----

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**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 JUNE                  30, 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.)** |

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**PART      I—FINANCIAL INFORMATION **

**EUGENE        SCIENCE, INC.**

**CONTENTS**

| Report of Independent Registered Public                Accounting Firm | **1**                               |
|------------------------------------------------------------------------|-------------------------------------|
|                                                                   |                                |
| Consolidated Balance Sheets                                            | **2**                               |
|                                                                   |                                |
| Consolidated Statements of Stockholders'                Deficit        | **3**                               |
|                                                                   |                                |
| Consolidated Statements of Operations                                  | **4** **-                  5** |
|                                                                   |                                |
| Consolidated Statements of Cash Flows                                  | **6**                               |
|                                                                   |                                |
| Notes to Consolidated Financial Statements                             | **7**-**19**                        |

----

**REPORT        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**Eugene        Science, Inc.**

**Eugene        Science, Inc.**

| **Toronto,                  Canada** August                  14, 2006 | **CHARTERED                ACCOUNTANTS** |
|----------------------------------------------------------------------------|------------------------------------------|

**-            1 -**

----

**EUGENE        SCIENCE, INC.**

|                                                                                                                                      |   | **2006** |              | 2005   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-------------------|--------|--------|
| **ASSETS**                                                                                                                                |   |     |              |   |   |
| **Current**                                                                                                                               |   |     |              |   |   |
| Cash                    and cash equivalents (note 3)                                                                                     |   | **$**    | ****25,911****    |   | $      | 58,018 |   |
| Accounts                      receivable - net of allowance for doubtful                      accounts $48,083; 2005 - $317,492 (note 15) |   |     | **938,307**       |   |   | 2,405,186 |   |
| Inventory                    (note 4)                                                                                                     |   |     | **46,667**        |   |   | 39,168 |   |
| Advances                    to a related company (note 5)                                                                                 |   |     | **1,237,086**     |   |   | 1,169,500 |   |
| Prepaid                    and sundry assets (note 15)                                                                                    |   |     | **377,747**       |   |   | 194,088 |   |
|                                                                                                                                      |   |     | **2,625,718**     |   |   | 3,865,960 |   |
| **Properties                    and Equipment**                    (note 6)                                                               |   |     | **2,843,927**     |   |   | 9,384,235 |   |
| **Investments**                    (note 7)                                                                                               |   |     | **452,353**       |   |   | 531,470 |   |
| **Intangible                    Assets**                                                                                                  |   |     | **176,467**       |   |   | 176,323 |   |
|                                                                                                                                      |   | **$**    | ****6,098,465**** |   | $      | 13,957,988 |   |
| **LIABILITIES**                                                                                                                           |   |     |              |   |   |   |   |
| **Current**                                                                                                                               |   |     |              |   |   |   |   |
| Accounts                    payable                                                                                                       |   | **$**    | ****8,284,629**** |   | $      | 6,628,336 |   |
| Accounts                    payable to related party                                                                                      |   |     | **360,868**       |   |   | - |   |
| Rental                    deposits (note 8)                                                                                               |   |     | **168,610**       |   |   | 154,880 |   |
| Loans                    payable - current portion (note 9)                                                                               |   |     | **6,021,838**     |   |   | 10,215,951 |   |
| Advances                    from a related company (note 10)                                                                              |   |     | **19,706**        |   |   | - |   |
| Advances                    from shareholder (note 11)                                                                                    |   |     | **671,318**       |   |   | - |   |
|                                                                                                                                      |   |     | **15,526,969**    |   |   | 16,999,167 |   |
| **Accrued                    Severance**                                                                                                  |   |     | **621,137**       |   |   | 475,907 |   |
| **Deposit**                                                                                                                          |   |     | **-**             |   |   | 1,561,868 |   |
| **Loans                    Payable**(note                    9)                                                                           |   |     | **42,679**        |   |   | 313,879 |   |
|                                                                                                                                      |   |     | **16,190,785**    |   |   | 19,350,821 |   |
| **STOCKHOLDERS'                    DEFICIENCY**                                                                                           |   |     |              |   |   |   |   |
| **Capital                    Stock**** **(note                    12)                                                                |   |     | **32,166**        |   |   | 3,537 |   |
|                                                                                                                                      |   |     |              |   |   |   |   |
| **Paid                    in Capital**                                                                                                    |   |     | **16,500,734**    |   |   | 16,216,558 |   |
|                                                                                                                                      |   |     |              |   |   |   |   |
| **Accumulated                    Other Comprehensive Income (Loss)**                                                                      |   |     | **(2,494,133**    | **)**  |   | (1,676,818 | ) |
|                                                                                                                                      |   |     |              |   |   |   |   |
| **Accumulated                    Deficit**                                                                                                |   |     | **(24,131,087**   | **)**  |   | (19,936,110 | ) |
|                                                                                                                                      |   |     | **(10,092,320**   | **)**  |   | (5,392,833 | ) |
|                                                                                                                                      |   | **$**    | ****6,098,465**** |   | $      | 13,957,988 |   |

**APPROVED        ON BEHALF OF THE BOARD**

| **“Dr.                  S. K. Noh”** |   |       |
|--------------------------------------------------|--------|--------------------------------|
| Director                                         |   | Director                       |

