**UNITED
      STATES**


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


**Washington,
      D.C. 20549**





**FORM
      10-QSB/A**


(Amendment
      No. 1)





x
            **QUARTERLY****REPORT
                UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
              
              **FOR
                THE QUARTERLY PERIOD ENDED JUNE 30,
                2007**





 ̈
            **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.)**





**8TH
      FLOOR, LG PALACE BUILDING, 165-8 DONGGYO-DONG, MAPO-GU, SEOUL,
      KOREA**


**(Address
      of principal executive offices)**





**Issuer’s
      telephone number: 82-2-338-6284**





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No  ̈





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  ̈





The
      number of outstanding shares of the issuer’s common stock as of August 20, 2007
      was 40,315,705.





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







**EXPLANATORY
      NOTE**




This
      Amendment No. 1 to the Quarterly Report on Form 10-QSB of Eugene Science,
      Inc. (“we,” “our,” “us,” or the “Company”) for the quarterly period ended June
      30, 2007, which was originally filed with the Securities and Exchange Commission
      on August 22, 2007, is being filed solely (i) to revise and add disclosures
      to the financial statements and notes to the financial statements in Item 1,
      (ii) to revise the disclosures in Item 2 to reflect revisions made and
      disclosures added to the financial statements and (iii) to revise the responses
      to Item 3. This Amendment No. 1 does not reflect events occurring after
      August 22, 2007, the date of the filing of our original Form 10-QSB, or modify
      or update those disclosures that may have been affected by subsequent
      events.




1


**PART
      I—FINANCIAL INFORMATION**




**ITEM
      1** . **FINANCIAL
      STATEMENTS**




**EUGENE
      SCIENCE, INC. AND SUBSIDIARIES**




CONSOLIDATED
      FINANCIAL STATEMENTS


(Unaudited)




JUNE
      30,
      2007 AND 2006




F-1




**EUGENE
      SCIENCE, INC. AND SUBSIDIARIES**




CONSOLIDATED
      FINANCIAL STATEMENTS


(Unaudited)




JUNE
      30,
      2007 AND 2006


**CONTENTS**
              
              **PAGE**FINANCIAL
                  STATEMENTSConsolidated
                  Balance Sheets
              
              F-3Consolidated
                  Statements of Operations and Comprehensive Loss
              
              F-5Consolidated
                  Statements of Stockholders’ Deficit
              
              F-7Consolidated
                  Statements of Cash Flows
              
              F-8Notes
                  to Consolidated Financial Statements
              
              F-9
                  - 20
  F-2
  **EUGENE
        SCIENCE, INC.** **AND SUBSIDIARIES**
 Consolidated
        Balance Sheets
 June
        30,
        2007 and 2006


**2007**
            
            **2006****ASSETS**Current
                assets:Cash
                and cash equivalents (Note 2)
            
            $
            13,409
            
            $
            15,373Restricted
                cash (Note 3)
            
            
            —
            
            
            10,538Accounts
                receivable (Notes 2 and 17)
            
            
            84,759
            
            
            938,307Inventories
                (Note 2)
            
            
            15,755
            
            
            46,667Due
                from related parties (Note 4)
            
            
            683
            
            
            1,237,086Receivable
                from unsettled contract (Note 6)
            
            
            671,891
            
            
            —Prepaid
                expenses and other current assets (Note 7)
            
            
            111,010
            
            
            377,747Total
                current assets
            
            
            884,098
            
            
            2,625,718Property
                and equipment (Note 5)
            
            
            1,123,950
            
            
            2,843,927Other
                assets:Investments
                (Note 8)
            
            
            413
            
            
            452,353Intangible
                assets (Note 2)
            
            
            179,913
            
            
            176,467Deposits
            
            
            87,147
            
            
            —Total
                other assets
            
            
            267,473
            
            
            628,820Total
                assets
            
            $
            2,288,930
            
            $
            6,098,465





F-3


**EUGENE
        SCIENCE, INC.** **AND SUBSIDIARIES**
 Consolidated
        Balance Sheets
 June
        30,
        2007 and 2006





**2007**
            
            **2006****LIABILITIES
                AND STOCKHOLDER'S DEFICIENCY**Current
                liabilities:Accounts
                payable and accrued expenses
            
            $
            8,812,749
            
            $
            8,645,497Rental
                deposits (Note 9)
            
            
            65,033
            
            
            168,610Loan
                payable, current portion (Note 10)
            
            
            7,255,328
            
            
            6,021,837Due
                to related company
            
            
            69,688
            
            
            19,707Due
                to shareholders and officers (Note 11)
            
            
            793,719
            
            
            671,318Total
                current liabilities
            
            
            16,996,517
            
            
            15,526,969Long-term
                liabilities:Accrued
                pension payable and other liabilities (Note 12)
            
            
            356,476
            
            
            621,137Deposits
                from customers
            
            
            177,428
            
            
            —Long-term
                debt, net of current portion (Note 10)
            
            
            22,890
            
            
            42,679Long-term
                liabilities
            
            
            556,794
            
            
            663,816Total
                liabilities
            
            
            17,553,311
            
            
            16,190,785Stockholders'
                deficiency:Common
                stock (Note 13)
            
            
            40,316
            
            
            32,166Additional
                paid-in-capital
            
            
            16,579,251
            
            
            16,500,734Accumulated
                other comprehensive loss
            
            
            (2,033,226
            )
            
            (2,494,133
            )Accumulated
                deficit
            
            
            (29,850,722
            )
            
            (24,131,087
            )Total
                stockholders' deficiency
            
            
            (15,264,381
            )
            
            (10,092,320
            )Total
                liabilities and stockholders' deficiency
            
            $
            2,288,930
            
            $
            6,098,465





F-4


**EUGENE
        SCIENCE, INC.** **AND SUBSIDIARIES**
 Consolidated
        Statements of Operation s
        and
        Comprehensive Loss
 For
        The
        Six Months Ended June 30, 2007 and 2006


**2007**
            
            **2006**Net
                sales (Note 15)
            
            $
            309,575
            
            $
            342,840Cost
                of goods sold (Note 15)
            
            
            160,871
            
            
            165,070Gross
                profits
            
            
            148,704
            
            
            177,770Operating
                expenses
            
            
            738,928
            
            
            1,410,660Operating
                loss
            
            
            (590,224
            )
            
            (1,232,890
            )Other
                income (expenses):Gain
                (loss) from sale of property (Note 5)
            
            
            (277
            )
            
            5,490,547Net
                rental income (expense)
            
            
            —
            
            
            79,253Other
                income
            
            
            111,681
            
            
            —Net
                interest expense
            
            
            (590,041
            )
            
            (1,177,221
            )Loss
                on currency transaction
            
            
            (462
            )
            
            —Loss
                from sale of investment securities (Note 8)
            
            
            (479,512
            )
            
            —Bad
                debt allowance for related party loans (Note 4)
            
            
            (1,921,973
            )
            
            (2,918,074
            )Net
                other income (expenses)
            
            
            (2,880,584
            )
            
            1,474,505Income
                (loss) before income taxes
            
            
            (3,470,808
            )
            
            241,615Income
                taxes (Note 14)
            
            
            —
            
            
            —Net
                income (loss)
            
            
            (3,470,808
            )
            
            241,615Comprehensive
                income (loss):Unrealized
                loss on investment
            
            
            —
            
            
            (107,114
            )Foreign
                currency translation
            
            
            1,185,239
            
            
            (609,153
            )1,185,239
            
            
            (716,267
            )Comprehensive
                loss
            
            $
            (2,285,569
            )
            $
            (474,652
            )Basic
                and diluted earnings (loss) per share
            
            $
            (0.09
            )
            $
            0.01Weighted
                average number of shares outstandingduring
                the periods - basic and diluted (Note 13)
            
            
            40,315,705
            
            
            35,091,023




F-5




**EUGENE
      SCIENCE, INC.** **AND SUBSIDIARIES**


Consolidated
      Statements of Operation s
      and
      Comprehensive Loss


For
      The
      Three Months Ended June 30, 2007 and 2006


**2007**
              
              **2006**Net
                  sales
              
              $
              154,808
              
              $
              220,397Cost
                  of goods sold
              
              
              123,131
              
              
              81,570Gross
                  profits
              
              
              31,677
              
              
              138,827Operating
                  expenses
              
              
              330,174
              
              
              731,297Operating
                  loss
              
              
              (298,497
              )
              
