**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION** ****


**Washington,
      D.C. 20549**





**FORM
      10-QSB**





x
            **QUARTERLY****REPORT
                UNDER SECTION 13 OR 15(****d****)
                OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
                MARCH 31, 2006**





 ̈
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(****d****)
                OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
                FROM
                _____________ TO
                __________________**





**Commission
      file number 000-50601**





**EUGENE
      SCIENCE, INC.**


**(Name
      of small business issuer as specified in its charter)**





**Delaware**
            **33-0827004****(State
                or other jurisdiction**
              **of
                incorporation or organization)**
            **(I.R.S.
                Employer**
              **Identification
                No.)**





**16-7
      SMJUNG-DONG, OJUNG-GU, BUCHEON, KYONGGI-DO KOREA**


**(Address
      of principal executive offices)**





**Issuer’s
      telephone number: 82-32-676-6283**





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act 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 Exchange Act).  ̈





The
      number of outstanding shares of the issuer’s common stock as of May 20, 2006 was
      32,165,974.





Transitional
      Small Business Disclosure Format (Check one): Yes  ̈  No x











**PART
      I—FINANCIAL INFORMATION**




**Item
      1** . **Financial
      Statements** .




**EUGENE
      SCIENCE, INC.**




CONSOLIDATED
      FINANCIAL STATEMENTS




PERIODS
      ENDED MARCH 31, 2006 and 2005




(UNAUDITED)







**CONTENTS**





Report
                of Independent Registered Public Accounting Firm
            1Consolidated
                Balance Sheets
            2Consolidated
                Statements of Stockholders' Deficit
            3Consolidated
                Statements of Operations
            4Consolidated
                Statements of Cash Flows
            5Notes
                to Financial Statements
            6-16




















**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Stockholders of


Eugene
      Science, Inc.




We
      have
      reviewed the accompanying consolidated balance sheets of **Eugene
      Science, Inc.** and
      subsidiary (the "Company") as at March 31, 2006 and 2005, and the related
      consolidated statements of operations, stockholders' deficit, and cash flows
      for
      the quarter then ended. These interim consolidated financial statements are
      the
      responsibility of the Company's management.




We
      conducted our reviews in accordance with standards of the Public Company
      Accounting Oversight Board (United States). A review of interim financial
      information consists principally of applying analytical procedures and making
      inquiries of persons responsible for financial and accounting matters. It is
      substantially less in scope than an audit conducted in accordance with standards
      of the Public Company Accounting Oversight Board (United States), the objective
      of which is the expression of an opinion regarding the financial statements
      taken as a whole. Accordingly, we do not express such an opinion.




Based
      on
      our reviews, we are not aware of any material modifications that should be
      made
      to such consolidated interim financial statements for them to be in conformity
      with accounting principles generally accepted in the United States of
      America.




The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 1
      to the financial statements, the Company has suffered recurring losses and
      negative working capital from operations and operates in a country whose economy
      is currently unstable, which raises substantial doubt about its ability to
      continue as a going concern. Management's plan in regard to these matters are
      also described in Note 1.
      The
      consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.




CHARTERED
      ACCOUNTANTS


**Toronto,
      Canada**


May
      18,
      2006


1


**EUGENE
      SCIENCE, INC.**


Consolidated
      Balance Sheets


March
      31,
      2006 and 2005


(Unaudited)





**2006**
            
            2005**ASSETS****Current**Cash
                and cash equivalents (note 3)
            
            **$**
            **23,834**
            
            $
            53,420Accounts
                receivable (net of allowance for doubtful accounts $26,503; 2005
                - $Nil)
                (note 16)
            
            
            **45,544**
            
            
            47,739Inventory
                (note 4)
            
            
            **111,365**
            
            
            12,779Accounts
                receivable from a related company
            
            
            **-**
            
            
            2,709,496Advances
                to a related company (note 5)
            
            
            **1,179,189**
            
            
            1,401,927Prepaid
                and sundry assets (note 16)
            
            
            **211,559**
            
            
            189,442**1,571,491**
            
            
            4,414,803**Properties
                and Equipment**(note
                6)
            
            
            **9,499,945**
            
            
            9,683,453**Investments**(note
                7)
            
            
            **441,381**
            
            
            537,613**Intangible
                Assets**
            
            
            **183,271**
            
            
            174,041**$**
            **11,696,088**
            
            $
            14,809,910**LIABILITIES****Current**Accounts
                payable
            
            **$**
            **8,972,826**
            
            $
            6,138,505Accounts
                payable to related party
            
            
            **301,302**
            
            
            429,496Rental
                deposits (note 8)
            
            
            **164,520**
            
            
            157,539Loans
                payable - current portion (note 9)
            
            
            **10,976,109**
            
            
            10,198,884Advances
                from a related company (note 10)
            
            
            **19,228**Advances
                from shareholder and officer (note 11)
            
            
            **518,664**
            
            
            6,230**20,952,649**
            
            
            16,930,654**Accrued
                Severance**
            
            
            **573,918**
            
            
            450,857**Deposit**
            
            
            **1,504,844**
            
            
            1,588,684**Loans
                Payable**(note
                9)
            
            
            **41,644**
            
            
            319,268**23,073,055**
            
            
            19,289,463**STOCKHOLDERS'
                DEFICIENCY****Capital
                Stock**(note
                13)
            
            
            **31,166**
            
            
            3,537**Paid
                in Capital**
            
            
            **16,418,734**
            
            
            16,216,558**Accumulated
                Other Comprehensive Income (Loss)**
            
            
            **(2,255,671**
            **)**
            
            (1,724,530
            )**Accumulated
                Deficit**
            
            
            **(25,571,196**
            **)**
            
            (18,975,118
            )**(11,376,967**
            **)**
            
            (4,479,553
            )**$**
            **11,696,088**
            
            $
            14,809,910





**APPROVED
      ON BEHALF OF THE BOARD**






Director
              
              Director





2


**EUGENE
      SCIENCE, INC.**


Consolidated
      Statements of Stockholders’ Deficit


March
      31,
      2006 and 2005


(Unaudited)




**Number
                of Shares**
            
            
            **Capital
                Stock**
            
            
            **Paid
                in Capital in excess of**
              **Par
                Value**
            
            
            **Accumulated
                Other Comprehensive Loss**
            
            
            **Accumulated
                Deficit**
            
            
            **Total
                Stockholders' Deficit**Balance,January
                1, 2005 (note 13)
            
            
            35,368,800
            
            $
            3,537
            
            $
            15,223,558
            
            $
            (1,676,719
            )
            $
            (18,028,969
            )
            $
            (4,478,593
            )Issuance
                of common shares by subsidiary
            
            
            
            
            
            
            
            
            993,000
            
            
            
            
            
            
            
            
            993,000Unrealized
                loss on investments
            
            
            
            
            
            
            
            
            
            
            
            (56,310
            )
            
            
            
            
            (56,310
            )Foreign
                exchange on translation
            
            
            
            
            
            
            
            
            
            
            
            8,499
            
            
            
            
            
            8,499Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (946,149
            )
            
            (946,149
            )Balance,March
                31, 2005
            
            
            35,368,800
            
            $
            3,537
            
            $
            16,216,558
            
            $
            (1,724,530
            )
            $
            (18,975,118
            )
            $
            (4,479,553
            )Balance,January
                1, 2006 (note 13)
            
            
            311,659,748
            
            $
            31,166
            
            $
            16,418,734
            
            $
            (1,777,866
            )
            $
            (24,372,702
            )
            $
            (9,700,668
            )Unrealized
                loss on investments
            
            
            
            
            
            
            
            
            
            
            
            (107,113
            )
            
            
            
            
            (107,113
            )Foreign
                exchange on translation
            
            
            
            
            
            
            
            
            
            
            
            (370,692
            )
            
            
            
            
            (370,692
            )Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,198,494
            )
            
            (1,198,494
            )Balance,March
                31, 2006
            
            
            311,659,748
            
            $
            31,166
            
            $
            16,418,734
            
            $
            (2,255,671
            )
            $
            (25,571,196
            )
            $
            (11,376,967
            )








3


**EUGENE
      SCIENCE, INC.**


Consolidated
      Statements of Operations


March
      31,
      2006 and 2005


(Unaudited)





**2006**
            
            **2005****Revenue**Manufacturing
            
            **$**
            **102,458**
            
            $
            243,590Merchandise
            
            
            **19,985**
            
            
            172,642**122,443**
            
            
            416,232**Cost
                of Sales**Manufacturing
            
            
            **67,564**
            
            
            236,279Merchandise
            
            
            **15,936**
            
            
            136,314**83,500**
            
            
            372,593**Gross
                Profit**
            
            
            **38,943**
            
            
            43,639**Expenses**Salaries,
                employee benefits, and retirement allowance
            
            
            **334,332**
            
            
            230,050Professional
                fees
            
            
            **63,751**
            
            
            60,588Research
                and development
            
            
            **113,064**
            
            
            168,880Office
                and general
            
            
            **13,614**
            
            
            9,961Repairs
                and maintenance
            
            
            **16,152**
            
            
            15,514Travel
            
            
            **15,542**
            
            
            46,912Utilities
            
            
            **14,662**
            
            
            14,790Insurance
            
            
            **2,551**
            
            
            8,411Advertising,
                promotion, and entertainment
            
            
            **10,790**
            
            
            2,527Bad
                debts
            
            
            **10,157**
            
            
            43,367Foreign
                exchange
            
            
            **(248**
            **)**
            
            (34
            )Depreciation
            
            
            **84,996**
            
            
            109,804**679,363**
            
            
            710,770**Operating
                Loss**
            
            
            **(640,420**
            **)**
            
            (667,131
            )**Other
                Income (Expenses)**Provision
                for uncollectible loan and accounts receivable from related
                party
            
            
            **(108,894**
            **)**
            
            **-**Net
                rental income
            
            
            **36,964**
            
            
            38,219Miscellaneous
                income
            
            
            -
            
            
            10,685Interest
                expense - net
            
            
            **(439,439**
            **)**
            
            (283,404
            )Interest
                - other (note 6)
            
            
            **(46,705**
            **)**
            
            (44,518
            )**(558,074**
            **)**
            
            (279,018
            )**Net
                Loss**
            
            **$**
            **(1,198,494**
            **)**
            $
            (946,149
            )**Basic
                Loss Per Share**
            
            **$**
            **0.00**
            
            $
            0.00**Weighted
                Average Number of Shares**(note
                13)
            
            
            **311,659,748**
            
            
            272,790,948





4


**EUGENE
      SCIENCE, INC.**


Consolidated
      Statements of Cash Flows


March
      31,
      2006 and 2005


(Unaudited)





**2006**
            
            **2005****Cash
                Flows from Operating Activities**Net
                loss
            
            $
            (1,198,494
            )
            $
            (946,149
            )Adjustments
                for:Provision
                for uncollectible loans and accounts receivable from related
                party.
            
