                                                                              16
<PAGE>


On April 12, 2006, we completed a private  equity  financing of $1,062,000  with
two accredited  investors.  Net proceeds from the financing  were  approximately
$952,000.  We issued 1,888,000 shares of our Series A Preferred Stock, par value
$0.001 per share and stated  value of $0.75 per  share,  at a purchase  price of
$0.5625 per share.  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 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 Series A
Preferred Stock purchased,  except for the Series J Warrants, which entitled the
investor  to  purchase a number of shares of common  stock  equal to 100% of the
number of shares of Series A  Preferred  Stock  purchased.  We issued a total of
9,440,000 Warrants.  Each of the Warrants has a  term of 5 years, except for the
Series J Warrants, which have a term of 1 year.

In connection with the April 12, 2006 financing, we paid  cash compensation to a
placement  consultant in the amount of $84,960 and issued him 188,800  warrants.
Each of the placement  consultant's  warrants allow him to purchase one share of
our Series A Preferred  Stock,  and one half of each of the Series A-I  Warrants
and one  Series  J  warrant.  Each of the  placement  consultant's  warrants  to
purchase the securities described above is exercisable at a price of $0.5625 per
warrant, for a period of three years.

On May 30,  2006,  we completed  another  round of private  equity  financing of
$1,500,000  with one  accredited  investor  pursuant  to a Series A  Convertible
Preferred  Stock  Purchase  Agreement.  Net proceeds  from this  financing  were
approximately  $1,380,000.  We issued 2,000,000 shares of our Series A Preferred
Stock,  stated value of $0.75per  share,  at a purchase price of $0.75 per share
and the investor also received one of each of the following warrants: (i) Series
A Warrant,  (ii)  Series B Warrant,  (iii)  Series C Warrant,  and (iv) Series D
Warrant,  each to purchase a 1,000,000  shares of Common  Stock;  therefore,  we
issued a total of 4,000,000 Warrants. Each of the Warrants has a term of 5 years
and is identical  to the Series A-D Warrants we issued to investors  pursuant to
the financing we closed on April 12, 2006 as disclosed in our Current  Report on
Form 8-K filed on April 14, 2006.  Each share of the Series A Preferred Stock is
convertible  into one fully paid and  nonassessable  share of our common  stock.
Pursuant to the Purchase  Agreement,  the investor was  committed to purchase an
additional  $2,400,000 of our Series A Preferred Stock in subsequent closings to
be completed no later than June 30, 2006.

In connection  with the May 30, 2006 financing,  we paid cash  compensation to a
placement  consultant in the amount of $120,000 and issued him 200,000 warrants.
Each of the placement  consultant's  warrants allow him to purchase one share of
our Series A preferred  stock,  and one half of each of the Series A-D Warrants.
Each of the placement consultant's warrants to purchase the securities described
above is exercisable at a price of $0.75 per warrant, for a period of 3 years.






                                                                              17
<PAGE>



NOTE 12.  GOING CONCERN

Prior to the  completion  of our  Preferred  Stock  Financing  (see  Note 11 for
additional  details),  our 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 May 31, 2006 we
had a cash balance of approximately  $1,370,000.  Although  management  believes
that we have adequate  funds to maintain our business  operations  into the next
fiscal year and until we become cash flow positive, we are likely to continue to
suffer operational losses until 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.  If we are  unable  to  raise  such  capital,  if it is
required,  it could raise  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 13.  SUBSEQUENT EVENTS

On June 30, 2006 and July 11,  2006,  we  completed  two final rounds of private
equity financing,  accepting subscriptions in the aggregate amount of $2,840,000
from nine  institutional and accredited  investors  pursuant to the May 30, 2006
Series A Convertible  Preferred  Stock  Purchase.  On June 30, 2006 and July 11,
2006,  we  entered  into  separate  Joinder  Agreements  to each of the Series A
Convertible  Preferred  Stock  Purchase  Agreement and the  Registration  Rights
Agreement,  each dated as of May 30, 2006,  with each of the new investors which
added  such  investors  as  additional  parties  to the May 30,  2006  financing
documents.   Net  cash  proceeds  from  these  two  rounds  were   approximately
$2,659,000.  Pursuant to these round two final financings,  we issued a total of
3,786,666  shares of our Series A  Preferred  Stock,  stated  value of $0.75 per
share,  at a purchase  price of $0.75 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,  and (iv) Series D Warrant,  each to purchase
1,893,338  shares of Common  Stock ;  therefore,  we issued a total of 7,573,352
Warrants in these two final rounds of financing. Each of the Warrants has a term
of 5 years and is  identical  to the Series A-D  Warrants we issued to investors
pursuant to the  financings  we closed on April 12, 2006 and May 30, 2006.  Each
share of the Series A  Preferred  Stock is  convertible  into one fully paid and
nonassessable share of our common stock.