              (592,470
              )Other
                  income (expenses):Gain
                  (loss) from sale of property
              
              
              (2
              )
              
              5,490,547Net
                  rental income
              
              
              7,120
              
              
              42,289Other
                  income
              
              
              114,663
              
              
              —Net
                  interest expense
              
              
              (294,666
              )
              
              (691,074
              )Loss
                  on currency transaction
              
              
              (462
              )
              
              —Loss
                  from sale of investment securities
              
              
              (2,598
              )
              
              —Bad
                  debt allowance for related party loans
              
              
              (565,794
              )
              
              (2,809,180
              )Net
                  other income (expenses)
              
              
              (741,739
              )
              
              2,032,582Income
                  (loss) before income taxes
              
              
              (1,040,236
              )
              
              1,440,112Income
                  taxes
              
              
              —
              
              
              —Net
                  income (loss)
              
              
              (1,040,236
              )
              
              1,440,112Comprehensive
                  income (loss):Foreign
                  currency translation
              
              
              95,002
              
              
              (238,462
              )Comprehensive
                  income (loss)
              
              $
              (945,234
              )
              $
              1,201,650Basic
                  and diluted earnings (loss) per share
              
              $
              (0.03
              )
              $
              0.04Weighted
                  average number of shares outstandingduring
                  the periods - basic and diluted
              
              
              40,315,705
              
              
              35,091,023


F-6


**EUGENE
        SCIENCE, INC.** **AND SUBSIDIARIES**
 Consolidated
        Statements of Stockholders’ Deficit
 For
        The
        Six Months Ended June
        30,
        2007 and 2006
 **Common
                    Stock**
                
                **Paid
                    in Capital in Excess of**
                
                **Accumulated
                    Other Comprehensive**
                
                **Accumulated****Shares**
                
                **Amount**
                
                **Par
                    value**
                
                **Income
                    (loss)**
                
                **Deficit**
                
                **Total**Balance,
                    January 1, 2006 (Note 13)
                
                
                34,375,180
                
                $
                31,166
                
                $
                16,418,734
                
                $
                (1,777,866
                )
                $
                (24,372,702
                )
                $
                (9,700,668
                )Unrealized
                    loss on available for sale securities
                
                
                —
                
                
                —
                
                
                —
                
                
                (107,114
                )
                
                —
                
                
                (107,114
                )Issuance
                    of shares for consulting services (Note 13)
                
                
                1,000,000
                
                
                1,000
                
                
                82,000
                
                
                —
                
                
                —
                
                
                83,000Foreign
                    currency translation adjustment
                
                
                —
                
                
                —
                
                
                —
                
                
                (609,153
                )
                
                —
                
                
                (609,153
                )Net
                    income
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                241,615
                
                
                241,615Balance,
                    June 30, 2006
                
                
                35,375,180
                
                $
                32,166
                
                $
                16,500,734
                
                $
                (2,494,133
                )
                $
                (24,131,087
                )
                $
                (10,092,320
                )Balance,
                    January 1, 2007 (Note 13)
                
                
                40,315,705
                
                $
                40,316
                
                $
                16,579,251
                
                $
                (3,218,465
                )
                $
                (26,379,914
                )
                $
                (12,978,812
                )Foreign
                    currency translation adjustment
                
                
                —
                
                
                —
                
                
                —
                
                
                1,185,239
                
                
                —
                
                
                1,185,239Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (3,470,808
                )
                
                (3,470,808
                )Balance,
                    June 30, 2007
                
                
                40,315,705
                
                $
                40,316
                
                $
                16,579,251
                
                $
                (2,033,226
                )
                $
                (29,850,722
                )
                $
                (15,264,381
                )




F-7


**EUGENE
        SCIENCE, INC.** **AND SUBSIDIARIES**
 Consolidated
        Statements of Cash Flows
 For
        The
        Six Months Ended June 30, 2007 and 2006
 **2007**
                
                **2006**Cash
                    flows from operating activities:Net
                    income (loss)
                
                $
                (3,470,808
                )
                $
                241,615Adjustments
                    to reconcile net income to net cash provided by operating
                    activities:Depreciation
                    and amortization
                
                
                57,620
                
                
                284,093Provision
                    for loss on uncollectible related party loans
                
                
                1,921,973
                
                
                2,918,074Gain
                    on sale of property
                
                
                —
                
                
                (5,490,547
                )Loss
                    on investment
                
                
                479,512
                
                
                —(Increase)
                    decrease in assets:Restricted
                    cash
                
                
                5,818
                
                
                (648
                )Accounts
                    receivable
                
                
                (7,695
                )
                
                (825,346
                )Inventory
                
                
                18,344
                
                
                13,919Prepaid
                    expenses and other assets
                
                
                70,899
                
                
                (197,221
                )Increase
                    (decrease) in liabilities:Accounts
                    payable
                
                
                661,301
                
                
                (11,040
                )Accrued
                    pension payable
                
                
                (236,505
                )
                
                166,459Rental
                    deposits
                
                
                —
                
                
                10,370Cash
                    used in operating activities
                
                
                (499,541
                )
                
                (2,890,272
                )Cash
                    flows from investing activities:Investment
                
                
                (146,074
                )
                
                (33,168
                )Deposits
                
                
                (3,435
                )
                
                —Acquisition
                    of property
                
                
                (12,803
                )
                
                —Intangible
                    assets
                
                
                8,268
                
                
                —Cash
                    used in investing activities
                
                
                (154,044
                )
                
                (33,168
                )Cash
                    flows from financing activities:Net
                    advances from (to) shareholder and officers
                
                
                (42,548
                )
                
                311,763Net
                    advance from (to) related party
                
                
                512,900
                
                
                (3,178,918
                )Net
                    advance to customers
                
                
                (140,070
                )
                
                (1,447,402
                )Proceeds
                    from disposition of property
                
                
                270,795
                
                
                12,089,892Issuance
                    of stock
                
                
                —
                
                
                83,000Loans
                    payable
                
                
                56,992
                
                
                (4,934,463
                )Cash
                    provided by financing activities
                
                
                658,069
                
                
                2,923,872Foreign
                    exchange on cash and cash equivalents
                
                
                (106
                )
                
                1,475Net
                    increase in cash and cash equivalents
                
                
                4,378
                
                
                1,907Cash
                    and cash equivalent - beginning of period
                
                
                9,031
                
                
                13,466Cash
                    and cash Equivalent - end of period
                
                $
                13,409
                
                $
                15,373Supplemental
                    Information:Cash
                    paid during the year for: Interest paid
                