            
            108,894
            
            
            -Depreciation
            
            
            152,355
            
            
            192,172Amortization
                of intangible assets
            
            
            15,577
            
            
            15,102Change
                in non-cash working capitalAccounts
                receivable
            
            
            49,425
            
            
            (14,261
            )Inventory
            
            
            (50,779
            )
            
            2,315Accounts
                payable to related party
            
            
            21,596
            
            
            152,987Accounts
                payable
            
            
            747,841
            
            
            521,535Accrued
                severance
            
            
            96,484
            
            
            24,490Prepaid
                and sundry assets
            
            
            (29,545
            )
            
            (81,223
            )Rental
                deposits
            
            
            6,280
            
            
            1,523(80,366
            )
            
            (131,509
            )**Cash
                Flows from Investing Activities**Intangible
                assets
            
            
            (3,942
            )
            
            -**Cash
                Flows from Financing Activities**Advances
                to a related company
            
            
            (259,127
            )
            
            (476,676
            )Deposit
            
            
            57,442
            
            
            17,264Loans
                payable
            
            
            164,139
            
            
            (385,717
            )Advances
                from shareholders and officer
            
            
            159,109
            
            
            61Advances
                from a related company
            
            
            (37,722
            )
            
            -Issuance
                of common stock
            
            
            -
            
            
            993,00083,841
            
            
            147,932**Foreign
                Exchange on Cash and Cash Equivalents**
            
            
            945
            
            
            316**Net
                Increase in Cash and Cash Equivalents**
            
            
            478
            
            
            16,739**Cash
                and Cash Equivalents - beginning of period**
            
            
            23,356
            
            
            36,681**Cash
                and Cash Equivalents - end of period**
            
            **$**
            **23,834**
            
            **$**
            **53,420****Interest
                and Income Taxes Paid**During
                the year, the company had cash flows arising from interestand
                income taxes paid as follows:Interest
                paid
            
            **$**
            **87,262**
            
            **$**
            **296,753**Income
                taxes paid
            
            **$**
            **-**
            
            **$**
            **-**








5


**EUGENE
      SCIENCE, INC.**


Notes
      to
      Consolidated Financial Statements


March
      31,
      2006 and 2005


(Unaudited)





**1.**  **Description
      of Business and Going Concern**




a)  Description
      of Business




Eugene
      Science Inc. (formerly "Ezcomm Enterprises, Inc.") was incorporated on August
      26, 1998 under the name Orcas Ltd., under the laws of the state of Delaware.
      As
      Orcas Ltd., the Company was in the business of building and promoting arcade
      video games and vending machines. The Company underwent a reverse merger and
      abandoned this enterprise to develop a loyalty reward program based in Taipei,
      Taiwan. On January 18, 2000, the Company changed its name to Ezcomm Inc. to
      reflect this change in business. On July 19, 2004, Ezcomm Inc. changed its
      name
      to Ezcomm Enterprises, Inc. The Company has been inactive since
      inception.




On
      September 30, 2005, in accordance with a Share Exchange Agreement dated
      September 1, 2005, the Company entered into a reverse-takeover transaction
      with
      Eugene Science, Inc. (Korea), whereby 89.5% of all the outstanding shares of
      the
      Korean subsidiary were exchanged for 272,790,948 shares of the Company. As
      a
      result of the transaction, the shareholders of Eugene Science, Inc. (Korea)
      will
      control 88.5% of the Company. While the Company is the legal parent, Eugene
      Science, Inc. (Korea) as a result of the reverse-takeover, became the parent
      company for accounting purposes.




Eugene
      Science, Inc. (Korea), a company operating in Bucheon, Kyunggi-Do, Korea, was
      founded on July 1, 1997 under the laws of the Republic of Korea to manufacture
      and sell biotechnology products.




Eugene
      Science, Inc. (Korea) manufactures CZTM series cholesterol-lowering functional
      food ingredients, beverages and capsules fortified with CZTM series ingredients,
      and ordinary corn oil. The merchandise sales include the purchase and resale
      of
      vegetable oil products which include the ingredients of CZTM
      series.




b)  Going
      Concern




The
      Company's financial statements are presented on a going concern basis, which
      contemplates the realization of assets and satisfaction of liabilities in the
      normal course of business. The Company has experienced recurring losses since
      2000 and has negative cash flows from operations that raise substantial doubt
      as
      to its ability to continue as a going concern. For the years ended March 31,
      2006 and 2005, the Company experienced net losses of $1,198,494 and $946,149
      and
      negative working capital of $19,254,357 and $12,318,927
      respectively.




The
      Company's ability to continue as a going concern is also contingent upon its
      ability to secure additional financing, initiating sale of its product and
      attaining profitable operations.




In
      May
      2005, plant sterols, the main ingredient of CZTM series, was formally approved
      as a health function food ingredient by the Korean Food & Drug
      Administration, making it possible for the Company to advertise the
      cholesterol-lowering function of CZTM and food enriched with CZTM. The Company
      expects that the favorable change in the regulation will strongly help in
      selling CZTM to major food companies. The Company has also developed new capsule
      products that are efficient and convenient in delivering the health function
      of
      CZTM. The Company is actively developing sales channels for CZTM and the capsule
      products.




The
      Company also plans to strengthen the cooperation with its international partners
      to restart shipping to overseas markets. The Company expects to sell CZTM to
      major food companies through its international strategic partners such as Archer
      Daniels Midland Company. In regards to CZTM capsules, the Company also plans
      to
      provide a large volume to the United States market starting early 2006 through
      marketing companies in the United States.




In
      addition, management is pursuing various sources of equity financing. Although
      the Company plans to pursue additional financing, there can be no assurance
      that
      the Company will be able to secure financing when needed or obtain such on
      terms
      satisfactory to the Company, if at all.




6


**EUGENE
        SCIENCE, INC.**
 Notes
        to
        Consolidated Financial Statements
 March
        31,
        2006 and 2005
 (Unaudited)


The
      financial statements do not include any adjustments to reflect the possible
      future effects on the recoverability and classification of assets or the amounts
      and classification of liabilities that may result from the possible inability
      of
      the Company to continue as a going concern.




**2.**  **Summary
      of Significant Accounting Policies**




The
      accounting policies of the Company are in accordance with generally accepted
      accounting principles of the United States of America, and their basis of
      application is consistent. Outlined below are those policies considered
      particularly significant:




a)  Basis
      of
      Financial Statement Presentation




These
      financial statements have been prepared in conformity with accounting principles
      generally accepted in the United States of America with the assumption that
      the
      Company will be able to realize its assets and discharge its liabilities in
      the
      normal course of business.




b)  Basis
      of
      Consolidation




The
      merger of the Company and Eugene Science Inc. (Korea) has been recorded as
      the
      recapitalization of the Company, with the net assets of the Company brought
      forward at their historical basis. The intention of the management of Eugene
      Science Inc. (Korea) was to acquire the Company as a shell company listed on
      Nasdaq. Management does not intend to pursue the business of the Company. As
      such, accounting for the merger as the recapitalization of the Company is deemed
      appropriate.




The
      consolidated financial statements included the operations of:


Eugene
      Science, Inc. (Formerly Ezcomm Enterprises, Inc.)


Eugene
      Science, Inc. (Korea)


Ucolebio,
      Inc. (a subsidiary of Eugene Science, Inc. (Korea)).




Minority
      interests are recorded to the extent of their equity. Losses in excess of
      minority interest equity capital are charged against the majority interest
      and
      will be reversed when the losses reverse.




c)  Unit
      of
      Measurement




The
      US
      Dollar has been used as the unit of measurement in these financial statements.




Preparation
      of financial statements in accordance with accounting principles generally
      accepted in the United States of America requires management to make estimates
      and assumptions that affect the amounts reported in the financial statements
      and
      related notes to financial statements. These estimates are based on management's
      best knowledge of current events and actions the Company may undertake in the
      future. Actual results may ultimately differ from estimates, although management
      does not believe such changes will materially affect the financial statements
      in
      any individual year.




d)  Revenue
      Recognition




The
      Company generates revenues from sales of manufactured goods and merchandise,
      as
      well as rental of the company's buildings.




Revenues
      from products sales are recognized in accordance with Staff Accounting Bulletin
      No. 101 "Revenue Recognition in Financial Statements" ("SAB No. 101") when
      delivery has occurred provided there is persuasive evidence of an agreement,
      the
      fee is fixed or determinable and collection of the related receivable is
      probable.




The
      Company retains substantially all of the benefits and risks of ownership of
      its
      income properties and therefore accounts for leases with its tenants as
      operating leases.




7


**EUGENE
        SCIENCE, INC.**
 Notes
        to
        Consolidated Financial Statements
 March
        31,
        2006 and 2005
 (Unaudited)


e)  Government
      Grants




Government
      grants are recognized as income over the periods necessary to match them with
      the related costs that they are intended to compensate.




f)  Currency
      Translation




The
      Company's functional currency is Korean won. Adjustments to translate those
      statements into U.S. dollars at the balance sheet date are recorded in other
      comprehensive income.




Foreign
      currency transactions of the Korean operation have been translated to Korean
      Won
      at the rate prevailing at the time of the transaction. Realized foreign exchange
      gains and losses have been charged to income in the year.




g)  Cash
      and
      Equivalents




Highly
      liquid investments with maturities of three months or less when purchased are
      considered cash equivalents and recorded at cost, which approximates fair
      value.




h)  Properties
      and Equipment




Properties
      and equipment are stated at cost. Major renewals and betterments are capitalized
      and expenditures for repairs and maintenance are charges to expense as incurred.
      Depreciation is computed using the straight-line method over the following
      periods:




Buildings
            20-40
                yearsMachinery
            10
                yearsVehicles
            5
                yearsFurniture
                and equipment
            3-5
                years




i)  Intangible
      Assets




Intangible
      assets such as cost of obtaining industrial rights and patents are stated at
      cost, net of depreciation computed using the straight-line method over 5 to
      10
      years.




j)  Inventories




Inventories
      are stated at the lower of cost or net realizable value. Net realizable value
      is
      determined by deducting selling expenses from selling price.




