**UNITED
      STATES**


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


**Washington,
      D.C. 20549**





**FORM
      10-QSB**





x
            **QUARTERLY****REPORT
                UNDER SECTION 13 OR 15(****d****)
                OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
                SEPTEMBER 30, 2006**





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





**Commission
      file number 000-50601**





**EUGENE
      SCIENCE, INC.**


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





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





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


**(Address
      of principal executive offices)**





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





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





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





The
      number of outstanding shares of the issuer’s common stock as of November 18,
      2006 was 40,115,705.





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








**PART
      I—FINANCIAL INFORMATION**




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




**R** **EPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the Board
      of
      Directors of




Eugene
      Science, Inc.




We
      have
      reviewed the accompanying consolidated balance sheets of Eugene Science, Inc.
      and subsidiar ies
      (the
      "Company") as at September
      30, 2006 and 2005 ,
      and the
      related consolidated statements of operations, stockholders’ deficit, and cash
      flows for the nine month then ended. These interim consolidated financial
      statements are the responsibility of the Company's management.




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




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




The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 1 to the
      financial statements, the Company has suffered recurring losses from operations
      and had working capital deficiencies as of September 30, 2006 and 2005, which
      raises substantial doubt about its ability to continue as a going concern.
      Management's plans in regard to these matters are also described in Note 1.
      The
      consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.




The
      20 05
      financial statements of Eugene Science, Inc. and subsidiaries were reviewed
      by
      other accountants, whose report dated November 15, 2005, stated that they were
      not aware of any material modifications, except the matter described in the
      preceding paragraph, that should be made to those statements in order for them
      to be in conformity with generally accepted accounting principles.




November
      10, 2006







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


C onsolidated
      Balance Sheets


September
      30, 2006 and 2005


**(Unaudited)**





**ASSETS**2006
            
            2005Current
                Assets:Cash
                and cash equivalents (Note 3)
            
            $
            28,196
            
            $
            49,809Accounts
                receivable (Notes 2 and 14)
            
            
            810,769
            
            
            1,875,899Inventory
                (Note 2)
            
            
            24,149
            
            
            60,840Due
                from related parties (Note 4)
            
            
            1,417,023
            
            
            1,476,055Prepaid
                expenses and other current assets
            
            
            276,217
            
            
            169,098Total
                Current Assets
            
            
            2,556,354
            
            
            3,631,701Property
                and Equipment:Property
                and equipment (Note 5)
            
            
            2,758,529
            
            
            9,147,716Other
                Assets:Investments
                (Note 6)
            
            
            588,817
            
            
            509,482Intangible
                assets (Note 2)
            
            
            172,982
            
            
            164,107Total
                Other Assets
            
            
            761,799
            
            
            673,589Total
                Assets
            
            $
            6,076,682
            
            $
            13,453,006





-4-


**EUGENE
      SCIENCE, INC. AND SUBSIDIARIES**


C onsolidated
      Balance Sheets


September
      30, 2006 and 2005


**(Unaudited)**





**LIABILITIES
                AND STOCKHOLDER'S DEFICIENCY**2006
            
            2005Current
                Liabilities:Accounts
                payable
            
            $
            9,432,723
            
            $
            6,935,450Rental
                deposits (Note 7)
            
            
            169,133
            
            
            153,440Due
                to shareholders and officers (Note 9)
            
            
            657,009
            
            
            307,535Loan
                payable, current portion (Note 8)
            
            
            5,744,708
            
            
            10,154,011Total
                Current Liabilities
            
            
            16,003,573
            
            
            17,550,436Long-Term
                Liabilities:Accrued
                pension payable
            
            
            655,784
            
            
            384,305Deposits
                on unsettled contract
            
            
            68,710
            
            
            1,403,497Long-term
                debt, net of current portion (Note 8)
            
            
            22,324
            
            
            310,961Total
                Long-Term Liabilities
            
            
            746,818
            
            
            2,098,763Total
                Liabilities
            
            
            16,750,391
            
            
            19,649,199Stockholders'
                Deficiency:Common
                stock (Note 10)
            
            
            35,765
            
            
            30,816Additional
                paid-in-capital
            
            
            16,500,344
            
            
            16,408,578Accumulated
                other comprehensive loss
            
            
            (2,111,980
            )
            
            (1,656,302
            )Accumulated
                deficit
            
            
            (25,097,838
            )
            
            (20,979,285
            )Total
                Stockholders' Deficiency
            
            
            (10,673,709
            )
            
            (6,196,193
            )Total
                Liabilities and Stockholders' Deficiency
            
            $
            6,076,682
            
            $
            13,453,006





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




-5-


**EUGENE
      SCIENCE, INC. AND SUBSIDIARIES**


C onsolidated
      Statements of Operation


Nine
      Months Ended September 30, 2006 and 2005


**(Unaudited)**





2006
            
            2005Net
                sales (Note 12)
            
            $
            657,566
            
            $
            790,479Cost
                of goods sold (Note 12)
            
            
            429,541
            
            
            618,231Gross
                profit
            
            
            228,025
            
            
            172,248Operating
                expenses
            
            
            1,970,715
            
            
            1,773,171Operating
                loss
            
            
            (1,742,690
            )
            
            (1,600,923
            )Other
                income (expenses):Gain
                from sale of assets (Note 5)
            
            
            5,504,264
            
            
            --Net
                rental income
            
            
            164,827
            
            
            103,870Miscellaneous
                income
            
            
            897
            
            
            16,296Net
                interest expense
            
            
            (1,671,194
            )
            