                                                                              18
<PAGE>


In  connection  with the June 30,  2006 and July 11, 2006  financing,  we paid a
total placement  consultant fee of $217,000.  The placement  consultant received
$160,000 of his fee in securities (as described below) and $57,000 in cash. As a
result,  we issued  the  placement  consultant  213,333  shares of our  Series A
Preferred Stock,  and one of each of the A-D Warrants,  each to purchase 106,667
shares of our Common Stock. The A-D Warrants issued to the placement  consultant
are identical to the Series A-D Warrants we issued to the investors as described
above.

We used a  portion  of the  proceeds  of the  above  referenced  private  equity
financings  to repay the entire  balance of  short-term  loan with an authorized
limit of $1,451,510  secured by our assets,  including a mortgage  charge in the
amount of  $1,451,510  on land and  building of the  Company,  and by a personal
guarantee of Robert Saunders,  our Chairman,  President and CEO, and former sole
shareholder of Island Scallops. (For additional information on this note, please
see Note 7 - Short Term Debt above)

On June 30,  we issued  22,860  shares  of  common  stock to the two  accredited
investors  of our  April  12 and May  30,  2006  financings  as  payment  of the
semi-annual  dividend per the terms of the  Certificate  of  Designation  of the
Relative Rights and Preferences of the Series A Convertible Preferred Stock.

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 second  quarter of 2006,  we  started  harvesting  our 2004 year class of
scallops and began  inspecting  our 2005 year class of scallops as we prepare to
begin moving these  scallops to their final grow-out stage in the second half of
2006.  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,  but after  inspection of growth rates of the 2004 ear-hung  crops
and an analysis of labor costs of ear-hanging versus the cost of additional nets
we decided to use nets for the final grow-out stage of the 2005 crop.

The 2005 year-class scallops are currently maturing in our tenured growing sites
and joint venture locations.  We are currently  preparing our farm sites for the
transfer  of these  scallops to their final  stage  large  grow-out  nets.  This



                                                                              19
<PAGE>

transfer  will  be  completed  during  the  summer  of  2006  and we  anticipate
commencing  harvesting up to approximately four million 2005 year-class scallops
during April of 2007. The 2006 year-class  scallop  spawning season commenced in
March  of 2006  and  was  completed  in  April  2006.  The  scallop  brood-stock
conditioning  for these spawning began in mid-December  2005. 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.  We anticipate that of
the over 350 million  larvae  that were  spawned,  at least 10 million  scallops
could reach full  maturity  and thus be  harvested.  The use of DNA based family
analysis  started in 2005 will continue  through 2006, with the goal of breeding
high meat yield scallops.

As a result of the above, we believe that the 2005 scallop-class will produce at
least $5.5 million of 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  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 the near term,
the sales of the remainder of our 2004 scallop  class  between  October 2006 and
March  2007  are   expected  to  produce  more  the  $1.0  million  of  revenue.
Additionally,  we plan on generating additional revenues via the sale of scallop
and possibly other shellfish seed.


COMPARISON OF RESULTS FOR THE THREE MONTHS AND NINE MONTHS ENDED MAY 31, 2006 TO
THE THREE AND SIX MONTHS ENDED MAY 31, 2005.

Revenues.  Revenues for the three months ended May 31, 2006, were  approximately
$133,000.  We had revenues of  approximately  $35,000 for the three months ended
May 31, 2005. This is an increase of approximately $98,000 or 280%. Revenues for
the nine  months  ended May 31, 2006 were  approximately  $437,000 as compare to
$308,000  for the nine  months  ended  May 31,  2005.  This was an  increase  of
approximately  $129,000 or 42%. For the three and nine month  periods  ended May
31,  2006 and  2005,  the  majority  of our  revenue  resulted  from the sale of
scallops.  The slight  increase in our revenue  from 2005 to 2006 was due to the
increased emphasis on the development and production of larger scallops crops in
2005 and  continuing  into 2006 as opposed to our prior  emphasis on selling our
scallops  earlier in the growth cycle to generate  working  capital.  Management
believes that this emphasis on the  development and production of larger scallop
crops has  positioned  the  company for  revenue  growth and that our  continued
emphasis on expansion of future  crops  should yield a  significant  increase in
revenues in first part of 2007 and beyond.