The
      cost
      of inventories is determined on the first-in first-out method, except for
      materials-intransit for which the specific identification method is
      used.




k)  Investments




Investments
      in available-for-sale securities are being recorded in accordance with FAS-115
      "Accounting for Certain Investments in Debt and Equity Securities". Equity
      securities that are not held principally for the purpose of selling in the
      near
      term are reported at fair market value with unrealized holding gains and losses
      excluded from earnings and reported as a separate component of stockholders'
      equity.




l)  Financial
      Instruments




Fair
      values of cash equivalents, short-term and long-term investments and short-term
      debt approximate cost. The estimated fair values of other financial instruments,
      including debt, equity and risk management instruments, have been determined
      using market information and valuation methodologies, primarily discounted
      cash
      flow analysis. These estimates require considerable judgment in interpreting
      market data, and changes in assumptions or estimation methods could
      significantly affect the fair value estimates.




8


**EUGENE
        SCIENCE, INC.**
 Notes
        to
        Consolidated Financial Statements
 March
        31,
        2006 and 2005
 (Unaudited)


m)  Recent
      Accounting Pronouncements




In
      December 2004, the FASB issued a revision to SFAS No. 123, "Share-Based Payment"
      (Statement 123R). This Statement requires a public entity to measure the cost
      of
      employee services received in exchange for an award of equity instruments based
      on the grant-date fair value of the award (with limited exceptions). That cost
      will be recognized over the period during which the employee is required to
      provide service in exchange for the award requisite service period (usually
      the
      vesting period). No compensation cost is recognized for equity instruments
      for
      which employees do not render the requisite service. Employee share purchase
      plans will not result in recognition of compensation cost if certain conditions
      are met; those conditions are much the same as the related conditions in
      Statement 123. This Statement is effective for public entities that do not
      file
      as a small business issuers as of the beginning of the first interim or annual
      reporting period that begins after June 15, 2005. This Statement applies to
      all
      awards granted after the required effective date and to awards modified,
      repurchased, or cancelled after that date. The cumulative effect of initially
      applying this Statement, if any, is recognized as of the required effective
      date
      and is not expected to have a material impact on the Company's consolidated
      financial statements.




In
      May
      2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections"
      ("SFAS 154"), which replaces Accounting Principles Board ("APB") Opinion No.
      20,
      "Accounting Changes", and SFAS No. 3, "Reporting Accounting Changes in Interim
      Financial Statements An Amendment of APB Opinion No. 28". SFAS No. 154 provides
      guidance on the accounting for and reporting of changes in accounting principles
      and error corrections. SFAS No. 154 requires retrospective application to prior
      period financial statements of voluntary changes in accounting principle and
      changes required by new accounting standards when the standard does not include
      specific transition provisions, unless it is impracticable to do so. SFAS No.
      154 also requires certain disclosures for restatements due to correction of
      an
      error. SFAS No. 154 is effective for accounting changes and corrections of
      errors made in fiscal years beginning after December 15, 2005, and is required
      to be adopted by the Company as of January 1, 2006. The impact that the adoption
      of SFAS No. 154 will have on the Company's results of operations and
      financial condition will depend on the nature of future accounting changes
      adopted by the Company and the nature of transitional guidance provided in
      future accounting pronouncements.




**3.**  **Cash
      and Cash Equivalents**




Included
      in cash and cash equivalents is a bond in the amount of $10,283 (2005 - $9,846)
      pledged as security for payment on future purchases from a vendor. The bond
      is
      restricted for use.




**4.**  **Inventory**




Inventory
      includes $68,627 (2005 - $10,060) of finished goods, $42,738 (2005 -$2,719)
      of
      raw materials.




**5.**  **Advances
      to a Related Company**




Advances
      to a related company which has the same major shareholder and chief executive
      officer bear interest at 9% per annum and are due on demand. The Company is
      in
      financial difficulty and collectability of the advances is uncertain. There
      is
      an agreement with the related party to sell its investments in the Company
      to
      repay the advances as described in note 16. As of March 31, 2006, the value
      of
      the shares held approximates the carrying value of the loan.




9


**EUGENE
        SCIENCE, INC.**
 Notes
        to
        Consolidated Financial Statements
 March
        31,
        2006 and 2005
 (Unaudited)


**6.**  **Properties
      and Equipment**




Properties
      and equipment are comprised as follows:




**Cost**
            
            **2006
                Accumulated Depreciation**
            
            Cost
            
            2005
                Accumulated DepreciationLand
            
            **$**
            **4,640,855**
            
            **$**
            **-**
            
            $
            4,443,938
            
            $
            -Buildings
            
            
            **3,554,256**
            
            
            **885,440**
            
            
            3,403,445
            
            
            697,183Equipment
            
            
            **4,242,042**
            
            
            **2,080,333**
            
            
            4,053,936
            
            
            1,583,304Furniture
                and fixtures
            
            
            **1,000,049**
            
            
            **971,484**
            
            
            959,038
            
            
            896,417**$**
            **13,437,202**
            
            **$**
            **3,937,257**
            
            $
            12,860,357
            
            $
            3,176,904Net
                carrying amount
            
            
            
            
            **$**
            **9,499,945**
            
            
            
            
            $
            9,683,453





Depreciation
      expense on buildings and equipment leased to a related company in the amount
      of
      $61,577 (2005 - $20,553) has been allocated to net rental income. In addition,
      depreciation on equipment used for research and development in the amount of
      $41,153 (2005 - $56,319) has been allocated to research and development
      expenses.




The
      land
      and buildings have been pledged as security for a bank loan as described in
      note
      9 and a rental deposit as described in note 8. During the 2004 year, the Company
      defaulted on its payments of the loans and the bank with the first charge on
      the
      Company's properties attempted to auction off the Company's properties through
      court action. Also, various creditors of the Company have put a provisional
      seizure on the properties to protect their loans. The appraised value of the
      properties was $9,952,000. However, in July 2005, the bank cancelled the auction
      of the properties on the Company's payment of auction administrative cost of
      $173,000.




In
      January 2004, the Company entered into a commitment to sell its land and
      building. The transfer of title is to occur on January 31, 2009. In 2004 the
      Company received an advance payment of $1,768,344. Until legal transfer of
      the
      title in 2009, the Company is to pay $4,900 monthly in cash. On any initial
      public offering, the Company is also to provide shares based on initial public
      offering price and the number of months since the agreement at $9,900 per month.
      After the initial public offering, the Company is to pay $14,800 in cash
      monthly.




The
      Company cancelled the old sales agreement and entered into a new one with
      another purchaser in March 2006 as described in note 17. The sales agreement
      specifies that proceeds from the sale will be used to repay the bank
      loan.




**7.**  **Investments**




**2006**
            
            2005Private
                company
            
            
            **7.5**
            **%**
            **$**
            **440,989**
            
            $
            537,238Company
                with same major shareholder and CEO
            
            
            **4.58**
            **%**
            
            **1**
            
            
            1Other
                marketable securities
            
            
            
            
            
            **391**
            
            
            374**$**
            **441,381**
            
            $
            537,613







The
      Company has pledged 4% of the investment in the private company with carrying
      value of $233,725 (2005 - $284,736) as security for a trade payable in the
      amount of $319,224 (2005 - $366,926).




**8.**  **Rental
      Deposits**




A
      rental
      deposit of $61,695 (2005 - $59,077) is secured by a charge on the land and
      buildings as described in note 6. The charge is subordinate to the prior claim
      held by the bank as described in note 9.




10


**EUGENE
        SCIENCE, INC.**
 Notes
        to
        Consolidated Financial Statements
 March
        31,
        2006 and 2005
 (Unaudited)


**9.**  **Loans
      Payable**




**Current**
            
            **Long-term**
            
            **2006**
              **Total**
            
            **2005**
              **Total**Bank
                loans
            
            **$**
            **6,114,757**
            
            **$**
            **-**
            
            **$**
            **6,114,757**
            
            $
            6,021,687Bank
                loan #2
            
            
            **2,052,181**
            
            
            **-**
            
            
            **2,052,181**
            
            
            1,965,105Note
                payable #1
            
            
            **2,056,500**
            
            
            **-**
            
            
            **2,056,500**
            
            
            1,969,240Notes
                payable (#2, 3, 4 & 5)
            
            
            **429,962**
            
            
            **-**
            
            
            **429,962**
            
            
            180,471Government
                loans (#1, 2 & 3)
            
            
            **322,709**
            
            
            **41,644**
            
            
            **364,353**
            
            
            381,649**$**
            **10,976,109**
            
            **$**
            **41,644**
            
            **$**
            **11,017,753**
            
            $
            10,518,152





Bank
      Loans




The
      bank
      loans bear interest at 4.5% to 21% and are due on demand. A bank loan of
      $3,954,533 (2005 - $3,927,230) is secured by a first charge on the land and
      buildings as described in note 6. The Company is currently in default of these
      loans and, as such, the bank attempted to auction off the Company's properties
      through court action. However, in July 2005, the auction of the properties
      was
      cancelled by the bank as described in note 6. The loan will be repaid in
      accordance with a new sales agreement of the property as described in note
      17.




In
      addition to the security mentioned above, a loan in the amount of $1,382,953
      (2005 - $1,324,273) is guaranteed by Korea Technology Credit Guarantee Fund,
      a
      government operated fund. Additionally, another bank loan of $292,664 (2005
      -
      $281,526) is guaranteed by the chief executive officer as at March 31,
      2006.




Bank
      Loan
      #2




The
      bank
      loan bears interest at 4.95% per annum is secured by land and buildings as
      described in note 6 and is due on demand. As of March 31, 2006, the Company
      is
      in default of its payment. The loan will be repaid in accordance with a new
      sales agreement of the property as described in note 17.




Note
      Payable #1




The
      note
      payable to Korea Technology Credit Guarantee Fund, a government operated fund,
      bears interest at 21% per annum, is guaranteed by the chief executive officer,
      and is due on demand. As of the year end, the Company is in default of its
      payment.




Notes
      Payable #2, 3, 4 and 5




The
      notes
      payable bear interest at 9% to 10% are unsecured, and due on
      demand.




Government
      Loan #1




The
      loan
      is non-interest bearing, unsecured, repayable in three annual payments of
      $21,798 and matured in February 2006. The Company is in arrears on the 2004,
      2005 and 2006 annual payments .




Government
      Loan #2




The
      loan
      amount of $41,644 is non-interest bearing, unsecured, and is repayable when
      the
      projects related to the loan have been completed.




Government
      Loan #3




Loan
      in
      the amount of $269,902 is non-interest bearing, unsecured, and is repayable
      on
      demand as the Company completed the contract in 2005.




11


**EUGENE
        SCIENCE, INC.**
 Notes
        to
        Consolidated Financial Statements
 March
        31,
        2006 and 2005
 (Unaudited)


**10.**  **Advances
      from Related Company**




The
      advances from a company controlled by a person related to the chief executive
      officer bears interest at 9%, and is due on demand.