                $
                —
                
                $
                —




F-8


EUGENE
          SCIENCE, INC.AND
          SUBSIDIARIES
 Notes
          to
          Consolidated Financial Statements
 June
          30,
          2007 and 2006
 **Note** **1
          - Nature of Business and Going Concern**
  ***(a)***
                ***Description
                    of
                    Business***
  Eugene
          Science Inc. (“the Company”) was incorporated in August 1998 under the laws of
          state of Delaware, and owns 89.5% of Eugene Science, Inc. in Korea (“the Korean
          subsidiary”) which manufactures certain cholesterol lowering food ingredients.
          The Company currently has no other business.
  Initially
          registered as Orcas, Ltd, the Company changed its name to Ezcomm Inc. in
          January
          2000, and again to Ezcomm Enterprises, Inc. (EEI) in July 2004, and finally
          to
          the current name in September 2005 as it acquired the control of the Korean
          subsidiary.
  The
          control of the Korean subsidiary was acquired in September 2005 by a share
          exchange transaction. By this exchange, EEI acquired 89.5% of Eugene Science,
          Inc. by issuing 88.5% of its own common stock to the shareholders of the
          Korean
          company. As a result, the Korean company has become 89.5% subsidiary of
          EEI
          while the shareholders of the Korean subsidiary hold 88.5% control in EEI
          in the
          United States. Immediately following the share exchange, EEI changed its
          name to
          Eugene Science, Inc. so that both companies are known under a common
          name.
  The
          Korean subsidiary, located in Kyunggi-Do, Korea, was organized in July
          1997
          under the laws of the Republic of Korea, and is in business of manufacturing
          and
          selling CZ TM series
          cholesterol-lowering functional food ingredients, beverages and capsules,
          and
          vegetable oil products that include those ingredients.
  ***(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 .
          With
          the loss continuing, the Company’s net loss amounted to $3,470,808 for the six
          months ended June 30, 2007 and its working capital deficiency was $16,655,800
          as
          of June 30, 2007. These factors raise substantial doubt about the Company’s
          ability to continue as a going concern.
  The
          Company's ability to continue as a going concern is also contingent upon
          its
          ability to secure additional financing, initiating sale of its product
          and
          attaining profitable operations.
  In
          May
          2005, plant sterols, the main ingredient of CZ TM 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 CZ TM and food
          enriched with CZ TM .
          The
          Company expects that the favorable change in the regulation will strongly
          help
          in selling CZ TM to major
          food companies. The Company has also developed new capsule products that
          are
          efficient and convenient in delivering the health function of CZ TM .
          The
          Company is actively developing sales channels for CZ TM and the
          capsule products.
  The
          Company also plans to strengthen the cooperation with its international
          partners
          to restart shipping to oversea s
          markets. The Company expects to sell CZ TM to major
          food companies through its international strategic partners. For marketing
          the
          CZ TM capsules, the Company established a distribution channel in the United
          States in
          2006.
  In
          addition, management is pursuing various sources of equity financing ,
          although 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.
  F-9
 EUGENE
              SCIENCE, INC.AND
              SUBSIDIARIES
 Notes
              to
              Consolidated Financial Statements
 June
              30,
              2007 and 2006
 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.
  **Note** **2
              -** **Significant
              Accounting Policies**
  The
          following summary of significant accounting polices of the Company is presented
          to assist in understanding the Company’s financial statements. These
          accounting policies conform to the accounting principles generally accepted
          in
          the United States of America, and have been consistently applied in the
          preparation of the financial statements.
  ***(a)***
                ***Basis
                    of Financial Statement
                    Presentation***
   These
              financial statements have been prepared 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
              reverse-takeover transaction between the Company and Eugene Science
              Inc. in
              Korea has been recorded as the recapitalization of the Company, with
              the net
              assets of the Company brought forward at their historical basis. The
              intention
              of the management of Eugene Science Inc. in Korea was to acquire the
              Company as
              a shell company listed on a stock market. As such, accounting for the
              reverse-takeover as the recapitalization of the Company is deemed
              appropriate.
  The
          consolidated financial statements included the accounts
          of Eugene Science, Inc. (formerly Ezcomm Enterprises, Inc.) in the United
          States, Eugene Science, Inc. in Korea and its subsidiary, Ucolebio, Inc.
          in
          Korea. Significant inter company transactions, if any, have been eliminated
          in
          consolidation
  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 Estimates***
  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.
  Revenue
          from product sales is
          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.
  For
            manufactured finished goods, the Company recognizes revenue when there
            is a
            definitive sales agreement, and upon shipment of products, when title
            is passed
            and the amount collectible can reasonably be determined.
  For
            merchandise sales, the Company recognizes revenue upon shipment of products,
            when title is passed and the amount collectible can reasonably be
            determined.
  For
            rental income, the Company retains substantially all of the benefits
            and risks
            of ownership of its income properties and therefore recognizes revenue
            upon
            receipt of monthly rent.
  F-10
  EUGENE

            SCIENCE, INC.AND
            SUBSIDIARIES
 Notes
            to
            Consolidated Financial Statements
 June
            30,
            2007 and 2006
 
 ***(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 occurring
              in
              translating the currency into U.S. dollars at the balance sheet date
              are
              recorded as a component of other comprehensive income
              (loss).
  Foreign
              currency transactions of the Korean operations have been translated
              to Korean
              Won at the rate prevailing at the time of the transaction. Realized
              foreign
              exchange gains and losses were taken into current
              period.
  ***(g)***
                ***Cash
                    and Cash 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)***
                ***Allowance
                    for Doubtful Accounts***
 
 An
          allowance for doubtful accounts is computed based on the Company’s historical
          experience and management’s analysis of possible bad debts. Accounts receivable
          are shown net of allowance for doubtful accounts of $66,984 and $48,083
          as of
          June 30, 2007 and 2006, respectively.
  ***(******i)***
                ***Properties
                    and Equipment***
  Properties
          and equipment are stated at cost. Major renewals and betterments are capitalized
          and expenditures for repairs and maintenance are charges to expense as
          incurred.
          Depreciation is computed using the straight-line method over the following
          periods:
  Buildings
                20-40
                    yearsMachinery
                10
                    yearsVehicles
                5
                    yearsFurniture
                    and equipment
                3-5
                    years
  ***(******j)***
                ***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 five
          to
          ten years.
  ***(******k)***
                ***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.
  F-11
  EUGENE
            SCIENCE, INC.AND
            SUBSIDIARIES
 Notes
            to
            Consolidated Financial Statements
 June
            30,
            2007 and 2006
 
 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.
          The
          components of inventory at June 30, 2007 and 2006 were as follows:
 
 **2007**
                
                **2006**Raw
                    materials
                
                $
                —
                
                $
                13,347Finished
                    goods
                
                
                15,755
                
                
                33,320Total
                
                $
                15,755
                
                $
                46,667
  ***(******l)***
                ***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.
  ***(******m)***
                ***Financial
                    Instruments***
  Fair
          values of cash equivalents, short-term and long-term investments and short-term
          debt approximate their
          costs. 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.
  ***(******n)***
                ***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.
 
 F-12
  EUGENE
            SCIENCE, INC.AND
            SUBSIDIARIES
 Notes
            to
            Consolidated Financial Statements
 June
            30,
            2007 and 2006
 
 **Note
          3 - Restricted Cash**
  The
          Company had a restricted cash of
          $10,538 at June 30, 2006, which was pledged as security for future purchases
          from a vendor.
 
 **Note
          4 - Due from Related Party**
  Loans
          receivable from an affiliate by virtue of common ownership were carried
          at
          $ 683
          and
          $1,237,086 as of June 30, 2007 and 2006, respectively. These loans are
          pledged
          by marketable securities, and bear interest at 9% and are due on demand.
          As of
          June 30, 2007, the Company determined that the collectability of these
          loans is
          remote due to the leveraged financial condition of the affiliate and provided
          a
          loss reserve in an amount matching the entire loan amount.
  **Note
          5 - Properties and Equipment**
  Properties
          and equipment co nsisted
          of the following at June 30:
 
 **2007**
                
                **2006**Buildings
                
                $
                880,327
                
                $
                835,769Equipment
                    and vehicles
                
                
                788,004
                
                
                4,349,150Furniture
                    and fixtures
                
                
                1,100,179
                
                
                1,024,908Construction
                    in progress
                
                
                34,487
                
                
                —2,802,997
                
                
                6,209,827Less:
                    accumulated depreciation
                
                
                (1,679,047
                )
                
                (3,365,900
                )Net
                    property and equipment
                
                $
                1,123,950
                
                $
                2,843,927
  On
          March
          3, 2006, the Company cancelled a sales agreement into which the Company
          entered
          in January 2004 to sell the land and buildings. In cancelling, the Company
          paid the buyer approximately $2,100,000 representing return of the deposit
          and a
          cancellation fee. On the April 27, 2006, the Company sold the land and
          building
          to a third party at approximately $11,700,000, realizing a gain of approximately
          $5,504,000. The proceeds from the sale were used to reduce a portion of
          the
          loans from Korea Trade Bank.
 
 On
          August
          11, 2006, the Company sold certain machinery and equipment located in the
          Bucheon facilities for about $1,021,500 realizing a loss of about $189,300.
 
 Depreciation
          expenses for the six months ended June 30, 2007 and 2006 were $57,620 and
          $158,932, respectively.
 