**(The        accompanying notes are an integral part of these consolidated financial        statements)**

**-            2 -**

----

**EUGENE        SCIENCE, INC.**

|                                                                                                                |   | **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 12)                                        |   |                                       | 3,536,880      |                             | $      | 3,537                                                                                                                           |   | $                                                 | 15,223,558     |                             | $      | (1,676,719                                  | )      | $ | (18,028,969 | ) | $ | (4,478,593 | ) |
|                                                                                                                |   |                                       |           |                             |   |                                                                                                                            |   |                                              |           |                             |   |                                        |   |   |   |   |   |   |   |
| Issuance                      of shares by                      subsidiary                                          |   |                                       | -              |                             |   | -                                                                                                                               |   |                                              | 993,000        |                             |   | -                                           |   |   | - |   |   | 993,000 |   |
|                                                                                                                |   |                                       |           |                             |   |                                                                                                                            |   |                                              |           |                             |   |                                        |   |   |   |   |   |   |   |
| Unrealized                      loss on investments                                                                 |   |                                       | -              |                             |   | -                                                                                                                               |   |                                              | -              |                             |   | (52,828                                     | )      |   | - |   |   | (52,828 | ) |
|                                                                                                                |   |                                       |           |                             |   |                                                                                                                            |   |                                              |           |                             |   |                                        |   |   |   |   |   |   |   |
| Foreign                      exchange on                      translation                                           |   |                                       | -              |                             |   | -                                                                                                                               |   |                                              | -              |                             |   | 52,729                                      |   |   | - |   |   | 52,729 |   |
|                                                                                                                |   |                                       |           |                             |   |                                                                                                                            |   |                                              |           |                             |   |                                        |   |   |   |   |   |   |   |
| Net                    loss                                                                                         |   |                                       | -              |                             |   | -                                                                                                                               |   |                                              | -              |                             |   | -                                           |   |   | (1,907,141 | ) |   | (1,907,141 | ) |
|                                                                                                                |   |                                       |           |                             |   |                                                                                                                            |   |                                              |           |                             |   |                                        |   |   |   |   |   |   |   |
| Balance,                    June 30, 2005                                                                           |   |                                       | 3,536,880      |                             | $      | 3,537                                                                                                                           |   | $                                                 | 16,216,558     |                             | $      | (1,676,818                                  | )      | $ | (19,936,110 | ) | $ | (5,392,833 | ) |
|                                                                                                                |   |                                       |           |                             |   |                                                                                                                            |   |                                              |           |                             |   |                                        |   |   |   |   |   |   |   |
| Balance,                      January 1, 2006                      (note 12)                                        |   |                                       | **34,375,180** |                             | $      | **31,166**                                                                                                                      |   | **$**                                             | **16,418,734** |                             | **$**  | **(1,777,866**                              | **)**  | $ | **(24,372,702** | **)** | **$** | **(9,700,668** | **)** |
|                                                                                                                |   |                                       |           |                             |   |                                                                                                                            |   |                                              |           |                             |   |                                        |   |   |   |   |   |   |   |
| Unrealized                      loss on investments                                                                 |   |                                       | **-**          |                             |   | **-**                                                                                                                           |   |                                              | **-**          |                             |   | (107,114                                    | )      |   | **-** |   |   | (107,114 | ) |
|                                                                                                                |   |                                       |           |                             |   |                                                                                                                            |   |                                              |           |                             |   |                                        |   |   |   |   |   |   |   |
| Issuance                      of shares for                      consulting services                      (note 12) |   |                                       | **1,000,000**  |                             |   | **1,000**                                                                                                                       |   |                                              | **82,000**     |                             |   | **-**                                       |   |   | **-** |   |   | **83,000** |   |
|                                                                                                                |   |                                       |           |                             |   |                                                                                                                            |   |                                              |           |                             |   |                                        |   |   |   |   |   |   |   |
| Foreign                      exchange on                      translation                                           |   |                                       | **-**          |                             |   | **-**                                                                                                                           |   |                                              | **-**          |                             |   | **(609,153**                                | **)**  |   | **-** |   |   | **(609,153** | **)** |
|                                                                                                                |   |                                       |           |                             |   |                                                                                                                            |   |                                              |           |                             |   |                                        |   |   |   |   |   |   |   |
| Net                    earnings                                                                                     |   |                                       | **-**          |                             |   | **-**                                                                                                                           |   |                                              | **-**          |                             |   | **-**                                       |   |   | **241,615** |   |   | **241,615** |   |
|                                                                                                                |   |                                       |           |                             |   |                                                                                                                            |   |                                              |           |                             |   |                                        |   |   |   |   |   |   |   |
| Balance,                    June 30, 2006                                                                           |   |                                       | **35,375,180** |                             | **$**  | **32,166**                                                                                                                      |   | **$**                                             | **16,500,734** |                             | **$**  | **(2,494,133**                              | **)**  | **$** | **(24,131,087** | **)** | **$** | **(10,092,320** | **)** |