**11.**  **Advances
      from Shareholder**




The
      advances from the chief executive officer, who is also a 32% shareholder, bears
      interest at 9% per annum and is repayable on demand.




**12.**  **Deposit**




The
      Company received a refundable deposit on the sale of its land and buildings
      as
      described in notes 6 and 17.




**13.**  **Capital
      Stock**




Authorized:


480,000,000
      common shares, par value $0.0001 (2005 - $0.0001)


20,000,000
      preferred shares, par value $0.0001 (2005 - $0.0001)




**2006**
            
            2005Issued:311,659,748
                (2005 - 35,368,800) common shares
            
            **$**
            **31,166**
            
            $
            3,537





On
      March
      3, 2005, the Korean subsidiary issued 2,500,000 shares, a 8% ownership to an
      investor for $993,000.




On
      September 30, 2005, in accordance with a Share Exchange Agreement dated
      September 1, 2005, the Company entered into a reverse-takeover transaction
      with
      Eugene Science, Inc. (Korea), whereby 89.5% of all the outstanding shares of
      the
      Korean subsidiary were exchanged for 272,790,948 shares of the Company. As
      a
      result of the transaction, the shareholders of Eugene Science, Inc. (Korea)
      will
      control 88.5% of the Company. While the Company is the legal parent, Eugene
      Science, Inc. (Korea), as a result of the reverse-takeover, became the parent
      company for accounting purposes.




The
      financial statements have been retroactively adjusted to reflect the
      reverse-takeover transaction.




On
      October 12, 2005, the Company issued 3.5 million common shares, at par value
      $0.0001 per share for consulting services provided.




Stock
      Warrants and Options of the Korean Subsidiary




The
      Company has accounted for its stock options and warrants in accordance with
      SFAS
      123 "Accounting for Stock - Based Compensation" and SFAS 148 "Accounting for
      Stock - Based compensation - Transition and Disclosure." Value of options
      granted has been estimated by the Black Scholes option pricing model. The
      assumptions are evaluated annually and revised as necessary to reflect market
      conditions and additional experience. The following assumptions were
      used:




**2006**
            
            2005Interest
                rate
            
            
            **7.7**
            **%**
            
            7.7
            %Expected
                volatility
            
            
            **80.0**
            **%**
            
            80.0
            %Expected
                life in years
            
            
            **4**
            
            
            5





In
      1999
      the Board of Directors of the Korea subsidiary adopted an option plan to allow
      employees to purchase ordinary shares of the Company.




12


**EUGENE
          SCIENCE, INC.**
 Notes
          to
          Consolidated Financial Statements
 March
          31,
          2006 and 2005
 (Unaudited)


In
      October 1999, the share option plan granted 928,350 stock options for the common
      stock of the Company having a $0.0869 nominal par value each and an exercise
      price of $0.12. In 2000, 236,240 stock options were cancelled. In 2005, the
      balance of the 692,110 options were exercised.




In
      December 1999, 659,169 stock options were granted having a $0.0869 nominal
      par
      value each and an exercise price of $0.26. In 2005, the balance of the 659,169
      options were exercised.




In
      October 2000, 971,999 stock options were granted having a $0.0869 nominal par
      value each and an exercise price of $1.93. In 2000, 5,087, in 2001, 162,848,
      in
      2002, 40,712, and in 2003, 244,272 stock options were cancelled. As at March
      31,
      2006, 519,080 options are still outstanding. In May 2001, 71,246 stock options
      were granted having a $0.0869 nominal par value each and an exercise price
      of
      $1.93. In 2002, 20,356 stock options were cancelled. As at March 31, 2006,
      50,890 options are still outstanding.




In
      March
      2002, 1,000,000 stock options were granted having a $0.0869 nominal par value
      each and exercise price of $1.96. 330,000, 110,000, 100,000 stock options were
      cancelled in 2002, 2003, and 2005 respectively. In addition, 31,190 options
      were
      granted in 2005. There was also a change in the exercise price to $1.84. As at
      March 31, 2006, 491,190 options are still outstanding. In September 2002,
      220,000 stock options were granted having a $0.0869 nominal par value each
      and
      an exercise price of $1.96. During 2005, 14,916 options were granted. In
      addition, the exercise price of the options was reduced to $1.84.




In
      March
      2003, 350,000 stock options were granted having a $0.0869 nominal par value
      each
      and an exercise price of $1.96. In 2003 and 2004, 180,000 and 20,000 stock
      options were cancelled respectively. During 2005, 10,170 options were granted
      and the exercise price was reduced to $1.84. As at March 31, 2006, 160,170
      stock
      options are still outstanding.




The
      options vest gradually over a period of 2 to 3 years from the date of grant.
      The
      term of each option shall not be more than 7 years from the date of grant.
      285,806 and 651,360 options have vested in 2004 and 2005 respectively. However,
      as the exercise price of the options was substantially higher than the fair
      market value, therefore the options have no value and no benefits have been
      recorded since the 2000 plan.




The
      stock
      options have not been included in the calculation of the diluted earnings per
      share as their inclusion would be antidilutive.




The
      following table summarizes the stock option activity during three months ended
      March 31, 2006 and 2005:




**2006**
            
            2005Outstanding,
                beginning of year
            
            
            **1,456,246**
            
            
            2,851,249Granted
            
            
            **-**
            
            
            -Exercised
            
            
            **-**
            
            
            -Cancelled
            
            
            **-**
            
            
            -Outstanding,
                end of year
            
            
            **1,456,246**
            
            
            2,851,249Weighted
                average fair value of options granted during the year
            
            **$**
            **-**
            
            $
            -Weighted
                average exercise price of common stock options, beginning of
                year
            
            **$**
            **1.12**
            
            $
            0.97Weighted
                average exercise price of common stock options granted in the
                year
            
            **$**
            **1.84**
            
            $
            -Weighted
                average exercise price of common stock options, end of
                year
            
            **$**
            **1.88**
            
            $
            1.12Weighted
                average remaining contractual life of common stock options
            
            
            **4
                years**
            
            
            5
                years


13
 **EUGENE
          SCIENCE, INC.**
 Notes
          to
          Consolidated Financial Statements
 March
          31,
          2006 and 2005
 (Unaudited)


**14.**  **Income
      Taxes**




The
      Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for
      Income Taxes". This Standard prescribes the use of the liability method whereby
      deferred tax asset and liability account balances are determined based on
      differences between financial reporting and tax bases of assets and liabilities
      and are measured using the enacted tax rates. The effects of future changes
      in
      tax laws or rates are not anticipated. Corporate income tax rates applicable
      to
      the Company in 2006 and 2005 are 16.5 percent of the first 100 million Korean
      Won ($84,000) of taxable income and 29.7 percent on the excess. For the United
      States operation, the corporate tax rate is approximately 34%. Tax losses from
      the Korean subsidiary can be carried forward for five years to offset future
      taxable income. The U.S. tax losses can be carried forward for fifteen years
      to
      offset future taxable income. The company has accumulated approximately
      $15,958,355 of taxable losses, which can be used to offset future taxable
      income. The utilization of the losses expires in years 2006 to
      2010.




Under
      SFAS No. 109 income taxes are recognized for the following: a) amount of
      tax payable for the current year, and b) deferred tax liabilities and assets
      for
      future tax consequences of events that have been recognized differently in
      the
      financial statements than for tax purposes. The Company has deferred income
      tax
      assets arising from research and development expenses. For accounting purposes,
      these amounts are expenses when incurred. Under Korean tax laws, these amounts
      are deferred and amortized on a straight-line basis over 5 years.




The
      Company has deferred income tax assets as follows:




**2006**
            
            2005Deferred
                income tax assetsResearch
                and development expenses amortized over 5 years for tax
                purposes
            
            **$**
            **207,040**
            
            $
            313,080Other
                timing differences
            
            
            **10,397**
            
            
            64,895Net
                operating loss carryforwards
            
            
            **2,633,129**
            
            
            2,641,295Valuation
                allowance for deferred income tax assets
            
            
            **(2,850,566**
            **)**
            
            (3,019,270
            )**$**
            -
            
            $
            -




The
      Company provided a valuation allowance equal to the deferred income tax assets
      because it is not presently more likely than not that they will be
      realized.




**15.**  **Major
      Customers**




In
      2006,
      the Company had three major customers which accounted for 85% of the total
      revenue, of which one single customer accounted for 46%. In 2005, sales to
      three
      of the major customers accounted for 88% of the total revenue, of which 22%
      was
      from a company with the same major shareholder and chief executive officer
      and
      41% was from one major customer.




**16.**  **Related
      Party Transactions**




**Finished
                Goods Sales**
            
            **Net
                Rental/ Interest Income**
            
            **Purchases**
            
            **Accounts
                Receivable**
            
            **Prepaid
                Assets**
            
            **Accounts
                Payable**
            
            **Rental
                Deposit**Company
                #1 - same major shareholder and chief executive officer-
                2005
            
            $
            92,892
            
            $
            190,258
            
            $
            137,127
            
            $
            2,709,496
            
            $
            25,898
            
            $
            429,496
            
            $
            98,462-
                2006
            
            $
            6,067
            
            $
            93,056
            
            $
            15,890
            
            $
            -
            
            $
            74,019
            
            $
            301,302
            
            $
            102,825Company
                #2 - controlled by a relative of chief executive officer-
                2005
            
            $
            31,228
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            18,412
            
            $
            --
                2006
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            2,868
            
            $
            -
            
            $
            19,228
            
            $
            -Company
                #3 - controlled by a relative of chief executive officer-
                2005
            
            $
            -
            
            $
            440
            
            $
            20,165
            
            $
            2,599
            
            $
            -
            
            $
            98,487
            
            $
            --
                2006
            
            $
            655
            
            $
            461
            
            $
            20,800
            
            $
            679
            
            $
            -
            
            $
            107,888
            
            $
            -





14
 **EUGENE
        SCIENCE, INC.**
 Notes
        to
        Consolidated Financial Statements
 March
        31,
        2006 and 2005
 (Unaudited)


The
      Company with the same major shareholder and chief executive officer has negative
      working capital of approximately $4 million and a loss of approximately $1
      million in the year ended December 31, 2005. The related company has an
      agreement with the Company to sell its investment in the Korean subsidiary
      and
      use the proceeds to repay its loan and accounts payables. As a result, the
      company has written off the receivables to the extend of the expected proceeds
      from the sale of the shares.




These
      transactions were in the normal course of business and recorded at an exchange
      value established and agreed upon by the above mentioned parties, which
      approximates fair market value.