 **Note
          6 - Receivable from Unsettled Contracts**
 As
              of
              June 30, 2007, the Company had outstanding proceeds receivable of $671,891
              from
              the sales of real property and machinery and equipment further explained
              in Note
              5.
  F-13


EUGENE
        SCIENCE, INC.AND
        SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 June
        30,
        2007 and 2006


**Note
        7 - Prepaid Expenses and Other Current Assets**
  Prepaid
        expenses and other current assets co nsisted
        of the following at June 30:
 
 **2007**
              
              **2006**Prepaid
                  fees for certain patent registration and related legal costs under
                  application process
              
              $
              66,897
              
              $
              —Advance
                  payment to vendors
              
              
              44,113
              
              
              —Interest
                  receivable from related party loans
              
              
              —
              
              
              377,747Total
              
              $
              111,010
              
              $
              377,747
  **Note
        8 - Investments**
  The
        following is a summary of investments at June 30:
 
 **2007**
              
              **2006**7.50%
                  equity of a unlisted company
              
              $
              —
              
              $
              451,9524.58%
                  equity in a unlisted company
              
              
              —
              
              
              1Other
                  marketable securities
              
              
              413
              
              
              400Total
              
              $
              413
              
              $
              452,353
  During
        the six months ended June
        30,
        2007, the Company sold the investments in the equity securities and recognized
        a
        loss of $479,512.
  **Note
        9 - Rental Deposits**
  In
        January 2007, the Company began to occupy an office space that was previously
        leased to an unrelated party and has an outstanding rental
        deposit of $65,033 as of June 30, 2007.
 
 **Note
        10 - Loans Payable**
   Loans
            payable consisted of the following at June 30:
 
 **2007**
              
              **2006**Loan
                  payable to Korea Trade Bank with interest at 4.5% to 18%, due on
                  demand,
                  guaranteed by Korea Technology Credit Guarantee Fund and the Company’s
                  chief executive officer. Principal reduced by $4,000,000 in April
                  2006.
              
              $
              3,528,225
              
              $
              1,619,045Note
                  payable to Kook Min Bank with interest at 19% to 21%, due on demand,
                  guaranteed by Korea Technology Credit Guarantee Fund and the Company’s
                  chief executive officer. This loan is in default.
              
              
              1,356,759
              
              
              3,430,311Note
                  payable to a customer with interest at 3% due on demand. The note
                  is in
                  default.
              
              
              2,041,575
              
              
              —Note
                  payable to Shin Han Bank with interest at 18% due on demand. The
                  note is
                  in default.
              
              
              308,500
              
              
              —Various
                  notes payable to related party with interest at 9% to 10%, unsecured,
                  and
                  due on demand.
              
              
              —
              
              
              641,750Government
                  loan, non-interest bearing, unsecured, payable on demand.
              
              
              43,159
              
              
              373,410Total
                  notes payable
              
              
              7,278,218
              
              
              6,064,516Less:
                  current portion
              
              
              7,255,328
              
              
              6,021,837Total
                  long-term debt
              
              $
              22,890
              
              $
              42,679
  F-14
 
  **EUGENE
          SCIENCE, INC. AND SUBSIDIARIES**
 Notes
            to
            Consolidated Financial Statements
 June
            30,
            2007 and 2006
 **Note
        11 - Due to Shareholders and Officers**
 Due
            to
            shareholders and officer consisted of the following at June
            30:
   **2007**
              
              **2006**Unsecured
                  short term advance payable to shareholder with interest at 9% per
                  annum,
                  due on demand.
              
              $
              118,903
              
              $
              -Unsecured
                  short-term advances payable to corporate officer with interest
                  at 9% per
                  annum, due on demand.
              
              
              674,816
              
              
              671,318Total
              
              $
              793,719
              
              $
              671,318
  **Note
        12 - Accrued Pension Payable**
 
 The
        Company has an unfunded non-contributory, defined contribution pension plan
        that
        covers substantially all of its employees which is mandated by the government.
        The plans provide defined benefits based on years of service and final average
        salary. The plan provides that about 8% of each participant’s total compensation
        will be contributed to the plan. The Company is required to make contributions
        to the plan equal to the amounts accrued for pension expense. The unfunded
        accrued pension payables were $288,250 and $621,137 at June 30, 2007 and
        2006,
        respectively.
   Total
            pension expenses for the six months ended June 30, 2007 and 2006 were
            $26,223
            and $166,459, respectively.
 
 **Note
        13 - Capital Stock**
 
 Total
                  shares authorized:480,000,000
                  shares of Common Stock, par value $0.00120,000,000
                  shares of Preferred Stock, par value $0.001Shares
                  issued and outstanding:
              
              **Shares**
              
              **Amount**Common
                  stockJune
                  30, 2007
              
              
              40,315,705
              
              $
              40,316June
                  30, 2006
              
              
              35,091,023
              
              $
              32,166Preferred
                  stock - none issued and outstanding
              
              
              —
              
              $
              —
  F-15
 **EUGENE
          SCIENCE, INC. AND SUBSIDIARIES**
 Notes
            to
            Consolidated Financial Statements
 June
            30,
            2007 and 2006
 On
        January 13, 2006 ,
        the
        company had a reverse stock split whereby one new common share was exchanged
        for
        ten common shares. The financial statements have been retroactively restated
        to
        reflect the reverse split.
  On
        February 21, 2006, the company issued 1,000,000 shares of common stock for
        $83,000.
  On September
        19, 2006, the company issued 390,000 shares of common stock for consulting
        services provided.
  On
        October 1, 2006, the company issued 1,200,000 shares of common stock for
        various
        consulting services provided.
  On
        October 1, 2006, in accordance of 2006 Stock Incentive Plan, the company
        issued
        3,350,000 shares of common stock to employees and directors.
  **Stock
        Compensation Plan**
 
 The
        Company has accounted for its stock options and warrants in accordance with
        SFAS
        123(R) "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 weighted-average assumptions
        were used and a discussion of our methodology for developing each of the
        assumptions used in the valuation model follows:
 
 **2007**Dividend
                  yield
              
              
              0.00
              %Expected
                  volatility
              
              
              80
              %Risk-free
                  interest rate
              
              
              4.3
              %Expected
                  life of the option term (in years)
              
              
              10Forfeiture
                  rate
              
              
              7.0
              %
 
 Dividend
        Yield - The Company has not declared or paid dividends in the past and has
        no
        plan for dividend payments in the future.
 
 Expected
        Volatility - Volatility is a measure of the amount by which a financial variable
        such as a share price has fluctuated (historical volatility) or is expected
        to
        fluctuate (expected volatility) during a period. The Company uses the historical
        volatility since its expected volatility because the current business strategy,
        which is not expected to change materially, is fundamentally consistent with
        past strategy. The volatility has averaged at 276%.
 
 Risk-Free
        Interest Rate - This is the U.S. Treasury rate for the week of each stock
        option
        grant during the quarter having a term that most closely resembles the expected
        life of the stock option.
 
 Expected
        Life of the Stock Option Term - This is the period of time that the stock
        options granted are expected to remain unexercised. Stock options granted
        during
        the fiscal year have a maximum term of ten years. The Company estimates the
        expected life of the stock option term using a lattice model with inputs
        regarding estimated exercise behavior that are consistent with actual past
        behavior for similar stock options.
 
 Forfeiture
        Rate - This is the estimated percentage of the stock options granted and
        expected to be forfeited or canceled on an annual basis before becoming fully
        vested. The Company estimates the forfeiture rate based on past turnover
        data
        ranging anywhere from one to three years with further consideration given
        to the
        class of employees to whom the options were granted.
  F-16
 **EUGENE
          SCIENCE, INC. AND SUBSIDIARIES**
 Notes
            to
            Consolidated Financial Statements
 June
            30,
            2007 and 2006
 In
        February 2006, the Board of Directors of the Company adopted 2006 Stock
        Incentive Plan (the “2006 Plan”). Under this Plan, employees and directors of
        the Company and affiliated company may receive options to purchase common
        stock.
        A maximum of 4,000,000 shares have been authorized to be granted under the
        2006
        Plan.
 