**(The        accompanying notes are an integral part        of these consolidated financial statements)**

**-            3 -**

----

**EUGENE        SCIENCE, INC.**

|                                                                                 |   | **2006** |           |  2005   |   |
|--------------------------------------------------------------------------------------|--------|----------|----------------|--------------|--------|
| **Revenue**                                                                          |   |     |           |    |   |
|  Manufacturing                                                                  |   | **$**    | **272,455**    |         | $      | 294,791 |   |
|  Merchandise                                                                    |   |     | **70,385**     |         |   | 221,523 |   |
|                                                                                 |   |     | **342,840**    |         |   | 516,314 |   |
|                                                                                 |   |     |           |         |   |   |   |
| **Cost                    of Sales**                                                 |   |     |           |         |   |   |   |
|  Manufacturing                                                                  |   |     | **108,659**    |         |   | 238,229 |   |
|  Merchandise                                                                    |   |     | **56,411**     |         |   | 175,541 |   |
|                                                                                 |   |     | **165,070**    |         |   | 413,770 |   |
|                                                                                 |   |     |           |         |   |   |   |
| **Gross                    Profit**                                                  |   |     | **177,770**    |         |   | 102,544 |   |
|                                                                                 |   |     |           |         |   |   |   |
| **Expenses**                                                                         |   |     |           |         |   |   |   |
|  Salaries,                    employee benefits, and retirement allowance       |   |     | **608,115**    |         |   | 473,195 |   |
|  Professional                    fees                                           |   |     | **239,483**    |         |   | 153,644 |   |
|  Research                    and development                                    |   |     | **212,689**    |         |   | 215,022 |   |
|  Repairs                    and maintenance                                     |   |     | **32,210**     |         |   | 42,466 |   |
|  Travel                                                                         |   |     | **29,993**     |         |   | 86,215 |   |
|  Utilities                                                                      |   |     | **27,243**     |         |   | 25,566 |   |
|  Bad                    debts                                                   |   |     | **18,866**     |         |   | 8,147 |   |
|  Advertising                    and promotion                                   |   |     | **17,883**     |         |   | 16,409 |   |
|  Taxes                    and dues                                              |   |     | **49,425**     |         |   | - |   |
|  Insurance                                                                      |   |     | **6,629**      |         |   | 4,043 |   |
|  Office                    and general                                          |   |     | **9,192**      |         |   | 28,827 |   |
|  Depreciation                                                                   |   |     | **158,932**    |         |   | 195,858 |   |
|                                                                                 |   |     | **1,410,660**  |         |   | 1,249,392 |   |
|                                                                                 |   |     |           |         |   |   |   |
| **Operating                    Loss**                                                |   |     | **(1,232,890** | **)**        |   | (1,146,848 | ) |
|                                                                                 |   |     |           |         |   |   |   |
| **Other                    Income (Expenses)**                                       |   |     |           |         |   |   |   |
|  Gain                    on sale of property (note 6)                           |   |     | **5,490,547**  |         |   | - |   |
|  Net                    rental income                                           |   |     | **79,253**     |         |   | 69,549 |   |
|  Miscellaneous                    income                                        |   |     | **-**          |         |   | 16,268 |   |
|  Interest                    expense - net                                      |   |     | **(1,177,221** | **)**        |   | (835,351 | ) |
|  Provision                    for uncollectible loan to related party           |   |     | **(2,918,074** | **)**        |   | - |   |
|  Loss                    on disposition of equipment                            |   |     | **-**          |         |   | (10,759 | ) |
|                                                                                 |   |     | **1,474,505**  |         |   | (760,293 | ) |
|                                                                                 |   |     |           |         |   |   |   |
| **Net                    Earnings (Loss)**                                           |   | **$**    | **241,615**    |         | $      | (1,907,141 | ) |
|                                                                                 |   |     |           |         |   |   |   |
| **Basic                    Earnings (Loss) Per Share**                               |   | **$**    | **0.01**       |         | $      | (0.54 | ) |
|                                                                                 |   |     |           |         |   |   |   |
| **Weighted                    Average Number of Shares**(note                    12) |   |     | **35,091,023** |         |   | 3,536,880 |   |