**17.**  **Subsequent
      Events**




On
      March
      3, 2006, the Company cancelled a sales agreement to sell the land and buildings
      (as described in note 6). In return, the company will pay the purchaser
      approximately $2,100,000 representing repayment of the deposit (as described
      in
      note 12) and a cancellation fee. On the same date, the Company signed a new
      agreement to sell the land and building to another purchaser for approximately
      $11,700,000. The title is to be transferred ten months after the contract date.
      The expected gain on the sale of the property is approximately $3,900,000.
      In
      accordance with the new agreement, the proceeds from the sale of the property
      will be applied to repay all the bank loans.














15


**Item
      2. Management’s Discussion and Analysis or Plan of
      Operation** .




This
      Quarterly Report on Form 10-QSB contains forward-looking statements within
      the
      meaning of Section 27A of the Securities Act of 1933, as amended, and
      Section 21E of the Securities Exchange Act of 1934, as amended, that
      concern matters that involve risks and uncertainties that could cause actual
      results to differ materially from those projected in the forward-looking
      statements. Discussions containing forward-looking statements may be found
      in
      the material set forth under “Management’s Discussion and Analysis or Plan of
      Operation” and in other sections of this Quarterly Report on Form 10-QSB. Words
      such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “predict,” “potential” or “continue” or similar words are
      intended to identify forward-looking statements, although not all
      forward-looking statements contain these words. Although we believe that our
      opinions and expectations reflected in the forward-looking statements are
      reasonable as of the date of this Quarterly Report on Form 10-QSB, we cannot
      guarantee future results, levels of activity, performance or achievements,
      and
      our actual results may differ substantially from the views and expectations
      set
      forth in this Quarterly Report on Form 10-QSB. We expressly disclaim any intent
      or obligation to update any forward-looking statements after the date hereof
      to
      conform such statements to actual results or to changes in our opinions or
      expectations. Readers are urged to carefully review and consider the various
      disclosures made by us which attempt to advise interested parties of the factors
      which affect our business, including, without limitation, the audited financial
      statements and the notes thereto and disclosures made under the captions
“Management’s Discussion and Analysis or Plan of Operation,” “Consolidated
      Financial Statements” and “Notes to Consolidated Financial Statements” included
      in our Annual Report on Form 10-KSB for the fiscal year ended December 31,
      2005.




**Overview**




We
      were
      incorporated on August 26, 1998 as Orcas Ltd. under the laws of the State of
      Delaware. As Orcas Ltd., we were in the business of building and promoting
      arcade video games and vending machines. We underwent a reverse merger and
      abandoned this enterprise to develop a loyalty reward program based in Taipei,
      Taiwan, at which time we changed our name to Ezcomm, Inc. to reflect this change
      in our business model. We were unable to raise enough capital to finance the
      research and development of our proposed consumer incentive and loyalty program
      in Asia and, therefore, we abandoned all efforts to develop such business in
      January 2001. We remained inactive until July 2004, at which time we changed
      our
      name to Ezcomm Enterprises, Inc. and began to consider and investigate potential
      business opportunities, including an acquisition or merger. On September 30,
      2005, we acquired Eugene Science, Inc. pursuant to the terms of an exchange
      agreement. The exchange transaction was accounted for as a reverse merger
      (recapitalization) with Eugene Science deemed to be the acquirer for accounting
      purposes. Accordingly, the historical financial information presented in our
      financial statements is that of Eugene Science as adjusted to give effect to
      any
      difference between the par value of our capital stock and Eugene Science capital
      stock with an offset to capital in excess of par value. The basis of the assets,
      liabilities and retained earnings of Eugene Science, the accounting acquirer,
      were carried over in the recapitalization. Upon the closing of the exchange
      transaction, we became a global biotechnology company that develops,
      manufactures and markets nutraceuticals, functional foods that offer
      health-promoting advantages beyond that of nutrition. Our primary products
      are
      our plant sterol products, including our CZ TM Series
      of food additives, and our CholZero TM branded
      beverages and capsules. On January 13, 2006, we changed our name from Ezcomm
      Enterprises to Eugene Science.




**Going
      Concern**




Our
      independent registered public accounting firm has expressed substantial doubt
      as
      to our ability to continue as a going concern, in its report for the quarter
      ended March 31, 2006, based on significant operating losses that we incurred
      and
      the fact that we do not have adequate working capital to finance our day-to-day
      operations. The Company's continued existence depends upon the success of our
      efforts to raise additional capital necessary to meet our obligations as they
      become due and to obtain sufficient capital to execute our business plan. We
      intend to obtain capital primarily through issuances of debt or equity. There
      can be no degree of assurance that we will be successful in completing
      additional financing transactions.




If
      we
      cannot obtain adequate funding or achieve revenues from the sale of our
      products, we may be required to significantly curtail or even shut down our
      operations.




16


**Results
      of Operations**




**Revenues**




*Comparison
      of the Three Months Ended March 31, 2006 and 2005*




We
      experienced a 58% decrease in our revenues for the three months ended March
      31,
      2006 as compared to the three months ended March 31, 2005. Such decrease is
      attributable primarily to poor progress in our sales activities and delayed
      schedules in the launch of our products.




In
      May
      2005, an amendment to the South Korean Functional Health Food Law of 2005,
      or
      FHFL, was adopted. The amendment allows us to market our CholZero-branded
      products as a functional health food and to include claims of health benefits
      with respect to the product's plant sterol ingredients. Sales of our
      CholZero-branded products increased by 65.4% in our 2005 fiscal year due to
      both
      the amendment of the FHFL and our engagement of Nutra Nano Tech as our exclusive
      distributor of CholZero capsules throughout the United States. Nutra Nano Tech
      will primarily distribute our CholZero capsules through television infomercials.
      We anticipate that sales of CholZero capsules in the United States will begin
      in
      May 2006.




We
      anticipate that sales of our products during our 2006 fiscal year will continue
      to increase as a result of our ability to make health claims with respect to
      our
      CZ Series additives and CholZero products in South Korea following the enactment
      of the amendment to the FHFL and upon the anticipated approval of our "Generally
      Recognized as Safe" application with the FDA for our plant sterol additive
      in
      the United States. We have engaged Archer Daniels Midland Company as the
      exclusive distributor of our CZ Series additives in North America and
      Europe.




**Operating
      Expenses**




*Comparison
      of the Three Months Ended March 31, 2006 and 2005*




**Cost
      of Sales**




For
      the
      three months ended March 31, 2006, we had cost of sales of $83,500, which amount
      consistedof manufacturing and merchandising costs. Our gross margin for the three
      months ended March 31, 2006 was approximately 32% of our gross revenues, as
      compared to a gross margin of approximately 10% of our gross revenues for the
      three months ended March 31, 2005. The change in our gross margin is due
      primarily to increased sales of our CholZero capsules.




**Expenses**




We
      had a
      $31,407 decrease in expenses in the three months ended March 31, 2006 as
      compared to the three months ended March 31, 2005 due primarily to decreases
      in
      our research and development and travel expenses.




**Other
      Income (Expense)**




The
      increase in interest expense in the three months ended March 31, 2006 as
      compared to the three months ended March 31, 2005 is primarily attributable
      to
      an increase in interest due on loans in default. All of our bank loans were
      in
      default as of March 31, 2006. The interest rate on such loans ranges from 15%
      to
      18%. We are currently in negotiations with our lenders to settle our outstanding
      debts and intend to enter into settlement agreements with such lenders during
      the second quarter of our 2006 fiscal year.




**Liquidity
      and Capital Resources**




*Comparison
      of the Three Months Ended March 31, 2006 and 2005*




As
      of
      March 31, 2006, we had cash and cash equivalents of approximately $23,834 and
      negative working capital of approximately $19,381,158. As of March 31, 2005,
      we
      had cash and cash equivalents of approximately $53,420 and negative working
      capital of approximately $12,515,851. The decrease in our cash and working
      capital during the three months ended March 31, 2006 was due primarily to poor
      progress in our sales activities and an accompanying decrease in our total
      sales.




17


We
      currently satisfy our working capital requirements primarily through cash flows
      generated from operations, bank loans and sales of equity and debt securities.
      For the three months ended March 31, 2006, we had a net increase in cash of
      approximately $478, as compared with a net increase in cash of approximately
      $16,739 for the three months ended March 31, 2005.




**Cash
      Used in Operating Activities**




The
      net
      cash used in operating activities decreased 39% to $80,366 for the three months
      ended March 31, 2006, as compared to net cash of $131,509 used in operating
      activities during the three months ended March 31, 2005. This decrease of
      $51,143 resulted primarily from an increase in our accounts payable, due to
      a
      related decrease in accounts receivable from our related company, and an
      aggravation of our cash flow.




**Cash
      Used in Investing Activities**




The
      net
      cash used in investing activities was $3,942 for the three months ended March
      31, 2006, as compared to zero net cash used in investing activities during
      the
      three months ended March 31, 2005. This increase of $3,942 resulted primarily
      from an increase in intangible assets.




**Cash
      Used in Financing Activities**




The
      net
      cash used in financing activities decreased 43% to $83,841 for the three months
      ended March 31, 2006, as compared to net cash of $147,932 used in financing
      activities during the three months ended March 31, 2005. This decrease of
      $64,091 resulted primarily from a decrease in advances to our related company
      and from an issuance of common stock in the quarter ended March 31, 2005 which
      did not occur in the quarter ended March 31, 2006.




**Bank
      Loans**




Since
      1999, we have borrowed an aggregate principal amount of $3,889,259 from the
      Industrial Bank of Korea. These loans bear interest at rates of 4.5% to 18%
      per annum and are due and payable on demand. A portion of these loans was
      secured by our real property. Loans in the aggregate principal amount of
      $1,301,919 are guaranteed by the Korea Technology Credit Guarantee Fund, or
      KOTEC, a government-operated fund. At March 31, 2006, the aggregate principal
      balance and accrued and unpaid interest on these loans was approximately
      $4,908,954.




We
      were
      in default under these loans as of December 31, 2004 and, as such, the
      Industrial Bank of Korea requested that our real property be auctioned to repay
      the loan. The Industrial Bank of Korea later agreed to cancel the auction and
      released our property as security upon our payment of administrative costs
      in
      the amount of $173,000. The redemption period has been extended until the end
      of
      April 2006. We will use the proceeds from the sale of our real property in
      Bucheon, South Korea to repay the outstanding amount due to the Industrial
      Bank
      of Korea. In December 2004, we obtained a short-term loan from the National
      Agricultural Cooperative Federation, or NACF, in the principal amount of
      $1,946,105. This loan had an interest rate of 4.6% per annum and was due on
      December 22, 2005. This loan was guaranteed by KOTEC. At March 31, 2006, the
      loan has not been repaid to NACF and the aggregate principal balance and accrued
      and unpaid interest on such loan was approximately $1,999,247.