 In
        May
        2006, the Plan granted 3,600,000 stock options for common stock having a
        $0.01
        nominal par value each and exercise price of $0.50 to $1.36. In October 2006,
        3,350,000 stock options were exercised, 250,000 options were canceled and
        no
        option is outstanding as of June 30, 2007.
  The
        Company issued 300,000 stock options to a non-employee during the year ended
        December 31, 2006. These stock options had a vesting period of 12 months.
        The
        fair value of these stock options was recorded as deferred compensation and
        was
        amortized over the performance period. Under variable plan accounting, the
        value
        of the unvested stock options was re-measured and recognized in operations
        at
        each period reporting date until fully vested.
 
 No
        option
        is outstanding as of June 30, 2007 and for disclosure requirements set forth
        above under Statement 123, during the period ended June 30, 2007, the Company
        recognized no additional stock-based compensation for options vested.
 
 **Stock
        Options of the Korean Subsidiary**
  The
        following weighted-average assumptions were used in the valuation model for
        the
        stock option of the subsidiary:
 
 **Period
                  ended June 30,****2007**
              
              **2006**Dividend
                  yield
              
              
              0
              %
              
              0
              %Expected
                  volatility
              
              
              80
              %
              
              80
              %Risk-free
                  interest rate
              
              
              4.3
              %
              
              7.7
              %Expected
                  life of the option term (in years)
              
              
              3
              
              
              4
  In
        1999
        the Board of Directors of the Korea subsidiary adopted an option plan to
        allow
        employees to purchase common
        stock of the Company.
  In
        October 1999, the share option plan granted 928,350 options for the common
        stock
        having a $0.0869 nominal par value each and an exercise price of $0.12. In
        2000,
        236,240 options were cancelled. In 2005, the balance of the 692,110 options
        was
        exercised.
  In
        December 1999, 659,169 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
        was exercised.
  In
        October 2000, 971,999 options were granted having a $0.0869 nominal par value
        each and an exercise price of $1.93. 5,087, 162,848, 40,712, 244,272 options
        were cancelled in 2000, 2001, 2002 and 2003, respectively. As of December
        31,
        2006, 519,080 options are still outstanding.
  In
        May
        2001, 71,246 options were granted having a $0.0869 nominal par value each
        and an
        exercise price of $1.93. In 2002, 20,356 options were cancelled. As of December
        31, 2006, 50,890 options are still outstanding.
  In
        March
        2002, 1,000,000 options were granted having a $0.0869 nominal par value each
        and
        exercise price of $1.96. 330,000, 110,000, 100,000 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 of December
        31,
        2006, 491,190 options are still outstanding.
  F-17
 **EUGENE
          SCIENCE, INC. AND SUBSIDIARIES**
 Notes
            to
            Consolidated Financial Statements
 June
            30,
            2007 and 2006
 In
        September 2002, 220,000 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 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 of December 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 does not exceed 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, the options have no value and no benefits have been recorded since
        inception of the 2000 plan.
 
 The
        stock
        options have not been included in the calculation of the diluted earnings
        per
        share as their inclusion would be anti-dilutive.
  The
        following table summarizes the stock option activity during the periods ended
        June 30:
 **2007**
                
                **2006****Shares**
                
                **Weighted-Average
                    Excise Price**
                
                **Shares**
                
                **Weighted-Average
                    Excise Price**Outstanding,
                    beginning of period
                
                
                1,456,246
                
                $
                1.88
                
                
                1,456,246
                
                $
                1.12Granted
                
                
                —
                
                
                —
                
                
                —
                
                
                —Exercised
                
                
                —
                
                
                —
                
                
                —
                
                
                —Cancelled
                
                
                —
                
                
                —
                
                
                —
                
                
                —Outstanding,
                    end of period
                
                
                1,456,246
                
                $
                1.88
                
                
                1,456,246
                
                $
                1.88Weighted
                    average remaining contractual life of common stock options
                
                
                3
                    years
                
                
                
                
                
                4
                    years


**Note
        14 - Income Taxes**
  The
        Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for
        Income Taxes". This Standard prescribes the use of the liability method whereby
        deferred tax asset and liability account balances are determined based on
        differences between financial reporting and tax bases of assets and liabilities
        and are measured using the enacted tax rates. The effects of future changes
        in
        tax laws or rates are not anticipated. Corporate income tax rates applicable
        to
        the Company in 2007
        and
        2006 were 16.5% of the first 100 million Korean Won ($84,000) of taxable
        income
        and 29.7% 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. The U.S. tax losses can be carried forward for fifteen
        years. The company has accumulated approximately $20,561,000 of taxable losses,
        which can be used to offset future taxable income. The utilization of the
        losses
        expires in years 2007 through 2010.
  Under
        SFAS No. 109 income taxes are recognized for the following: a) amount of
        tax
        payable for the current year, and b) deferred tax liabilities and assets
        for
        future tax consequences of events that have been recognized differently in
        the
        financial statements than for tax purposes.
  The
        Company has deferred income tax assets arising from research and development
        expenses. For accounting purposes, these amounts are expenses when incurred.
        Under Korean tax laws, these amounts are deferred and amortized on a
        straight-line basis over 5 years.
 
 F-18
 
 **EUGENE
            SCIENCE, INC. AND SUBSIDIARIES**
 Notes
                  to
                  Consolidated Financial Statements
 June
                  30,
                  2007 and 2006
 The
        Company has deferred income tax assets as follows:
 
 **2007**
              
              **2006**Deferred
                  income tax assets:Research
                  and development expenses amortizedover
                  5 years for tax purposes
              
              $
              150,722
              
              $
              207,040Other
                  timing differences
              
              
              2,876
              
              
              10,397Net
                  operating loss carryforwards
              
              
              3,746,250
              
              
              2,594,4703,899,848
              
              
              2,811,907Valuation
                  allowance fordeferred
                  income tax assets
              
              
              (3,899,848
              )
              
              (2,811,907
              )$
              —
              
              $
              —
  The
        Company provided a valuation allowance equal to the deferred income tax assets
        because it is presently considered that they will not be
        realized.
 
 **Note
        15 - Business Segment Information**
  Sales
                  and cost of goods sold of the Company’s segments for the periods ended
                  June 30, 2007 and 2006 were as
                  follows:
 
 **2007**
              
              **2006**Sales:Manufacturing
              
              $
              212,221
              
              $
              272,455Merchandise
              
              
              97,354
              
              
              70,385$
              309,575
              
              $
              342,840Cost
                  of Sales:Manufacturing
              
              $
              94,565
              
              $
              108,659Merchandise
              
              
              66,306
              
              
              56,411$
              160,871
              
              $
              165,070
  **Note
        16 - Major Customers**
 For
          the
          six months ended June
          30,
          2007 and 2006, sales to the major three customers accounted for 98% and
          93%,
          respectively, of the Company’s total revenue.


F-19




**EUGENE
      SCIENCE, INC. AND SUBSIDIARIES**


Notes
        to
        Consolidated Financial Statements
 June
        30,
        2007 and 2006


**N** **ote
        17 - Related Party Transactions**
 
 Significant
                  transactions with companies related or affiliates by common control
                  for
                  the periods ended and as of June 30, 2007 and 2006 are summarized
                  as
                  follows:
 
 Sales
              
              Net
                  rental/
                Interest
                  income
              
              Purchases
              
              Accounts
                  Receivable
              
              Prepaid
                Assets
              
              Accounts
                Payable
              
              Rental
                DepositCompany
                  related by common control2007
              
              $
              97,354
              
              $
              —
              
              $
              66,306
              
              $
              —
              
              $
              —
              
              $
              247,417
              
              $
              65,0332006
              
              $
              12,305
              
              $
              183,394
              
              $
              56,333
              
              $
              —
              
              $
              —
              
              $
              360,867
              
              $
              105,381Companies
                  affiliated by common control2007
              
              $
              201
              
              $
              1,582
              
              $
              —
              
              $
              4,542
              
              $
              —
              
              $
              73,179
              
              $
              —2006
              
              $
              196
              
              $
              —
              
              $
              43,716
              
              $
              3,982
              
              $
              —
              
              $
              114,727
              
              $
              —
  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.
  F-20
 