**(The          accompanying notes are an integral part          of these consolidated financial statements)**

**-            4 -**

----

**EUGENE        SCIENCE, INC.**

|                                                                                 |   | **2006** |           |  2005   |   |
|--------------------------------------------------------------------------------------|--------|----------|----------------|--------------|--------|
| **Revenue**                                                                          |   |     |           |    |   |
|  Manufacturing                                                                  |   | **$**    | **169,997**    |         | $      | 51,201 |   |
|  Merchandise                                                                    |   |     | **50,400**     |         |   | 48,881 |   |
|                                                                                 |   |     | **220,397**    |         |   | 100,082 |   |
|                                                                                 |   |     |           |         |   |   |   |
| **Cost                    of Sales**                                                 |   |     |           |         |   |   |   |
|  Manufacturing                                                                  |   |     | **41,095**     |         |   | 1,950 |   |
|  Merchandise                                                                    |   |     | **40,475**     |         |   | 39,227 |   |
|                                                                                 |   |     | **81,570**     |         |   | 41,177 |   |
|                                                                                 |   |     |           |         |   |   |   |
| **Gross                    Profit**                                                  |   |     | **138,827**    |         |   | 58,905 |   |
|                                                                                 |   |     |           |         |   |   |   |
| **Expenses**                                                                         |   |     |           |         |   |   |   |
|  Salaries,                    employee benefits, and retirement allowance       |   |     | **273,783**    |         |   | 243,145 |   |
|  Professional                    fees                                           |   |     | **175,732**    |         |   | 93,056 |   |
|  Research                    and development                                    |   |     | **99,625**     |         |   | 46,142 |   |
|  Repairs                    and maintenance                                     |   |     | **16,058**     |         |   | 26,952 |   |
|  Travel                                                                         |   |     | **14,451**     |         |   | 39,303 |   |
|  Utilities                                                                      |   |     | **12,581**     |         |   | 10,776 |   |
|  Bad                    debts                                                   |   |     | **8,709**      |         |   | (35,220 | ) |
|  Advertising                    and promotion                                   |   |     | **7,093**      |         |   | 13,882 |   |
|  Taxes                    and dues                                              |   |     | **49,425**     |         |   | - |   |
|  Insurance                                                                      |   |     | **4,078**      |         |   | (4,368 | ) |
|  Office                    and general                                          |   |     | **(4,174**     | **)**        |   | 18,900 |   |
|  Depreciation                                                                   |   |     | **73,936**     |         |   | 86,054 |   |
|                                                                                 |   |     | **731,297**    |         |   | 538,622 |   |
|                                                                                 |   |     |           |         |   |   |   |
| **Operating                    Loss**                                                |   |     | **(592,470**   | **)**        |   | (479,717 | ) |
|                                                                                 |   |     |           |         |   |   |   |
| **Other                    Income (Expenses)**                                       |   |     |           |         |   |   |   |
|  Gain                    on sale of assets                                      |   |     | **5,490,547**  |         |   | - |   |
|  Net                    rental income                                           |   |     | **42,289**     |         |   | 31,330 |   |
|  Miscellaneous                    income                                        |   |     | **-**          |         |   | 5,583 |   |
|  Interest                    - other                                            |   |     | **46,708**     |         |   | 44,518 |   |
|  Interest                    expense - net                                      |   |     | **(737,782**   | **)**        |   | (551,947 | ) |
|  Provision                    for uncollectible loan to related party           |   |     | **(2,809,180** | **)**        |   | - |   |
|  Loss                    on disposition of equipment                            |   |     | **-**          |         |   | (10,759 | ) |
|                                                                                 |   |     | **2,032,582**  |         |   | (481,275 | ) |
|                                                                                 |   |     |           |         |   |   |   |
| **Net                    Earnings (Loss)**                                           |   | **$**    | **1,440,112**  |         | $      | (960,992 | ) |
|                                                                                 |   |     |           |         |   |   |   |
| **Basic                    Earnings (Loss) Per Share**                               |   | **$**    | **0.04**       |         | $      | (0.27 | ) |
|                                                                                 |   |     |           |         |   |   |   |
| **Weighted                    Average Number of Shares**(note                    12) |   |     | **35,091,023** |         |   | 3,536,880 |   |

**(The          accompanying notes are an integral part          of these consolidated financial statements)**

**-            5 -**

----

**EUGENE        SCIENCE, INC.**

|                                                                       |   | **2006** |           |  2005   |   |
|----------------------------------------------------------------------------|--------|----------|----------------|--------------|--------|
| **Cash                    Flows from Operating Activities**                |   |     |           |    |   |
|  Net                    earnings (loss)                               |   | **$**    | **241,615**    |         | $      | (1,907,141 | ) |
|  Adjustments                    for:                                  |   |     |           |         |   |   |   |
|  Provision                    for uncollectible loan to related party |   |     | **2,918,074**  |         |   | - |   |
|  Depreciation                                                         |   |     | **284,093**    |         |   | 351,436 |   |
|  Gain                    on sale of property                          |   |     | **(5,490,547** | **)**        |   | - |   |
|  Gain                    on disposition of equipment                  |   |     | -              |         |   | 10,759 |   |
|  Change                    in non-cash working capital                |   |     |           |         |   |   |   |
|  Accounts                    receivable                               |   |     | **(825,346**   | **)**        |   | 301,581 |   |
|  Inventory                                                            |   |     | **13,919**     |         |   | (24,616 | ) |
|  Accounts                    payable to related party                 |   |     | **81,162**     |         |   | - |   |
|  Accounts                    payable                                  |   |     | **(92,202**    | **)**        |   | 906,329 |   |
|  Accrued                    severance                                 |   |     | **166,459**    |         |   | 53,585 |   |
|  Prepaid                    and sundry assets                         |   |     | **(197,221**   | **)**        |   | (25,089 | ) |
|  Rental                    deposits                                   |   |     | **10,370**     |         |   | - |   |
|                                                                       |   |     | **(2,889,624** | **)**        |   | (333,156 | ) |
|                                                                       |   |     |           |         |   |   |   |
| **Cash                    Flows from Investing Activities**                |   |     |           |         |   |   |   |
|  Acquisition                    of property and equipment             |   |     | -              |         |   | (13,037 | ) |
|  Investments                                                          |   |     | **(33,168**    | **)**        |   | 53,772 |   |
|  Intangible                    assets                                 |   |     | -              |         |   | (9,822 | ) |
|                                                                       |   |     | **(33,168**    | **)**        |   | 30,913 |   |
|                                                                       |   |     |           |         |   |   |   |
| **Cash                    Flows from Financing Activities**                |   |     |           |         |   |   |   |
|  Advances                    to a related company                     |   |     | **(3,180,133** | **)**        |   | (255,472 | ) |
|  Deposit                                                              |   |     | **(1,447,402** | **)**        |   | (197,060 | ) |
|  Loans                    payable                                     |   |     | **(4,934,463** | **)**        |   | (210,002 | ) |
|  Proceeds                    from disposition of property             |   |     | **12,089,892** |         |   |   |   |
|  Advances                    from shareholder                         |   |     | **311,763**    |         |   | (6,234 | ) |
|  Advances                    from a related company                   |   |     | **1,215**      |         |   | - |   |
|  Issuance                    of common stock                          |   |     | **83,000**     |         |   | 993,000 |   |
|                                                                       |   |     | **2,923,872**  |         |   | 324,232 |   |
|                                                                       |   |     |           |         |   |   |   |
| **Foreign                    Exchange on Cash and Cash Equivalents**       |   |     | **1,475**      |         |   | (652 | ) |
|                                                                       |   |     |           |         |   |   |   |
| **Net                    Increase in Cash and Cash Equivalents**           |   |     | **2,555**      |         |   | 21,337 |   |
|                                                                       |   |     |           |         |   |   |   |
| **Cash                    and Cash Equivalents - beginning of period**     |   |     | **23,356**     |         |   | 36,681 |   |
| **Cash                    and Cash Equivalents - end of period**           |   | **$**    | **25,911**     |         | $      | 58,018 |   |