Gross profit  (loss).  Gross loss for the three  months ended May 31, 2006,  was
approximately $37,000, an increase of approximately $43,000 as compared to gross
profit of roughly $6,000,  for the three months ended May 31, 2005. For the nine
months ended May 31, 2006, gross loss was approximately $39,000 as compared to a


                                                                              20
<PAGE>

gross profit of $20,000 for the nine months ended May 31, 2005.  The increase in
the amount of gross loss for the three and nine  months  ended May 31,  2006 was
mainly  attributable  to  management's  decision to focus on the  expansion  and
development  of larger scallop crops and larger scallop yields for the crop year
2005 and 2006. As a result, we expended a larger portion of our resources on the
maintaining,  developing  and tending our scallop crops in 2005 and 2006 and are
only  beginning  to see the  benefits  of our efforts in  developing  larger and
profits.

General and  administrative.  General and administrative  expenses for the three
months  ended  May 31,  2006,  were  approximately  $286,000.  Our  general  and
administrative  expenses were  approximately  $51,000 for the three months ended
May 31,  2005.  This is an  increase  of  approximately  $235,000.  General  and
administrative   expenses  for  the  nine  months  ended  May  31,  2006,   were
approximately   $394,000.   Our  general  and   administrative   expenses   were
approximately  $123,000  for the nine  months  ended  May 31,  2005.  This is an
increase of approximately  $271,000. Our general and administrative expenses for
the  three  and nine  months  ended  May 31,  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,  realized stock  compensation and
salaries.  We anticipate that these costs will rise as we continue to expand our
operations.

Stock  compensation  expense.  During the three months  ended May 31, 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 May 31, 2006.

We did have an expense of  approximately  $183,00  during the three months ended
November 30, 2005. The expense was for two  consulting  groups who would provide
services  to  us.  As  such,  we  incurred  a  stock  compensation   expense  of
approximately $183,000 for the nine months ended May 31, 2006.

Other income (expense), net. Interest expense for the three months ended May 31,
2006 was approximately  $54,000. For the three months ended May 31, 2005, we had
interest expense of roughly $50,000. Other income for the three months ended May
31, 2006 was  approximately  $13,000 as opposed to no other income for the three
months  ended May 31,  2005.  The  Company  recognized  a loss of  approximately
$2,525,000  which was related to the change in the fair value of warrants issued
to three accredited  investors in conjunction with preferred stock financings on
April 12 and May 30 and the market  price of the common  stock  underlying  such
warrants at May 31, 2006 No such loss was  recorded  for the three  months ended
May 31, 2005. As a result, other expense for the three months ended May 31, 2006
was  approximately  $2,566,000  as  compared to other  expense of  approximately
$50,000 for the three  months ended May 31, 2005.  This  increase was  primarily
attributed  to loss  associated  with the change in fair  value of the  recently
issued warrants.



                                                                              21
<PAGE>


Interest  expense  for the nine  months  ended  May 31,  2006 was  approximately
$160,000.  For the nine months  ended May 31, 2005,  we had interest  expense of
roughly $51,000. The Company recognized a loss of approximately $2,525,000 which
was  related  to the  change  in the fair  value  of  warrants  issued  to three
accredited  investors in conjunction with preferred stock financings on April 12
and May 30 and the market price of the common stock  underlying such warrants at
May 31, 2006 No such loss was  recorded  for the nine months ended May 31, 2005.
Other expense for the nine months ended May 31, 2006 was approximately  $501,000
as opposed to no other  expense for the nine  months  ended May 31,  2005.  As a
result,  other expense for the nine months ended May 31, 2006 was  approximately
$3,186,000  as compared to other expense of  approximately  $51,000 for the nine
months ended May, 2006. This is an increase of more than $3,100,000 is primarily
attributed  to loss  associated  with the change in fair  value of the  recently
issued  warrants and other expense  related to the issuance of 400,000 shares of
restricted  stock  (requiring us to incur non-cash  expenses for the issuance of
stock of approximately $520,000) to one group in consideration for the extension
of the due date on a share term loan to Island Scallops and expenses  related to
the  expansion of our scallop crops and interest  expenses  related to this term
loan.

Net profit (loss). As a result of the above, the net loss for the three and nine
months  ended May 31, 2006,  was  approximately  $2,929,000  and  $3,919,000  as
compared to a net loss of approximately  $114,000 and $209,000 for the three and
nine months  ended May 31, 2005.  The majority on the  increases to the net loss
can be  attributed to the loss  associated  with the change in fair value of the
recently issued warrants.


Liquidity  and  Cash  Resources.  At May  31,  2006  we had a  cash  balance  of
approximately  $1,372,000.  During  the  three  months  ended  May  31,  2006 we
completed  two  private  equity  financings  that  resulted  in net  proceeds of
approximately  $2,332,000.  These  financings  contain  warrants  which if fully
exercised  could raise  approximately  an additional  $20,470,000.  Prior to the
three months ended May 31, 2006, our recent expansion had been largely funded by
a short term note with a maximum limit of approximately $1,451,000.  Previously,
we have 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 will be 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

         We maintain controls and procedures designed to ensure that information
         required to be  disclosed  in the reports  that we file or submit under
         the Securities Exchange Act of 1934 is recorded, processed,  summarized



                                                                              22
<PAGE>

         and reported  within the time periods  specified in the rules and forms
         of the Securities and Exchange Commission.  Based upon their evaluation
         of those controls and procedures  performed as of the end of the period
         covered by this  report,  our chief  executive  officer  and  principal
         financial officer concluded that our disclosure controls and procedures
         were effective.