 
 **ITEM
          2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
          OPERATION**.




*This
      Quarterly Report on Form 10-QSB contains forward-looking statements within
      the
      meaning of Section 27A of the Securities Act of 1933, as amended, and
      Section 21E of the Securities Exchange Act of 1934, as amended, that
      concern matters that involve risks and uncertainties that could cause actual
      results to differ materially from those projected in the forward-looking
      statements. Discussions containing forward-looking statements may be found
      in
      the material set forth under “Management’s Discussion and Analysis or Plan of
      Operation” and in other sections of this Quarterly Report on Form 10-QSB. Words
      such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “predict,” “potential” or “continue” or similar words are
      intended to identify forward-looking statements, although not all
      forward-looking statements contain these words. Although we believe that our
      opinions and expectations reflected in the forward-looking statements are
      reasonable as of the date of this Quarterly Report on Form 10-QSB, we cannot
      guarantee future results, levels of activity, performance or achievements,
      and
      our actual results may differ substantially from the views and expectations
      set
      forth in this Quarterly Report on Form 10-QSB. We expressly disclaim any intent
      or obligation to update any forward-looking statements after the date hereof
      to
      conform such statements to actual results or to changes in our opinions or
      expectations. Readers are urged to carefully review and consider the various
      disclosures made by us which attempt to advise interested parties of the factors
      which affect our business, including, without limitation, the audited financial
      statements and the notes thereto and disclosures made under the captions
“Management’s Discussion and Analysis or Plan of Operation,” “Consolidated
      Financial Statements” and “Notes to Consolidated Financial Statements” included
      in our Annual Report on Form 10-KSB for the fiscal year ended December 31,
      2006.*




**Overview**




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




**Going
      Concern**




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





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




**Results
      of Operations**




**Revenue**




*Comparison
      of the Three Months Ended June 30, 2007 and 2006*




Our
      total
      revenue decreased 30%, or $65,589, to $154,808 for the three months ended June
      30, 2007 as compared to $220,397 for the three months ended June 30, 2006.
      The
      decrease in total revenue for the three months ended June 30, 2007 was primarily
      attributable to a decrease in sales of our cooking oil products.




*Comparison
      of the Six Months Ended June 30, 2007 and 2006*




Our
      total
      revenue decreased 10%, or $33,265, to $309,575 for the six months ended June
      30,
      2007 as compared to $342,840 for the six months ended June 30, 2006. The
      decrease in total revenue for the six months ended June 30, 2007 was primarily
      attributable to decreased sales of our CholZero-branded capsules, partially
      offset by increased sales of our CZ-S additive.




2




We
      anticipate that sales of our products during our 2007 fiscal year will continue
      to increase as a result of our ability to make health claims with respect to
      our
      CZ-series additives and CholZero-branded products in South Korea and as a result
      of the United States Food and Drug Administration’s, or FDA’s, approval of our
      "Generally Recognized as Safe" application for our CZ-S additive on January
      13,
      2006. We engaged Archer Daniels Midland Company, or ADM, as our exclusive
      distributor of CZ-series additives in North America and Europe and authorized
      ADM to manage our FDA approval process in the United States. Following the
      approval of our GRAS application, ADM ordered five and one-half tons of our
      CZ-S
      additive for testing and marketing. We have supplied ADM with five tons of
      our
      CZ-S additive and are currently producing the remaining quantities at our
      laboratory facility in Seoul, Korea.




**Cost
      of Sales**




*Comparison
      of the Three Months Ended June 30, 2007 and 2006*




Cost
      of
      sales increased 51%, or $41,561, to $123,131 for the three months ended June
      30,
      2007 as compared to $81,570 for the three months ended June 30, 2006. The
      increase in cost of sales for the three months ended June 30, 2007 was primarily
      attributable to an increase in sales of our raw materials. Our gross margin
      for
      the three months ended June 30, 2007 was approximately 20% of our revenue as
      compared to a gross margin of approximately 37% of our revenue for the three
      months ended June 30, 2006. The change in our gross margin for the three months
      ended June 30, 2007 was primarily attributable to a decrease in the gross
      margins on sales of our CholZero-branded capsules and beverages.




*Comparison
      of the Six Months Ended June 30, 2007 and 2006*




Cost
      of
      sales decreased 3%, or $4,199, to $160,871 for the six months ended June 30,
      2007 as compared to $165,070 for the six months ended June 30, 2006. The
      decrease in cost of sales for the six months ended June 30, 2007 was primarily
      attributable to a decrease in our product sales. Our gross margin for the three
      months ended June 30, 2007 was approximately 48% of our revenue as compared
      to a
      gross margin of approximately 52% of our revenue for the three months ended
      June
      30, 2006. The change in our gross margin for the six months ended June 30,
      2007
      was primarily attributable to a decrease in sales of our CholZero-branded
      capsules.




**Operating
      Expenses**




*Comparison
      of the Three Months Ended June 30, 2007 and 2006*




Our
      operating expenses decreased 55%, or $401,123, to $330,174 for the three months
      ended June 30, 2007 as compared to $731,297 for the three months ended June
      30,
      2006. Our operating expenses decreased for the three months ended June 30,
      2007
      due primarily to decreases in professional fees and research and development
      expenses.




*Comparison
      of the Six Months Ended June 30, 2007 and 2006*




Our
      operating expenses decreased 48%, or $671,732, to $738,928 for the six months
      ended June 30, 2007 as compared to $1,410,660 for the six months ended June
      30,
      2006. Our operating expenses decreased for the six months ended June 30, 2007
      due primarily to decreases in professional fees, bad debts and research and
      development expenses.




**Other
      Income (Expense)**




*Comparison
      of the Three Months Ended June 30, 2007 and 2006*




Other
      income (expense) primarily represents an allowance for related party loans,
      loss
      from sale of investment securities and interest expense. Other expense increased
      136%, or $2,774,321, to $741,739 for the three months ended June 30, 2007 as
      compared to other income of $2,032,582 for the three months ended June 30,
      2006.
      The increase in other expense for the three months ended June 30, 2007 was
      primarily attributable to the absence of a gain from the sale of real property
      reflected in the comparable prior year period. All of our bank loans were in
      default as of June 30, 2007. The interest rate on such loans ranges from 15%
      to
      18%. We are currently in negotiations with our lenders to settle our outstanding
      debts, and we intend to enter into settlement agreements with such lenders
      during the third quarter of our 2007 fiscal year.




*Comparison
      of the Six Months Ended June 30, 2007 and 2006*




Other
      expense increased 295%, or $4,355,089, to $2,880,584 for the six months ended
      June 30, 2007 as compared to other income of $1,474,505 for the six months
      ended
      June 30, 2006. The increase in other expense for the six months ended June
      30,
      2007 was primarily attributable to a loss from the sale of investment securities
      and to a gain from the sale of real property reflected in the comparable prior
      year period.




3




**Liquidity
      and Capital Resources**




For
      the
      six months ended June 30, 2007, we had cash and cash equivalents of
      approximately $13,409 and negative working capital of approximately $16,112,419.
      For the six months ended June 30, 2006, we had cash and cash equivalents of
      approximately $15,373 and negative working capital of approximately $12,901,251.
      The decrease in our cash and working capital during the six months ended June
      30, 2007 was primarily attributable to losses from our operations.




We
      currently satisfy our working capital requirements primarily through cash flows
      generated from operations, bank loans and sales of equity and debt securities.
      For the six months ended June 30, 2007, we had a net increase in cash and cash
      equivalents of approximately $4,378 as compared with a net increase in cash
      and
      cash equivalents of approximately $1,907 for the six months ended June 30,
      2006.




**Cash
      Used In Operating Activities**




Cash
      used
      in operating activities decreased 82.7%, or $2,390,731, to $499,541 for the
      six
      months ended June 30, 2007 as compared to $2,890,272 for the six months ended
      June 30, 2006. The decrease in cash used in operating activities for the six
      months ended June 30, 2007 was primarily attributable to a gain on the sale
      of
      property reflected in the comparable prior year period, a decrease in accounts
      receivable and an increase in accounts payable.