**(The          accompanying notes are an integral part          of these consolidated financial statements)**

**-            6 -**

----

**EUGENE            SCIENCE, INC.**

| **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 bio-technology                  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 June 30, 2006 and 2005, the Company                    experienced net earnings of $241,615 and losses of $1,907,141                    and negative                    working capital of $12,901,251 and $13,133,207 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. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-            7 -**

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**EUGENE          SCIENCE, INC.**

| **1.** | **Description                  of Business and Going Concern**(cont'd) |
|--------|------------------------------------------------------------------------|

|   | b) | Going                  Concern (cont'd) 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. 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 recapitilization 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 recapitilization of the Company is deemed                  appropriate. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-            8 -**

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**EUGENE          SCIENCE, INC.**

| **2.** | **Summary                  of Significant Accounting Policies**(cont'd) |
|--------|-------------------------------------------------------------------------|

|   | b) | Basis                  of Consolidation (cont'd) 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. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-            9 -**

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**EUGENE          SCIENCE, INC.**

| **2.** | **Summary                  of Significant Accounting Policies**(cont'd) |
|--------|-------------------------------------------------------------------------|

|   | 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                  years |
|--------|-------------------------|------------------------------|
|   | Machinery               | 10                  years    |
|   | Furniture 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-in-transit 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. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-            10 -**

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**EUGENE          SCIENCE, INC.**

| **2.** | **Summary                  of Significant Accounting Policies**(cont'd) |
|--------|-------------------------------------------------------------------------|

|   | m) | Recent                  Accounting Pronouncements 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 $10,538 (2005 - $9,680) pledged as security for payment                  on                  future purchases from a vendor. The bond is restricted for                  use. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **4.** | **Inventory** Inventory                  includes $33,320 (2005 - $38,966) of                  finished goods, $13,347 (2005 -$202) 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 15. In the period ended June 30,                  2006, the                  loan was written down to the fair market value of the shares of                  the                  company being pledged. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-            11 -**

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**EUGENE          SCIENCE, INC.**

| **6.** | **Properties                  and Equipment** Properties                  and equipment are comprised as                  follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   |                                      |   | **Cost** |          | **2006****Accumulated****Depreciation** |   | Cost          |   | 2005AccumulatedDepreciation |       |
|--------|-------------------------------------------|--------|----------|---------------|-----------------------------------------|--------|---------------|--------|-----------------------------|------------|
|   | Land                                      |   | **$**    | -             |                                    | **$**  | -             |   | $                           | 4,368,926  |   | $ | - |   |
|   | Buildings                                 |   |     | **835,769**   |                                    |   | **123,753**   |   |                        | 3,345,996  |   |   | 722,450 |   |
|   | Equipment                                 |   |     | **4,349,150** |                                    |   | **2,241,444** |   |                        | 3,987,649  |   |   | 1,656,962 |   |
|   | Furniture                    and fixtures |   |     | **1,024,908** |                                    |   | **1,000,703** |   |                        | 941,452    |   |   | 880,376 |   |
|   |                                      |   | **$**    | **6,209,827** |                                    | **$**  | **3,365,900** |   | $                           | 12,644,023 |   | $ | 3,259,788 |   |
|   | Net                    carrying amount    |   |     |          |                                    | **$**  | **2,843,927** |   |                        |       |   | $ | 9,384,235 |   |

|   | Depreciation                      expense on buildings and equipment leased to a related company                      in the                      amount of $119,299 (2005 - $118,400) has been allocated to                      net rental                      income. In addition, depreciation on equipment used for research                      and                      development in the amount of $34,918 (2005 - $55,874) has been                      allocated                      to research and development expenses.  On                      March 3, 2006, the Company cancelled a sales agreement entered                      into in                      January 2004 to sell the land and buildings. In return, the                      company paid                      the purchaser approximately $2,100,000 representing repayment                      of the                      deposit 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 of the land and building                      transferred                      April 27, 2006. The gain on the sale of the property is approximately                      $5,490,000. In accordance with the new agreement, the proceeds                      from the                      sale of the property were used to repay a portion of the bank                      loans. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  **7.** | **Investments** |
|--------------|-----------------|