In
      September 2002, we obtained a short-term loan from ChoHeung Bank in the
      principal amount of $278,805. This loan has an interest rate of 9.5%, was due
      on
      August 1, 2004, and was personally guaranteed by Mr. Noh, our president, chief
      executive officer, board member and principal stockholder. At March 31, 2006,
      the aggregate principal balance and accrued and unpaid interest on such loan
      was
      approximately $377,311. In July 2001 and December 2002, we entered into loan
      arrangements with Kookmin Bank. Each loan was for $1,000,000, was unsecured,
      and
      had interest rates of 6.22% and 11.22%, respectively. Both loans were due and
      payable on November 15, 2004. At March 31, 2006, the aggregate principal balance
      and accrued and unpaid interest on such loans was approximately
      $2,415,665.




18


**Notes**




On
      October 9, 2004, we issued KOTEC a note in connection with its payout as
      guarantor of a convertible debenture issued by us. The note bears interest
      at a
      rate of 21% per annum, is guaranteed by Mr. Noh, our president, chief executive
      officer, board member and significant stockholder, and is due on demand. To
      date, no demands for payment have been made. At March 31, 2006, the balance
      of
      the note was approximately $1,969,240. Interest payments on the note are
      classified in our financial statements as Accounts Payable.




In
      October 2003, we issued a note in the principal amount of $47,772, bearing
      interest at a rate of 9% per annum, to Jae Ho Lee, the president of UcoleBio
      Corp., a subsidiary in which we have a 73% ownership interest. The note is
      due
      and payable on demand and the unpaid balance of this note was $48,238 at March
      31, 2006.




In
      February 2002, we issued a note in the principal amount of $100,000, bearing
      interest at a rate of 8% per annum, to Kyungioils Co., Ltd. The note is due
      and
      payable on demand and the unpaid balance on this note was $18,412 at March
      31,
      2006.




**Government
      Loans**




On
      March
      2, 2003, we received a non-interest bearing, unsecured government loan in the
      principal amount of $61,779. The loan must be repaid in three annual
      installments of $20,593, beginning February 26, 2004. The loan matures in its
      entirety in February 2006. At March 31, 2006, we were $62,381 in arrears under
      this loan arrangement.




We
      received a $316,181 government loan in connection with certain research and
      development projects over the period from 1999 to 2002. The projects were not
      successful and, therefore, we are obligated to refund to the government the
      principal amount of the loan. We repaid $21,034 of the amount due under this
      loan in our 2004 fiscal year. At March 31, 2006, we were $301,972 in arrears
      under this loan arrangement.




**Other
      Loans**




In
      December 2004, we received a loan in the principal amount of $63,382 from our
      customer, Sim Chon, Co., Ltd. The loan is non-interest bearing and due and
      payable on demand. The principal amount of $49,450 was repaid during our 2005
      fiscal year. We repaid the remaining outstanding principal amount due under
      this
      loan during our quarter ended March 31, 2006.




**Critical
      Accounting Policies**




Our
      financial position, results of operations and cash flows are impacted by the
      accounting policies we have adopted. In order to get a full understanding of
      our
      financial statements, one must have a clear understanding of the accounting
      policies employed. A summary of our critical accounting policies
      follows:




BASIS
      OF
      PRESENTATION. The consolidated financial statements include our accounts and
      the
      accounts of UcoleBio Corp, a company in which Eugene Science Korea holds a
      74%
      ownership interest. Intercompany accounts and transactions have been eliminated
      on consolidation. These consolidated financial statements reflect all
      adjustments, which are, in the opinion of management, necessary for a fair
      presentation of the results for the year.




UNIT
      OF
      MEASUREMENT. The United States Dollar has been used as the unit of measurement
      in our consolidated financial statements.




USE
      OF
      ESTIMATES. The preparation of financial statements in accordance with accounting
      principles generally accepted in the United States requires our management
      to
      make estimates and assumptions that affect the amounts reported in the financial
      statements and related notes to financial statements. These estimates are based
      on management's best knowledge of current events and actions we may undertake
      in
      the future. Actual results may ultimately differ from estimates, although
      management does not believe such changes will materially affect the financial
      statements in any individual year.




REVENUE
      RECOGNITION. We generate revenues from sales of manufactured goods and
      merchandise, as well as rental of the company's buildings. Revenues from
      products sales are recognized in accordance with Staff Accounting Bulletin
      No.
      101, "Revenue Recognition in Financial Statements," or SAB No. 101, when
      delivery has occurred provided there is persuasive evidence of an agreement,
      the
      fee is fixed or determinable and collection of the related receivable is
      probable.




19


GOVERNMENT
      GRANTS. Government grants are recognized as income over the periods necessary
      to
      match them with the related costs that they are intended to
      compensate.




CURRENCY
      TRANSLATION. Our functional currency is Korean Won. Adjustments to translate
      those statements into United States Dollars at the balance sheet date are
      recorded in other comprehensive income. Foreign currency transactions of the
      Korean operation have been translated to Korean Won at the rate prevailing
      at
      the time of the transaction. Realized foreign exchange gains and losses have
      been charged to income in the year.




CASH
      AND
      EQUIVALENTS. Highly liquid investments with maturities of three months or less
      when purchased are considered cash equivalents and recorded at cost, which
      approximates fair value.




PROPERTIES
      AND EQUIPMENT. Properties and equipment are stated at cost. Major renewals
      and
      betterments are capitalized and expenditures for repairs and maintenance are
      charges to expense as incurred. Depreciation is computed using the straight-line
      method over the following periods:




Building
            
            20-40
                yearsMachinery
            
            10
                yearsVehicles
            
            5
                yearsFurniture
                and equipment
            
            3-5
                years




INTANGIBLE
      ASSETS. Intangible assets such as costs of obtaining industrial rights and
      patents are stated at cost, net of depreciation computed using the straight-line
      method over 5 to 10 years.




INVENTORIES.
      Inventories are stated at the lower of cost or net realizable value. Net
      realizable value is determined by deducting selling expenses from selling price.
      The cost of inventories is determined on the first-in first-out method, except
      for materials-intransit for which the specific identification method is
      used.




INVESTMENTS.
      Investments in available-for-sale securities are being recorded in accordance
      with FAS-115, "Accounting for Certain Investments in Debt and Equity
      Securities." Equity securities that are not held principally for the purpose
      of
      selling in the near term are reported at fair market value with unrealized
      holding gains and losses excluded from earnings and reported as a separate
      component of stockholders' equity.




FINANCIAL
      INSTRUMENTS. Fair values of cash equivalents, short-term and long-term
      investments and short-term debt approximate cost. The estimated fair values
      of
      other financial instruments, including debt, equity and risk management
      instruments, have been determined using market information and valuation
      methodologies, primarily discounted cash flow analysis. These estimates require
      considerable judgment in interpreting market data, and changes in assumptions
      or
      estimation methods could significantly affect the fair value
      estimates.




**Recent
      Accounting Pronouncements**




In
      November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an amendment
      of
      ARB No. 43, Chapter 4," or SFAS 151. This statement amends the guidance in
      ARB
      No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal
      amounts of idle facility expense, freight, handling costs, and wasted material
      (spoilage). As currently worded in ARB 43, Chapter 4, the term "so abnormal"
      was
      not defined and its application could lead to unnecessary noncomparability
      of
      financial reporting. SFAS 151 eliminates that term and requires that those
      items
      be recognized as current-period charges regardless of whether they meet the
      criterion of "so abnormal." In addition, SFAS 151 requires that allocation
      of
      fixed production overhead to the costs of conversion be based on the normal
      capacity of the production facilities. We do not believe that the adoption
      of
      SFAS 151 will have a material impact on our consolidated financial
      statements.




20


In
      December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-monetary Assets
      -
      an amendment of APB Opinion No. 29," or SFAS 153. SFAS 153 amends Opinion 29
      to
      eliminate the exception for non-monetary exchanges of similar productive assets
      and replaces it with a general exception for exchanges of non-monetary assets
      that do not have commercial substance. A non-monetary exchange has commercial
      substance if the future cash flows of the entity are expected to change
      significantly as a result of the exchange. We do not believe that the adoption
      of FAS 153 will have a material impact on our consolidated financial
      statements.




In
      December 2004, the FASB issued a revision to SFAS No. 123, “Share-Based
      Payment," or SFAS 123R. SFAS 123R requires a public entity to measure the cost
      of employee services received in exchange for an award of equity instruments
      based on the grant-date fair value of the award (with limited exceptions).
      That
      cost will be recognized over the period during which the employee is required
      to
      provide service in exchange for the award (usually the vesting period). No
      compensation cost is recognized for equity instruments for which employees
      do
      not render the requisite service. Employee share purchase plans will not result
      in recognition of compensation cost if certain conditions are met. Such
      conditions are much the same as the related conditions in SFAS 123. SFAS 123R
      is
      effective for public entities that do not file as small business issuers as
      of
      the beginning of the first interim or annual reporting period that begins after
      June 15, 2005. SFAS 123R applies to all awards granted after the required
      effective date and to awards modified, repurchased, or cancelled after that
      date. The cumulative effect of initially applying SFAS 123R, if any, is
      recognized as of the required effective date and we do not expect that it will
      have a material impact on our consolidated financial statements.




**Risk
      Factors**




*The
      following risks could affect our business, financial results and results of
      operations. These risk factors should be considered in connection with
      evaluating the forward-looking statements contained in this Quarterly Report
      on
      Form 10-QSB because these factors could cause actual results and conditions
      to
      differ materially from those projected in the forward-looking
      statements* .




***Our
      independent registered public accounting firm has a going concern qualification
      in their opinion contained in our audited financial statements which raises
      substantial doubt about our ability to continue as a going
      concern*** .




As
      a
      result of our substantial historical operating losses, limited revenues and
      working capital and our capital needs, our auditors added a going concern
      qualification in their report contained in our reviewed consolidated financial
      statements for the quarter ended March 31, 2006 which raises substantial doubt
      about our ability to continue as a going concern. While we have relied
      principally in the past on external financing to provide liquidity and capital
      resources for our operations, we can provide no assurance that cash generated
      from our operations together with cash received in the future from external
      financing will be sufficient to enable us to continue as a going
      concern.




***We
      will need to raise additional capital and it may not be available to us on
      favorable terms or at all. Our inability to obtain any needed additional capital
      on favorable terms could adversely affect our business, results of operations
      and financial condition*** .