**Cash
      Used In Investing Activities**




Cash
      used
      in investing activities increased 364%, or $120,876, to $154,044 for the six
      months ended June 30, 2007 as compared to $33,168 for the six months ended
      June
      30, 2006. The increase in cash used in investing activities for the six months
      ended June 30, 2007 was primarily attributable to losses on the sale of
      investment securities.




**Cash
      Provided By Financing Activities**




Cash
      provided by financing activities decreased 77.5%, or $2,265,803, to $658,069
      for
      the six months ended June 30, 2007 as compared to $2,923,872 for the six months
      ended June 30, 2006. The decrease in cash provided by financing activities
      for
      the six months ended June 30, 2007 was primarily attributable to a decrease
      in
      proceeds from the sale of real property during the six months ended June 30,
      2006, partially offset by an increase in advances from related parties to cover
      our negative working capital as of June 30, 2007.




**Bank
      Loans**




Since
      1999, we have borrowed an aggregate principal amount of $3,889,259 from the
      Industrial Bank of Korea, or IBK. These loans bear interest at rates of 4.5%
      to
      18% per annum and are due and payable on demand. A portion of these loans was
      secured by our real property located in Bucheon, Korea. Loans in the aggregate
      principal amount of $1,301,919 were guaranteed by the Korea Technology Credit
      Guarantee Fund, or KOTEC, a fund operated by the Korean government. During
      the
      first half of the 2006 fiscal year, we used the proceeds from the sale of our
      real property in Bucheon, Korea to repay all of the outstanding principal and
      a
      portion of the accrued and unpaid interest owed under the loans from IBK. At
      June 30, 2007, the accrued and unpaid interest owed by us to IBK under these
      loans was approximately $1,114,191.




In
      December 2004, we obtained a short-term loan from the National Agricultural
      Cooperative Federation, or the NACF, in the principal amount of $1,946,105.
      This
      loan has an interest rate of 4.6% per annum and was due on December 22, 2005.
      This loan is guaranteed by KOTEC. At June 30, 2007, the loan had not been repaid
      to NACF and the aggregate outstanding principal balance and accrued and unpaid
      interest on such loan was approximately $1,386,849.




In
      September 2002, we obtained a short-term loan from ChoHeung Bank in the
      principal amount of $278,805. This loan has an interest rate of 9.5%, was due
      on
      August 1, 2004 and is personally guaranteed by Mr. Noh, our president, chief
      executive officer, chairman of the board and principal stockholder. At June
      30,
      2007, the aggregate principal balance and accrued and unpaid interest on such
      loan was approximately $434,279. In each of July 2001 and December 2002, we
      entered into loan arrangements with Kookmin Bank. Each loan has a principal
      amount of $1,000,000, is unsecured and bears interest at the rate of 6.22%
      or
      11.22% per annum, respectively. Both loans were due and payable on November
      15,
      2004. At June 30, 2007, the aggregate principal balance and accrued and unpaid
      interest on such loans was approximately $2,037,337.




**Notes**




On
      October 9, 2004, we issued KOTEC a note in connection with its payout as
      guarantor of a convertible debenture issued by us. The note bears interest
      at a
      rate of 21% per annum, is guaranteed by Mr. Noh, our president, chief executive
      officer, chairman of the board and principal stockholder, and is due and payable
      on demand. To date, KOTEC has made no demands for payment of this note. At
      June
      30, 2007, the outstanding balance of this note was $3,264,595.




4




In
      October 2003, we issued a note in the principal amount of $47,772, bearing
      interest at a rate of 9% per annum, to Jae Ho Lee, the president of UcoleBio
      Corp., an entity in which Eugene Science Korea, our subsidiary, has a 73%
      ownership interest. The note is due and payable on demand and, to date, Mr.
      Lee
      has made no demands to us for payment of this note. The outstanding balance
      of
      this note was $55,458,791 at June 30, 2007.




In
      February 2002, we issued a note in the principal amount of $100,000, bearing
      interest at a rate of 8% per annum, to Kyungioils Co., Ltd. The note is due
      and
      payable on demand and, to date, no demands have been made to us for payment
      of
      this note. The outstanding balance of this note was $24,158,126 at June 30,
      2007.




**Government
      Loans**




On
      March
      2, 2003, we received a non-interest bearing, unsecured loan from the Korean
      government in the principal amount of $61,779. Pursuant to its terms, the loan
      was to be repaid in three annual installments of $20,593, beginning February
      26,
      2004. The loan matured in its entirety in February 2006. At June 30, 2007,
      we
      were $58,452 in arrears under this loan.




We
      received a $316,181 loan from the Korean government in connection with certain
      of our research and development projects over the period from 1999 to 2002.
      These research and development projects were not successful and, as a result,
      we
      are obligated to repay the principal amount of the loan to the Korean
      government. We repaid $21,034 of the amount due under this loan in our 2004
      fiscal year. At June 30, 2007, we were $38,968 in arrears under this loan
      arrangement.




**Critical
      Accounting Policies**




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




BASIS
      OF
      PRESENTATION. These financial statements have been prepared with the assumption
      that we will be able to realize our assets and discharge our liabilities in
      the
      normal course of business.




BASIS
      OF
      CONSOLIDATION. The reverse-takeover transaction between us and Eugene Science
      Korea, our Korean subsidiary, has been recorded as our recapitalization, with
      our net assets brought forward at their historical basis. The intention of
      Eugene Science Korea’s management was to acquire us as a shell company listed on
      a stock market. As such, accounting for the reverse-takeover as our
      recapitalization is deemed appropriate. The consolidated financial statements
      included the accounts of us (formerly, Ezcomm Enterprises) in the United States,
      Eugene Science Korea, our Korean subsidiary, in Korea, and Ucolebio, Inc.,
      a
      subsidiary of Eugene Science Korea, in Korea. Significant inter company
      transactions, if any, have been eliminated in consolidation. 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.




UNIT
      OF
      ESTIMATES. The preparation of financial statements in accordance with accounting
      principles generally accepted in the United States 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 our management's best knowledge of current events and actions that we may
      undertake in the future. Actual results may ultimately differ from estimates,
      although our management does not believe such changes will materially affect
      the
      financial statements in any individual year.




REVENUE
      RECOGNITION. We generate revenue from sales of manufactured goods and
      merchandise, as well as the rental of our buildings. Revenue from our product
      sales are recognized in accordance with Staff Accounting Bulletin No. 101,
      "Revenue Recognition in Financial Statements," 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. For
      manufactured finished goods, we recognize revenue when there is a definitive
      sales agreement, and upon shipment of products, when title is passed and the
      amount collectible can reasonably be determined. For merchandise sales, we
      recognize revenue upon shipment of products, when title is passed and the amount
      collectible can reasonably be determined. For rental income, we retain
      substantially all of the benefits and risks of ownership of our income
      properties and therefore recognize revenue upon receipt of monthly rent.


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




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




5




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.




ALLOWANCE
      FOR DOUBTFUL ACCOUNTS. An allowance for doubtful accounts is computed based
      on
      our historical experience and our management’s analysis of possible bad debts.
      Accounts receivable are shown net of allowance for doubtful accounts of $66,984
      and $48,083 as of June 30, 2007 and 2006, respectively.




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





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





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




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




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




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




**Recent
      Accounting Pronouncements**




In
      May
      2005, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards, "Accounting Changes and Error Corrections," or SFAS 154,
      which replaces Accounting Principles Board, or APB, Opinion No. 20, "Accounting
      Changes", and Statement of Financial Accounting Standards 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 was required to be adopted by us as of January
      1,
      2006. The impact that the adoption of SFAS No. 154 will have on our results
      of
      operations and financial condition will depend on the nature of future
      accounting changes adopted by us and the nature of transitional guidance
      provided in future 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* .




**Risks
      Related to Our Company**




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




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




6




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




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




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




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




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




In
      the
      six months ended June 30, 2007, sales to two major customers accounted for
      48%
      of our total revenue. We may fail to capture a share of the market for such
      products. Because we are dependent on a limited number of customers, any
      decrease or elimination of such customers’ purchases could materially harm our
      business.