|   |                                                           |   |   |     | **2006** |   | 2005        |   |
|--------|----------------------------------------------------------------|--------|--------|----------|----------|--------|-------------|--------|
|   | Private                    company                             |   |   | **7.5**  | **%**    | **$**  | **451,952** |   | $ | 531,102 |   |
|   | Company                    with same major shareholder and CEO |   |   | **4.58** | **%**    |   | **1**       |   |   | 1 |   |
|   | Other                    marketable securities                 |   |   |     |     |   | **400**     |   |   | 367 |   |
|   |                                                           |   |   |     |     | **$**  | **452,353** |   | $ | 531,470 |   |

|   | The                    Company has pledged 53% of the investment in the private company                    with                    carrying value of $239,534 (2005 - $281,484) as security for                    a trade                    payable in the amount of $327,159 (2005 -                    $344,760). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-              12 -**

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**EUGENE          SCIENCE, INC.**

| **8.** | **Rental                  Deposits** A                  rental deposit of $63,229 (2005 - $58,080) is                  secured by a charge on the land and buildings as described in note                  6. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **9.** | **Loans                  Payable** |
|--------|------------------------------------|

|   |                                                                   |   |         |          |          |   | **2006**   |   | 2005   |          |
|--------|------------------------------------------------------------------------|--------|-------------------|---------------|---------------|--------|------------|--------|--------|---------------|
|   |                                                                   |   |  **Current** |          | **Long-term** |   | **Total**  |   | Total  |          |
|   | Bank                    loans                                          |   | **$**             | **1,619,045** |          | **$**  | **-**      |   | **$**  | **1,619,045** |   | $ | 5,757,868 |   |
|   | Bank                    loan #2                                        |   |              | **-**         |          |   | **-**      |   |   | **-**         |   |   | 1,931,934 |   |
|   | Note                    payable #1                                     |   |              | **2,107,620** |          |   | **-**      |   |   | **2,107,620** |   |   | 2,302,494 |   |
|   | Note                    payable #2                                     |   |              | **1,322,691** |          |   | **-**      |   |   | **1,322,691** |   |   | - |   |
|   | Notes                    payable (#3, 4, 5, 6, 7, 8, 9 & 10)  |   |              | **641,750**   |          |   | **-**      |   |   | **641,750**   |   |   | 162,326 |   |
|   | Government                    loans (#1, 2 & 3)                    |   |              | **330,731**   |          |   | **42,679** |   |   | **373,410**   |   |   | 375,208 |   |
|   |                                                                   |   | **$**             | **6,021,837** |          | **$**  | **42,679** |   | **$**  | **6,064,516** |   | $ | 10,529,830 |   |

|   | Bank                      Loans The                      bank loans bear interest at 4.5% to 21% and are due on demand.                      A bank loan                      of $299,938 (2005 - $276,774) is guaranteed by the chief executive                      officer                      as at June 30, 2006. Bank loans of approximately $4,000,000                      secured by the                      land and building as described in note 6 were repaid with the                      proceeds                      from the sale of property during the quarter. Bank                      Loan #2 The                      bank loan bears interest at 18% per annum and is due June 30,                      2006. Bank                      loan was repaid during the quarter. Note                      Payable #1 Note                      payable #1 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. Note                      Payable #2 Note                      payable #2 to Korea Technology Credit Guarantee Fund, a government                      operated fund, bears interest at 18% per annum and is due June                      30, 2006.                      As of the period end, the Company is in default of its                      payment. Notes                      Payable #3, 4, 5, 6, 7, 8, 9 and 10 The                      notes payable bear interest at 9% to 10% are unsecured, and                      due on                      demand. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-              13 -**

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**EUGENE          SCIENCE, INC.**

| **9.** | **Loans                  Payable**(cont'd) 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 is non-interest bearing, unsecured, and is repayable                    when the                    projects related to the loan have been completed.  Government                    Loan #3  Loan                    is non-interest bearing, unsecured, and is repayable on demand                    as the                    Company completed the contract in                    2005. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **10.** | **Advances                  from a 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. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-            14 -**

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**EUGENE          SCIENCE, INC.**

| **12.** | **Capital                  Stock** |
|---------|------------------------------------|

|   |  Authorized:                                                                         |   |     |       |   |   |
|--------|-------------------------------------------------------------------------------------------|--------|----------|------------|--------|--------|
|   |  480,000,000                    common                    shares, par value $0.001   |   |     |       |   |   |
|   |  20,000,000                    preferred                    shares, par value $0.001 |   |     |       |   |   |
|   |                                                                                 |   | **2006** |       | 2005   |   |
|   |  Issued:                                                                             |   |     |       |   |   |
|   | 35,375,180                    (2005 - 3,536,880) common shares                            |   | **$**    | **32,166** |   | $      | 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 304,882,998                      shares                      (30,488,300 post reverse split 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 3,500,000 common shares,                      (350,000                      common shares post reverse split) for $350,000 for consulting                      services                      provided. On                      January 13, 2006 the company had a reverse stock split whereby                      one new                      common share was exchanged for ten old common shares. The financial                      statements have been retroactively restated to reflect the                      reverse                      split. On                      February 21, 2006 the company issued 1,000,000 restricted common                      shares                      for $83,000 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**      | 2005   |
|---------------------------------------------|---------------|--------|
|                                        |          |   |
| Interest                      rate          | **7.7**%****  | 7.7%   |
| Expected                      volatility    | **80.0**%**** | 80.0%  |
| Expected                      life in years | **4**         | 5      |