We
      will
      need to raise additional capital over the next twelve months to support our
      operations, meet competitive pressures and respond to unanticipated requirements
      during and beyond that period. While there are no definitive arrangements with
      respect to sources of additional financing, management is optimistic that these
      funds can be raised through debt and/or equity offerings. However, our inability
      to obtain additional financing, when needed or on favorable terms, could
      materially adversely affect our business, results of operations and financial
      condition and could cause us to curtail or cease operations.




***We
      may fail to establish or cultivate strategic relationships to expand our
      business*** .




We
      intend
      to develop our business model and build our business initially through strategic
      relationships with large manufacturers. We may not be able successfully to
      form
      or manage such relationships, and if not, our ability to execute our business
      plan will be at risk. Further, if these partnerships are formed but are not
      successful in their execution, further revenue derived from sales of patented
      products may not materialize.




21


***Because
      we rely on a limited number of customers, any reduction in orders from any
      single customer would harm our business*** .




In
      the
      three months ended March 31, 2006, sales to four major customers accounted
      for
      85% of our total revenue. We may fail to capture a share of the market for
      such
      products. Because we are dependent on a limited number of customers, any
      decrease or elimination of such customers’ purchases could materially harm our
      business.




***We
      face product liability risks and may not be able to obtain adequate insurance
      to
      protect ourselves against losses*** .




We
      maintain liability insurance with policy limits generally of $200,000 per
      occurrence and $200,000 per year. Our insurance coverage includes property,
      casualty, comprehensive general liability, and products liability insurance.
      We
      believe that our insurance coverage is adequate. The testing, marketing, and
      sale of health care products, however, entail an inherent risk of product
      liability. We cannot assure you that product liability claims relating to
      dietary supplement products will not be asserted against us, our licensees,
      or
      third parties with whom we operate. Many claims related to dietary supplements
      have already been brought against businesses in our industry. Further, we cannot
      assure you that such insurance will provide adequate coverage against any
      potential claims. A product liability claim or product recall could have a
      material adverse effect on our business, financial condition, or results of
      operations.




***We
      may experience difficulty in entering international
      markets.***




The
      creation of strategic customer relationships and the marketing and sale of
      our
      functional nutrition technology and products could experience difficulty
      entering both the U.S. and additional international markets due to greater
      regulatory barriers, the necessity of adapting to new regulatory systems and
      problems related to entering new markets with different cultural bases and
      political systems. Operating in international markets exposes us to certain
      risks, including, among other things: (i) changes in or interpretations of
      foreign regulations that may limit our ability to sell certain products; (ii)
      exposure to currency fluctuations; (iii) the potential imposition of trade
      or
      foreign exchange restrictions or increased tariffs; and (iv) political
      instability. In addition, there can be no assurance that we will be able to
      enter into agreements with additional international marketing partners and
      thereby would limit the expansion of our revenue base.




***We
      rely on patents, licenses and intellectual property rights to protect our
      proprietary interests.***




Our
      success depends in part on our ability to obtain patents, licenses and other
      intellectual property rights covering its products. There can be no assurance
      that our licenses, patents and patent applications are sufficiently
      comprehensive to protect our products. The process of seeking further patent
      protection can be long and expensive, and there can be no assurance that we
      will
      have sufficient capital reserves to cover the expense of patent prosecution
      for
      their application or that all or even any patents will issue from currently
      pending or any future patent applications or that any of the patents when issued
      will be of sufficient scope or strength to provide meaningful protection or
      any
      commercial advantage to us. While we believe the bases on which patent
      applications were filed correspond to the patents that have been issued for
      composition and method of production and use and are reasonable given the
      issuance of the latter patents, there can be no assurance that the patents
      for
      which it has applied will be issued. We may be subject to or may be required
      to
      initiate interference proceedings with international patent and trademark
      authorities. Such proceedings could demand significant financial and management
      resources. We may receive communications alleging possible infringement of
      patents or other intellectual property rights of others. We believe that in
      most
      cases it could obtain necessary licenses or other rights on commercially
      reasonable terms, but it may be unable to do so. In addition, litigation could
      ensue or damages for any past infringements could be assessed. Litigation,
      which
      could result in substantial cost to and diversion of efforts by our management,
      may be necessary to enforce patents or our other intellectual property rights
      or
      to defend against claimed infringement of the rights of others. The failure
      to
      obtain necessary licenses or other rights or litigation arising out of
      infringement claims could have a material adverse effect on us.




***Our
      success depends in part on our successful development and sale of products
      currently in the research and development stage.***




Many
      of
      our product candidates are still in the research and development stage. The
      successful development of new products is uncertain and subject to a number
      of
      significant risks. Potential products that appear to be promising at early
      states of development may not reach the market for a number of reasons,
      including but not limited to, the cost and time of development. Potential
      products may be found to be ineffective or cause harmful side effects, fail
      to
      receive necessary regulatory approvals, be difficult to manufacture on a large
      scale or be uneconomical or fail to achieve market acceptance. Additionally,
      our
      proprietary products may not be commercially available for a number of years,
      if
      at all.




22


There
      can
      be no assurance that any of our products in development will be successfully
      developed or that we will achieve significant revenues from such products even
      if they are successfully developed. Our success is dependent upon our ability
      to
      develop and market our products on a timely basis. There can be no assurance
      that we will be successful in developing or marketing such products, or taking
      advantage of the perceived demand for such products. In addition, there can
      be
      no assurance that products or technologies developed by others will not render
      our products or technologies non-competitive or obsolete.




***We
      will rely in part on international sales, which are subject to additional
      risks.***




International
      sales may account for a significant portion of our revenues. International
      sales
      can be subject to many inherent risks that are difficult or impossible for
      us to
      predict or control, including:




•  expected
      changes in regulatory requirements and tariffs;




• difficulties
      and costs associated with staffing and managing foreign operations, including
      foreign distributor relationships;




•  longer
      accounts receivable collection cycles in certain foreign countries;




•  adverse
      economic or political changes;




•  unexpected
      changes in regulatory requirements;




•  more
      limited protection for intellectual property in some countries;




•  changes
      in our international distribution network and direct sales force;




•  potential
      trade restrictions, exchange controls and import and export licensing
      requirements;




•  potentially
      adverse tax consequences of overlapping tax structure; and




•  foreign
      currency fluctuations.




***Failure
      to adequately expand to address expanding market opportunities could have a
      material adverse effect on our business and results of
      operations.***




We
      anticipate that a significant expansion of operations will be required to
      address potential market opportunities. There can be no assurance that we will
      expand our operations in a timely or sufficiently large manner to capitalize
      on
      these market opportunities. The anticipated substantial growth is expected
      to
      place a significant strain on our managerial, operational and financial
      resources and systems. While management believes it must implement, improve
      and
      effectively use our operational, management, research and development,
      marketing, financial and employee training systems to manage anticipated
      substantial growth, there can be no assurance that these practices will be
      successful.




***We
      do not have a separate standing audit committee, compensation committee or
      nominating and corporate governance committee, so the duties customarily
      delegated to those committees are performed by the board of directors as a
      whole, and no director is an "audit committee financial expert" as defined
      by
      the rules and regulations of the securities and exchange
      commission*** *.*




Our
      Board
      of Directors consists of four members. The Board of Directors as a whole
      performs the functions of an Audit Committee, Compensation Committee and
      Nominating and Corporate Governance Committee. None of the directors is
      considered "independent" under Rule 4200(a)(15) of the National Association
      of
      Securities Dealers listing standards, and neither qualifies as an audit
      committee financial expert as defined in Item 401 of Regulation S-B.
      Accordingly, we will not be able to list our common stock with a nationally
      recognized exchange until we recruit independent directors to the Board and
      restructure our Board to comply with various requirements currently in place
      by
      those self-regulating organizations, and as a result, it may be difficult for
      you to sell our common stock.




23


***Our
      business is subject to the potential adverse consequences of exchange rate
      fluctuations.***




We
      expect
      to conduct business in various foreign currencies and will be exposed to market
      risk from changes in foreign currency exchange rates and interest rates.
      Fluctuations in exchange rates between the U.S. Dollar and such foreign
      currencies may have a material adverse effect on our business, results of
      operations, and financial condition and could specifically result in foreign
      exchange gains and losses. The impact of future exchange rate fluctuations
      on
      our operations cannot be accurately predicted. To the extent that the percentage
      of our non-U.S. Dollar revenue derived from international sales increases in
      the
      future, our exposure to risks associated with fluctuations in foreign exchange
      rates will increase further. Moreover, as a result of operating a manufacturing
      facility in South Korea, a substantial portion of our costs are and will
      continue to be denominated in the South Korean Won. Adverse changes in the
      exchange rates of the South Korean Won to the U.S. Dollar will affect our costs
      of goods sold and operating margins and could result in exchange
      losses.




***The
      requirements of the Sarbanes-Oxley Act, including Section 404, are burdensome,
      and our failure to comply with them could have a material adverse affect on
      our
      business and stock price.***




Except
      with respect to the adoption of our Code of Conduct and Ethics and our
      compliance with certain requirements specifically applicable to our Annual
      Report on Form 10-KSB and our other periodic reports, our management has not
      commenced any specific procedures to comply with the requirements of the
      Sarbanes Oxley Act of 2002, including, specifically, the process necessary
      to
      implement the requirements of Section 404 of the Sarbanes-Oxley Act of 2002,
      which requires our management to assess the effectiveness of our internal
      controls over financial reporting and include an assertion in our annual report
      as to the effectiveness of our controls. Beginning with our Annual Report on
      Form 10-KSB for the fiscal year ending December 31, 2007, unless otherwise
      amended by the Securities and Exchange Commission, our independent registered
      accounting firm will be required to attest to whether our assessment of the
      effectiveness of our internal control over financial reporting is fairly stated
      in all material respects and separately report on whether it believes we
      maintained, in all material respects, effective internal controls over financial
      reporting as of December 31, 2007. Because of our management's lack of
      resources, and our limited operations, we have not commenced the process of
      preparing the system and process documentation, performing an evaluation of
      our
      internal controls required for our management to make this assessment and for
      the auditors to provide their attestation report, and accordingly, have not
      begun testing the effectiveness of these internal controls. We expect that
      this
      process will require significant amounts of our management’s time and resources,
      as well as higher expenses in the form of higher audit and review fees, higher
      legal fees and higher internal costs to document, test and potentially remediate
      internal controls. Accordingly, with respect to Section 404 in particular,
      there
      exists a significant risk that we will not be able to meet all the requirements
      of Section 404 by the end of fiscal year 2007, when we are required to report
      on
      our internal controls and provide our auditor's opinion thereon. Additionally,
      even in the event we attempt to comply with Section 404, in the course of
      evaluation and testing, management may identify deficiencies that will need
      to
      be addressed and remediated, which could potentially have a material adverse
      effect on our stock price and could result in significant additional
      expenditures.