(b) Changes in internal controls

         There was no change in our internal  control over  financial  reporting
         identified in connection with the evaluation required by Rule 13a-15(d)
         and  15d-15(d)  of the  Exchange  Act that  occurred  during the period
         covered by this report that has materially  affected,  or is reasonably
         likely to  materially  affect,  our  internal  control  over  financial
         reporting.


















                                                                              23
<PAGE>


                           PART II - OTHER INFORMATION



ITEM 1.   LEGAL PROCEEDINGS

In 1998 Island Scallops entered into an agreement with two purchasers,  pursuant
to  which  Island  Scallops  was to  produce  and sell  geoduck  seed to the two
purchasers.  Island  Scallops  received  advance  payments  from each of the two
purchasers 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  $85,888.  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

Information  with  respect  to  unregistered  sales  of  equity  securities  was
previously filed on our current report on Form 8-K filed with the Securities and
Exchange Commission on May 30, 2006.

(b) Not Applicable.

(c) Not Applicable.

(d) Not Applicable.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

(a) Not Applicable.

(b) Not Applicable.




                                                                              24
<PAGE>


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

         Not applicable.

ITEM 5. OTHER INFORMATION

(a)      During the quarter ended May 31, 2006, we did not submit any matters to
         a vote of our security holders. However, on July 16, 2006, our Board of
         Directors  approved  increasing  our  authorized  capital by 50,000,000
         shares of common  stock,  for a total of  100,000,000  shares of common
         stock,  and  amending  our  articles of  incorporation  accordingly.  A
         majority  of  our  shareholders  (67.87%)  also  approved,  by  written
         consent, these same actions on July 16, 2006. A copy of our articles of
         incorporation, as amended is attached hereto as exhibit 3.1.

(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.

          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:  July 17, 2006                      EDGEWATER FOODS INTERNATIONAL, INC.

                                          By:

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

                                          By:

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


                                                                              25
<PAGE>



                                                                    Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Robert Saunders certify that:

1.   I have reviewed  this  quarterly  report on Form 10-QSB of Edgewater  Foods
     International, Inc.

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

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

4.   The  registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules  13a-15(e) and 15d-15(e))  and internal  control over
     financial  reporting  (as  defined  in  Exchange  Act Rules  13a-15(f)  and
     15d-15(f)) for the registrant and have:

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

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



                                                                              26
<PAGE>


          c. Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

          d.  Disclosed in this report any change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

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

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

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

Date:  July 17, 2006


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











                                                                              27
<PAGE>


CERTIFICATION OF ACTING CHIEF FINANCIAL OFFICER

I, Michael Boswell certify that:

1.   I have reviewed  this  quarterly  report on Form 10-QSB of Edgewater  Foods
     International, Inc.

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

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

4.   The  registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules  13a-15(e) and 15d-15(e))  and internal  control over
     financial  reporting  (as  defined  in  Exchange  Act Rules  13a-15(f)  and
     15d-15(f)) for the registrant and have:

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

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

          g. Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

          h.  Disclosed in this report any change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

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

          c. All significant  deficiencies and material weaknesses in the design
          or operation of internal  control over financial  reporting  which are


                                                                              28
<PAGE>

          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

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

Date:  July 17, 2006


/s/  Michael Bosell
-------------------------------
Michael Boswell
Acting Chief Accounting Officer



<PAGE>


                                                                    Exhibit 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Edgewater Foods  International,  Inc.
(the "Company") on Form 10-QSB for the period ending May 31, 2006, as filed with
the Securities  and Exchange  Commission on the date hereof (the  "Report'),  I,
Robert Saunders, Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that:

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

     (2)The information contained in the Report fairly presents, in all material
     respects,  the financial condition and results of operations of the Company
     at the dates and for the periods indicated.


Date:  July 17, 2006


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







                                                                              30
<PAGE>


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Edgewater Foods  International,  Inc.
(the "Company") on Form 10-QSB for the period ending May 31, 2006, as filed with
the Securities  and Exchange  Commission on the date hereof (the  "Report'),  I,
Michael  Boswell,  Acting  Chief  Financial  Officer  of the  Company,  certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

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

     (2)The information contained in the Report fairly presents, in all material
     respects,  the financial condition and results of operations of the Company
     at the dates and for the periods indicated.


Date:  July 17, 2006


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








                                                                              31