**-            15 -**

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**EUGENE          SCIENCE, INC.**

| **12.** | **Capital                    Stock**(cont'd) In                      1999 the Board of Directors of the Korea subsidiary adopted                      an option plan                      to allow employees to purchase ordinary shares of the                      Company. 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. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-              16 -**

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**EUGENE          SCIENCE, INC.**

| **12.** | **Capital                      Stock**(cont'd) The                        following table summarizes the stock option activity during                        the six months                        ended June 30, 2006 and                        2005: |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                                                                |   | **2006** |                           | 2005   |   |
|--------|---------------------------------------------------------------------------------------------------------------------|--------|----------|--------------------------------|--------|--------|
|   | Outstanding,                    beginning of period                                                                 |   |     | **1,456,246**                  |   |   | 2,751,249 |   |
|   | Granted                                                                                                             |   |     | **-**                          |   |   | - |   |
|   | Exercised                                                                                                           |   |     | **-**                          |   |   | - |   |
|   | Cancelled                                                                                                           |   |     | **-**                          |   |   | - |   |
|   | Outstanding,                    end of period                                                                       |   |     | **1,456,246**                  |   |   | 2,751,249 |   |
|   | Weighted                      average fair value of options granted during the                      period          |   | **$**    | **-**                          |   | $      | - |   |
|   | Weighted                    average exercise price of common stock                    options, beginning of period  |   | **$**    | **1.88**                       |   | $      | 1.12 |   |
|   | Weighted                    average exercise price of common stock                    options granted in the period |   | **$**    | **-**                          |   | $      | - |   |
|   | Weighted                    average exercise price of common stock                    options, end of period        |   | **$**    | **1.88**                       |   | $      | 1.12 |   |
|   | Weighted                    average remaining contractual life of                    common stock options           |   |     | **4                    years** |   |   | 5                    years |   |

| **13.** | **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. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-            17 -**

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**EUGENE          SCIENCE, INC.**

| **13.** | **Income                  Taxes**(cont'd) 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** |           |  2005   |   |
|--------|-----------------------------------------------------------------------------------------------------------------|--------|----------|----------------|--------------|--------|
|   | Deferred                    income tax assets                                                                   |   |     |           |    |   |
|   | Research                    and development expenses amortized over 5 years for tax                    purposes |   | **$**    | **207,040**    |         | $      | 313,080 |   |
|   | Other                    timing differences                                                                     |   |     | **10,397**     |         |   | 64,895 |   |
|   | Net                    operating loss carryforwards                                                             |   |     | **2,594,470**  |         |   | 2,641,295 |   |
|   | Valuation                    allowance for deferred income tax assets                                           |   |     | **(2,811,907** | **)**        |   | (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. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **14.** | **Major                  Customers** In                    2006, the Company had four major customers which accounted for                    93% of the                    total revenue, of which one single customer accounted for 44%.                    In 2005,                    sales to two of the major customers accounted for 86% of the                    total                    revenue. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-            18 -**

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**EUGENE          SCIENCE, INC.**

| **15.** | **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                                                                                |   | $                                              | 93,627 |                                                     | $      | 45,057        |   | $                          | 176,319 |                  | $      | 2,359,804               |   | $                     | -      |   | $ | - |   | $ | 98,462 |   |
|   |  -                    2006                                                                                |   | $                                              | 12,305 |                                                     | $      | 183,394       |   | $                          | 56,333  |                  | $      | -                       |   | $                     | -      |   | $ | 360,867 |   | $ | 105,381 |   |
|   |                                                                                                           |   |                                           |   |                                                     |   |          |   |                       |    |                  |   |                    |   |                  |   |   |   |   |   |   |   |   |
|   | Company                      #2 - controlled by a relative of chiefexecutive                      officer      |   |                                           |   |                                                     |   |          |   |                       |    |                  |   |                    |   |                  |   |   |   |   |   |   |   |   |
|   | -                    2005                                                                                      |   | $                                              | 31,475 |                                                     | $      | -             |   | $                          | -       |                  | $      | 2,700                   |   | $                     | -      |   | $ | - |   | $ | - |   |
|   | -                    2006                                                                                      |   | $                                              | -      |                                                     | $      | -             |   | $                          | -       |                  | $      | 2,939                   |   | $                     | -      |   | $ | - |   | $ | - |   |
|   |                                                                                                           |   |                                           |   |                                                     |   |          |   |                       |    |                  |   |                    |   |                  |   |   |   |   |   |   |   |   |
|   | Company                      #3 - controlled by a relative of chief executive                      officer     |   |                                           |   |                                                     |   |          |   |                       |    |                  |   |                    |   |                  |   |   |   |   |   |   |   |   |
|   |  -                    2005                                                                                |   | $                                              | 887    |                                                     | $      | -             |   | $                          | 40      |                  | $      | 3,035                   |   | $                     | -      |   | $ | - |   | $ | - |   |
|   |  -                    2006                                                                                |   | $                                              | 196    |                                                     | $      | -             |   | $                          | 43,716  |                  | $      | 1,043                   |   | $                     | -      |   | $ | 114,727 |   | $ | - |   |

|   | 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. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-            19 -**