***If
      we are not able to attract and retain key management and scientific personnel,
      our efforts to develop our products and achieve our other business objectives
      could be delayed or substantially impaired*** .




We
      are
      highly dependent on key marketing, research and development and management
      personnel, particularly Seung Kwon Noh, our president and chief executive
      officer; Jae Hong Yoo, our chief financial officer; Tae Hwan Lee, our vice
      president, domestic marketing; Se Cheon Ahn, our vice president, research and
      development; Jang Hyun Cho, our chief research scientist; and Chang Gon Kim,
      our
      principal research scientist. Although we do not have any reason to believe
      that
      we may lose the services of any of these persons in the foreseeable future,
      the
      loss of the services of any of these persons might impede the achievement of
      our
      research, development and commercialization objectives. Recruiting and retaining
      qualified scientific and business personnel will also be critical to our
      success. We may not be able to attract and retain these personnel on acceptable
      terms given the competition among numerous nutraceutical and biotechnology
      companies, academic institutions, government entities and other research
      organizations for similar personnel.




***Our
      competitors may develop products that are more effective and less
      costly*** .




The
      market for nutraceutical products is highly competitive. Many of our
      competitors, such as Venecol and Unilever, have substantially greater capital
      resources, research and development capabilities, and manufacturing and
      marketing resources, capabilities and experience than we do. Our competitors
      may
      succeed in developing products that are more effective or less costly than
      any
      products developed by us.




***Adverse
      publicity may affect our ability to attract and retain distributors for our
      products*** .




Our
      products are formulated with vitamins, minerals and other ingredients that
      we
      regard as safe when taken as recommended by us and that scientific studies
      have
      suggested may involve health benefits. While we conduct quality control testing
      on our products, we generally do not conduct or sponsor clinical studies
      relating to the benefits of our products. We are dependent upon consumer
      perceptions of the safety and quality of our products and similar products
      distributed by our competitors that may not adhere to the same quality standards
      as we do. We could be adversely affected if any of our products, or any similar
      products distributed by our competitors, should prove harmful or be asserted
      to
      be harmful to consumers, or should scientific studies provide unfavorable
      findings regarding the effectiveness of such products. Our ability to attract
      and retain distributors for our products could be adversely affected by negative
      publicity relating to us or by the announcement by any government entity of
      investigatory proceedings regarding our business practices or our
      products.




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




We
      maintain liability insurance with policy limits generally of $100,000 per
      occurrence and $100,000 per year. Our insurance coverage includes property,
      casualty, comprehensive general liability, and products liability insurance.
      We
      believe that our insurance coverage is adequate. The testing, marketing, and
      sale of health care products, however, entail an inherent risk of product
      liability. We cannot assure you that product liability claims relating to
      dietary supplement products will not be asserted against us, our licensees,
      or
      third parties with whom we operate. Many claims related to dietary supplements
      have already been brought against businesses in our industry. Further, we cannot
      assure you that such insurance will provide adequate coverage against any
      potential claims. A product liability claim or product recall could have a
      material adverse effect on our business, financial condition, or results of
      operations.




7




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




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




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




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




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




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




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




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




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




·
            expected
                changes in regulatory requirements and
                tariffs;




·
            difficulties
                and costs associated with staffing and managing foreign operations,
                including foreigndstributor
                relationships;




8




·
            longer
                accounts receivable collection cycles in certain foreign
                countries;




·
            adverse
                economic or political changes;




·
            unexpected
                changes in regulatory requirements;




·
            more
                limited protection for intellectual property in some
                countries;




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




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




·
            potentially
                adverse tax consequences of overlapping tax structure;
                and




·
            foreign
                currency fluctuations.




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




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




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




Our
      board
      of directors consists of four members. Our board of directors as a whole
      performs the functions of an audit committee, compensation committee and
      nominating and corporate governance committee. None of our directors is
      considered "independent" under Rule 4200(a)(15) of the Nasdaq Marketplace Rules,
      and none qualifies as an “audit committee financial expert” as defined in Item
      401 of Regulation S-B. Accordingly, we will not be able to list our common
      stock
      with a nationally recognized exchange until we recruit independent directors
      to
      our board and restructure our board to comply with various requirements
      currently in place by those self-regulating organizations, and as a result,
      it
      may be difficult for you to sell our common stock.




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




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




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




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




9




**Risks
      Related to Our Industry**




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




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




·
            
            initiating
                investigations;·
            
            issuing
                warning letters and cease and desist orders;·
            
            requiring
                corrective labeling or advertising;·
            
            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.





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




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




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




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




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




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




10




**Risks
      Related to Our Common Stock**




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




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




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




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




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




·
            
            actual
                or anticipated fluctuations in our quarterly operating
                results;·
            
            announcements
                of technological innovations;·
            
            conditions
                or trends in our industry; and·
            
            changes
                in the market valuations of other comparable
                companies.




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




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




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




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




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




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




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




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




As
      of
      June 30, 2007, our executive officers and directors and their affiliates owned
      approximately 34.99% of our outstanding voting shares. As a result, our
      executive officers and directors are able to exert considerable influence over
      the outcome of any matters submitted to a vote of the holders of our common
      stock, including the election of our board of directors. The voting power of
      these stockholders could also discourage others from seeking to acquire control
      of us through the purchase of our common stock, which might depress the price
      of
      our common stock.




11




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




We
      maintain disclosure controls and procedures (as defined in Rules 13a-15(e)
      and
      15(d)-15(e) under the Securities Exchange Act of 1934, as amended, or the
      Exchange Act) that are designed to
      ensure
      that the information required to be disclosed by us in reports that we file
      or
      submit under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in the Commission’s rules and forms, and to
      ensure that the information required to be disclosed by us in reports that
      we
      file or submit under the Exchange Act is accumulated and communicated to our
      management, including our chief executive officer and chief financial officer,
      as appropriate, to allow timely decisions regarding required
      disclosure.




We
      carried out an evaluation, under the supervision and with the participation
      of
      our management, including our chief executive officer and chief financial
      officer, of the effectiveness of our disclosure controls and procedures as
      of
      the end of the period covered by this Quarterly Report on Form 10-QSB, pursuant
      to Rules 13a-15(b) and 15d-15(b) under the Exchange Act. Based on that
      evaluation, our chief executive officer and chief financial officer have
      concluded that our disclosure controls and procedures, as of the end of the
      period covered by this Quarterly Report on Form 10-QSB, were
      effective to ensure that the information required to be disclosed by us in
      reports that we file or submit under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in the Commission’s
      rules and forms, and to ensure that the information required to be disclosed
      by
      us in reports that we file or submit under the Exchange Act is accumulated
      and
      communicated to our management, including our chief executive officer and chief
      financial officer, as appropriate, to allow timely decisions regarding required
      disclosure.





There
      were no changes in our internal control over financial reporting (as defined
      in
      Rules 13(a)-15(f) and 15(d)-15(f) under the Exchange Act) during the second
      fiscal quarter ended June 30, 2007, that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.




Section
      404 of the Sarbanes-Oxley Act of 2002 requires management's review and
      evaluation of our internal control over financial reporting beginning with
      our
      Annual Report on Form 10-KSB for the fiscal year ending May 31, 2008, and an
      attestation of the effectiveness of these controls by our independent registered
      public accounting firm beginning with our Annual Report on Form 10-KSB for
      the
      fiscal year ending May 31, 2009. We plan to dedicate significant resources,
      including management time and effort, and to incur substantial costs in
      connection with our Section 404 assessment. We will continue to work to improve
      our controls and procedures, and to educate and train our employees on our
      existing controls and procedures in connection with our efforts to maintain
      an
      effective controls infrastructure.





**PART
      II-OTHER INFORMATION**





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




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





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





12


**SIGNATURES**





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




EUGENE
                SCIENCE, INC.Date:
                October 26, 2007
            By:
            /s/
                Seung Kwon NohSeung
                Kwon NohPresident,
                Chief Executive Officer and Director
              (Principal
                Executive Officer)




13


**Exhibit
      Index**




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




14