***Risks
      related to our industry***




***Our
      failure to comply with current or future governmental regulations could
      adversely affect our business.***




The
      formulation, manufacturing, packaging, labeling, advertising, distribution,
      and
      sale of functional foods and food additives, such as those sold by us, are
      subject to regulation by a number of federal, state and local agencies,
      including the United States Food and Drug Administration,
      or FDA, and the United States Federal Trade Commission, or FTC, as
      well as government agencies in other countries where we may operate. Among
      other
      matters, this regulation is concerned with product safety and claims made with
      respect to a product's ability to provide health-related benefits. These
      agencies have a variety of procedures and enforcement remedies available to
      them, including the following:




·
            initiating
                investigations;




·
            issuing
                warning letters and cease and desist
                orders;




·
            requiring
                corrective labeling or advertising;




24


·
            requiring
                consumer redress, such as requiring that a Registrant offer to repurchase
                products previously sold to
                consumers;




·
            seeking
                injunctive relief or product seizures;
                and




·
            imposing
                civil penalties or commencing criminal
                prosecution.




United
      States federal and state agencies have in the past used these remedies in
      regulating participants in the dietary supplements industry, including the
      imposition by federal agencies of civil penalties in the millions of dollars
      against a few industry participants. In addition, publicity related to dietary
      supplements may result in increased regulatory scrutiny of the nutritional
      supplements industry.




Our
      failure to comply with applicable laws could subject us to severe legal
      sanctions, which could have a material adverse effect on our business and
      results of operations. We cannot assure you that the regulatory environment
      in
      which we operate will not change or that such regulatory environment, or any
      specific action taken against us, will not result in a material adverse effect
      on our business and operations. We cannot assure you that a state will not
      interpret claims presumptively valid under federal law as illegal under that
      state's regulations, or that future FDA regulations or FTC decisions will not
      restrict the permissible scope of such claims. Additionally, we cannot assure
      you that such proceedings or investigations or any future proceedings or
      investigations will not have a material adverse effect on our business or
      operations.




***We
      may be unable to compete effectively with competitors of perceived competing
      technologies or direct competitors that may enter our market with new
      technologies.***




The
      market for our products is relatively new. Our ability to increase revenues
      and
      generate profitability is directly related to our ability to maintain a
      competitive advantage. We face potential direct competition from companies
      that
      may enter this market with new competing technologies and with greater
      financial, marketing and distribution resources than us. These greater resources
      could permit our competitors to introduce new products and implement extensive
      advertising and promotional programs, with which we may not be able to compete.
      As a result, we can provide no assurances that we will be able to compete
      effectively in the future.




***If
      our industry receives unfavorable publicity, our business could be
      harmed.***




We
      believe the nutraceutical market is affected by media attention regarding the
      consumption of dietary supplements and functional goods. Future scientific
      research or publicity could be unfavorable to the functional nutrition market
      or
      any particular product, or inconsistent with earlier favorable research or
      publicity. Future reports of research that are perceived as less favorable
      or
      that question such earlier research could hurt our business. Because of our
      dependence upon consumer perceptions, adverse publicity associated with adverse
      effects resulting from the consumption of our products or any similar products
      distributed by other companies could also hurt our business. Such adverse
      publicity could arise even if the adverse effects associated with such products
      resulted from consumers' failure to consume such products as directed. In
      addition, we may not be able to counter the effects of negative publicity
      concerning the efficacy of our products.




***Risks
      related to our common stock***




***We
      have a limited trading volume and shares eligible for future sale by our current
      stockholders may adversely affect our stock price.***




To
      date,
      we have had a very limited trading volume in our common stock. As long as this
      condition continues, the sale of a significant number of shares of common stock
      at any particular time could be difficult to achieve at the market prices
      prevailing immediately before such shares are offered. In addition, sales of
      substantial amounts of common stock, including shares issued upon the exercise
      of outstanding options and warrants, under Rule 144 or otherwise could adversely
      affect the prevailing market price of our common stock and could impair our
      ability to raise capital at that time through the sale of our
      securities.




***Our
      common stock price is highly volatile.***




The
      market price of our common stock is likely to be highly volatile as the stock
      market in general has been highly volatile.




25


Factors
      that could cause such volatility in our common stock may include, among other
      things:




·
            actual
                or anticipated fluctuations in our quarterly operating
                results;




·
            announcements
                of technological innovations;




·
            changes
                in financial estimates by securities
                analysts;




·
            conditions
                or trends in our industry; and




·
            changes
                in the market valuations of other comparable
                companies.




***The
      sale of our common stock on the over-the-counter bulletin board and the
      potential designation of our common stock as a "penny stock" could impact the
      trading market for our common stock.***




Our
      securities, as traded on the Over-the-Counter Bulletin Board, are subject to
      Securities and Exchange Commission rules that impose special sales practice
      requirements upon broker-dealers who sell such securities to persons other
      than
      established customers or accredited investors. For purposes of the rule, the
      phrase "accredited investors" means, in general terms, institutions with assets
      in excess of $5,000,000, or individuals having a net worth in excess of
      $1,000,000 or having an annual income that exceeds $200,000 (or that, when
      combined with a spouse's income, exceeds $300,000). For transactions covered
      by
      the rule, the broker-dealer must make a special suitability determination for
      the purchaser and receive the purchaser's written agreement to the transaction
      prior to the sale. Consequently, the rule may affect the ability of
      broker-dealers to sell our securities and also may affect the ability of
      purchasers to sell their securities in any market that might develop
      therefor.




In
      addition, the Securities and Exchange Commission has adopted a number of rules
      to regulate "penny stock." Because our securities may constitute "penny stock"
      within the meaning of the rules, the rules would apply to us and to our
      securities. The rules may further affect the ability of owners of our common
      stock to sell our securities in any market that might develop for
      them.




Stockholders
      should be aware that, according to Securities and Exchange Commission, the
      market for penny stocks has suffered in recent years from patterns of fraud
      and
      abuse. Such patterns include (i) control of the market for the security by
      one
      or a few broker-dealers that are often related to the promoter or issuer; (ii)
      manipulation of prices through prearranged matching of purchases and sales
      and
      false and misleading press releases; (iii) "boiler room" practices involving
      high-pressure sales tactics and unrealistic price projections by inexperienced
      sales persons; (iv) excessive and undisclosed bid-ask differentials and markups
      by selling broker-dealers; and (v) the wholesale dumping of the same securities
      by promoters and broker-dealers after prices have been manipulated to a desired
      level, resulting in investor losses.




Our
      management is aware of the abuses that have occurred historically in the penny
      stock market. Although we do not expect to be in a position to dictate the
      behavior of the market or of broker-dealers who participate in the market,
      management will strive within the confines of practical limitations to prevent
      the described patterns from being established with respect to our
      securities.




***We
      do not foresee paying dividends in the near future.***




We
      have
      not paid dividends on our common stock and do not anticipate paying such
      dividends in the foreseeable future.




***Our
      officers and directors own a significant portion of our common stock, which
      could limit our stockholders' ability to influence the outcome of key
      transactions.***




As
      of
      March 31, 2006, our officers and directors and their affiliates owned
      approximately 39.19% of our outstanding voting shares. As a result, our officers
      and directors are able to exert considerable influence over the outcome of
      any
      matters submitted to a vote of the holders of our common stock, including the
      election of our Board of Directors. The voting power of these stockholders
      could
      also discourage others from seeking to acquire control of us through the
      purchase of our common stock, which might depress the price of our common
      stock.




**Item
      3** . **Controls
      and Procedures** .




We
      carried out an evaluation, under the supervision and with the participation
      of
      our management, including our principal executive officer and principal
      financial officer, of the effectiveness 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 amended (the “Exchange Act”)) as of the end of the
      period covered by this quarterly report, pursuant to Rules 13a-15(b) and
      15d-15(b) under the Exchange Act. Based on that evaluation, our principal
      executive officer and principal financial officer have concluded that our
      disclosure controls and procedures, as of the end of the period covered by
      this
      quarterly report, were effective in timely alerting them to material information
      relating to us required to be included in our periodic SEC filings.




26


There
      has
      been no change in our internal control over financial reporting (as defined
      in
      Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter
      ended March 31, 2006, that has materially affected, or is reasonably likely
      to
      materially affect, our internal control over financial reporting.




Section
      404 of the Sarbanes-Oxley Act of 2002 requires management's review and
      evaluation of our internal controls, and an attestation of the effectiveness
      of
      these controls by our independent registered public accounting firm beginning
      with our Annual Report on Form 10-KSB for the fiscal year ending December 31,
      2007. We plan to dedicate significant resources, including management time
      and
      effort, and to incur substantial costs in connection with our Section 404
      assessment. The evaluation of our internal controls will be conducted under
      the
      direction of our principal executive officer and principal financial officer.
      We
      will continue to work to improve our controls and procedures, and to educate
      and
      train our employees on our existing controls and procedures in connection with
      our efforts to maintain an effective controls infrastructure.




**PART
      II-OTHER INFORMATION**




**Item
      6. Exhibits and Reports on Form 8-K.**




The
      exhibits set forth below are filed as part of this Quarterly Report on Form
      10-QSB:




**Exhibit**
              **Number**
            
            **Description**31.1
            
            Certification
                of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
                under
                the Securities Exchange Act of 1934.31.2
            
            Certification
                of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
                under
                the Securities Exchange Act of 1934.32.1
            
            Certification
                of Principal Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b)
                under
                the Securities Exchange Act of 1934 and 18 U.S.C. Section
                1350.32.2
            
            Certification
                of Principal Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b)
                under
                the Securities Exchange Act of 1934 and 18 U.S.C. Section
                1350.








27


**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.




EUGENE
                SCIENCE, INC.Date:
              May 22, 2006
            By:
            /s/
              SEUNG
              KWON NOHSeung
                Kwon Noh
              President,
                Chief Executive Officer and Director
              (Principal
                Executive Officer)




Date:
                May 22, 2006
              By:
              /s/
                JAE
                HONG YOOJae
                    Hong Yoo
                  Chief
                    Financial Officer
                  (Principal
                    Financial and Accounting Officer)


28


**Exhibit
      Index**




**Exhibit**
              **Number**
            
            **Description**31.1
            
            Certification
                of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
                under
                the Securities Exchange Act of 1934.31.2
            
            Certification
                of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
                under
                the Securities Exchange Act of 1934.32.1
            
            Certification
                of Principal Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b)
                under
                the Securities Exchange Act of 1934 and 18 U.S.C. Section
                1350.32.2
            
            Certification
                of Principal Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b)
                under
                the Securities Exchange Act of 1934 and 18 U.S.C. Section
                1350.