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

**Overview**

**Going        Concern**

**Results        of Operations**

**Revenues**

*Comparison        of the Three Months Ended June 30, 2006 and 2005*

----

*Comparison        of the Six Months Ended June 30, 2006 and 2005*

**Operating        Expenses**

*Comparison        of the Three Months Ended June 30, 2006 and 2005*

**Cost        of Sales**

**Total        Expenses**

**Other        Income (Expenses)**

*Comparison        of the Six Months Ended June 30, 2006 and 2005*

**Cost        of Sales**

----

**Total        Expenses**

**Other        Income (Expenses)**

**Liquidity        and Capital Resources**

*Comparison        of the Six Months Ended June 30, 2006 and 2005*

**Cash        Used In Operating Activities**

**Cash        Used In/Provided By Investing Activities**

**Cash        Provided By Financing Activities**

**Bank        Loans**

----

**Notes**

**Government        Loans**

**Critical        Accounting Policies**

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| Building                                 | 20-40                  years |
|------------------------------------------|------------------------------|
|                                     |                         |
| Machinery                                | 10                  years    |
|                                     |                         |
| Vehicles                                 | 5                  years     |
|                                     |                         |
| Furniture                  and equipment | 3-5                  years   |

----

**Recent        Accounting Pronouncements**

**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***

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

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

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

----

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

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

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

----

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

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

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

----

***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.***

***Risks        related to our industry***

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

| ·   | initiating                investigations; |
|--------------------|-------------------------------------------|
| ·   | issuing                warning letters and cease and desist                orders; |
|--------------------|------------------------------------------------------------------------------------|
| ·   | requiring                corrective labeling or advertising; |
|--------------------|--------------------------------------------------------------|
| ·   | requiring                consumer redress, such as requiring that we offer to repurchase products                previously sold to consumers; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | seeking                injunctive relief or product seizures;                and |
|--------------------|----------------------------------------------------------------------------------|
| ·   | imposing                civil penalties or commencing criminal                prosecution. |
|--------------------|--------------------------------------------------------------------------------------------|

----

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

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

***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.***

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

| ·   | 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.***

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

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

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**PART        II-OTHER INFORMATION**

**Item        4. Submission of Matters to a Vote of Security Holders.**

On        April        13, 2006, the majority of our stockholders,        by written consent in lieu of a meeting, approved and adopted our 2006 Stock        Incentive Plan, which reserved 4,000,000 shares of our common stock for issuance        pursuant to the terms and conditions of the plan.

**Item        6. Exhibits.**

| **Exhibit****Number** |  **Description**                                                                                                                                                                                                                              |
|-----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                                                                                                                               |
| 10.1                  | 2006                  Stock Incentive Plan (incorporated by reference to Exhibit 10.1                  to the                  Registrant’s Current Report on Form 8-K filed on May 31,                  2006).                              |
|                  |                                                                                                                                                                                                                                               |
| 10.2                  | Form                  of Stock Option Agreement (I) under the 2006 Stock Incentive Plan                  (incorporated by reference to Exhibit 10.2 to the Registrant’s Current                  Report on Form 8-K filed on May 31, 2006).  |
|                  |                                                                                                                                                                                                                                               |
| 10.3                  | Form                  of Stock Option Agreement (II) under the 2006 Stock Incentive Plan                  (incorporated by reference to Exhibit 10.3 to the Registrant’s Current                  Report on Form 8-K filed on May 31, 2006). |
|                  |                                                                                                                                                                                                                                               |
| 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.                        |

----

**SIGNATURES**

|                                       |                                                                                                                                        |                                         |
|--------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------|
|                                       | EUGENE                  SCIENCE, INC.                                                                                                       |
|                                  |                                                                                                                                   |                                    |
| Date:                August 21, 2006  | By:                                                                                                                               | /s/ SEUNG                KWON NOH  |
|                                       | Seung                Kwon NohPresident,                  Chief Executive Officer and Director(Principal                  Executive Officer) |
|                                 |                                                                                                                             |                                                      |
|--------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------|
|                            |                                                                                                                        |                                                 |
| Date:                August 21, 2006 | By:                                                                                                                    | /s/ JAE                HONG                YOO  |
|                                 | Jae                Hong YooChief                  Financial Officer(Principal                  Financial and Accounting Officer) |
|                                 |                                                                                                                                  |

----

**Exhibit        Index**

| **Exhibit****Number** |  **Description**                                                                                                                                                                                                                              |
|-----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                                                                                                                               |
| 10.1                  | 2006                  Stock Incentive Plan (incorporated by reference to Exhibit 10.1                  to the                  Registrant’s Current Report on Form 8-K filed on May 31,                  2006).                              |
|                  |                                                                                                                                                                                                                                               |
| 10.2                  | Form                  of Stock Option Agreement (I) under the 2006 Stock Incentive Plan                  (incorporated by reference to Exhibit 10.2 to the Registrant’s Current                  Report on Form 8-K filed on May 31, 2006).  |
|                  |                                                                                                                                                                                                                                               |
| 10.3                  | Form                  of Stock Option Agreement (II) under the 2006 Stock Incentive Plan                  (incorporated by reference to Exhibit 10.3 to the Registrant’s Current                  Report on Form 8-K filed on May 31, 2006). |
|                  |                                                                                                                                                                                                                                               |
| 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.                        |

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