            (1,436,861
            )Financing
                fees
            
            
            --
            
            
            (32,698
            )Provision
                for uncollectable related party loans
            
            
            (2,981,240
            )
            
            --Net
                other income (expenses)
            
            
            1,017,554
            
            
            (1,349,393
            )Net
                loss
            
            $
            (725,136
            )
            $
            (2,950,316
            )Basic
                loss per share
            
            $
            (0.02
            )
            $
            (0.11
            )Weighted
                average number of shares (Note 10)
            
            
            35,091,023
            
            
            27,279,095





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





-6-


**E** **UGENE
      SCIENCE, INC. AND SUBSIDIARIES**


C onsolidated
      Statements of Operation


Three
      Months Ended September 30, 2006 and 2005


**(Unaudited** **)**





2006
            
            2005Net
                sales (Note 12)
            
            $
            314,726
            
            $
            274,165Cost
                of goods sold (Note 12)
            
            
            264,471
            
            
            193,702Gross
                profit
            
            
            50,255
            
            
            80,463Operating
                expenses
            
            
            560,055
            
            
            553,245Operating
                loss
            
            
            (509,800
            )
            
            (472,782
            )Other
                income (expenses):Gain
                from sale of assets (Note 5)
            
            
            13,717
            
            
            --Net
                rental income
            
            
            85,574
            
            
            31,365Miscellaneous
                income
            
            
            897
            
            
            28Net
                interest expense
            
            
            (493,973
            )
            
            (469,167
            )Financing
                fees
            
            
            --
            
            
            (276
            )Provision
                for uncollectable related party loans
            
            
            (63,166
            )
            
            --Net
                other expenses
            
            
            (456,951
            )
            
            (438,050
            )Net
                loss
            
            $
            (966,751
            )
            $
            (910,832
            )Basic
                loss per share
            
            $
            (0.03
            )
            $
            (0.03
            )Weighted
                average number of shares (Note 10)
            
            
            35,091,023
            
            
            27,279,095





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




-7-


**EUGENE
      SCIENCE, INC. AND SUBSIDIARIES**


C onsolidated
      Statements of Stockholders’ Deficit


Nine
      Months Ended September 30, 2006 and 2005


**(Unaudited)**




**Paid
                  in**
              
              **Accumulated**
              
              **Retained****Capital
                  in**
              
              **Other**
              
              **Earnings****Common
                  Stock**
              
              **Excess
                  of**
              
              **Comprehensive**
              
              **(Accumulated****Shares**
              
              **Amount**
              
              **Par
                  value**
              
              **Income
                  (loss)**
              
              **Deficit)**
              
              **Total**Balance,
                  January 1, 2005
                  (Note 10)
              
              
              3,536,880
              
              $
              3,537
              
              $
              15,223,558
              
              $
              (1,676,719
              )
              $
              (18,028,969
              )
              $
              (4,478,593
              )Issuance
                  of common shares by subsidiary
              
              
              --
              
              
              --
              
              
              1,284,181
              
              
              --
              
              
              --
              
              
              1,284,181Common
                  shares issued on acquisition of Eugene Science, Inc
              
              
              27,279,095
              
              
              27,279
              
              
              (99,161
              )
              
              --
              
              
              --
              
              
              (71,882
              )Unrealized
                  loss on investments
              
              
              --
              
              
              --
              
              
              --
              
              
              (70,926
              )
              
              --
              
              
              (70,926
              )Foreign
                  exchange on translation
              
              
              --
              
              
              --
              
              
              --
              
              
              91,343
              
              
              --
              
              
              91,343Net
                  loss
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (2,950,316
              )
              
              (2,950,316
              )Balance,
                  September 30, 2005
              
              
              30,815,975
              
              $
              30,816
              
              $
              16,408,578
              
              $
              (1,656,302
              )
              $
              (20,979,285
              )
              $
              (6,196,193
              )Balance,
                  January 1,2006
                  (Note 10)
              
              
              34,375,180
              
              $
              34,375
              
              $
              16,418,734
              
              $
              (1,781,075
              )
              $
              (24,372,702
              )
              $
              (9,700,668
              )Unrealized
                  loss on investments
              
              
              --
              
              
              --
              
              
              --
              
              
              (71,707
              )
              
              --
              
              
              (71,707
              )Issuance
                  of shares for consulting services(Note
                  10)
              
              
              1,390,000
              
              
              1,390
              
              
              81,610
              
              
              --
              
              
              --
              
              
              83,000Foreign
                  exchange on translation
              
              
              --
              
              
              --
              
              
              --
              
              
              (259,198
              )
              
              --
              
              
              (259,198
              )Net
                  loss
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (725,136
              )
              
              (725,136
              )Balance,
                  September 30, 2006
              
              
              35,765,180
              
              $
              35,765
              
              $
              16,500,344
              
              $
              (2,111,980
              )
              $
              (25,097,838
              )
              $
              (10,673,709
              )





The
      accompanying notes are an integral part of these financial
      statements




-8-


**EUGENE
      SCIENCE, INC. AND SUBSIDIARIES**


C onsolidated
      Statements of Cash Flows


Nine
      Months Ended September 30, 2006 and 2005


**(Unaudited)**




2006
            
            2005Cash
                Flows from Operating Activities:Net
                loss
            
            $
            (725,136
            )
            $
            (2,950,316
            )Adjustments
                to reconcile net income to net cashprovided
                by operating activities:Depreciation
                and amortization
            
            
            258,891
            
            
            542,239Provision
                for loss on uncollectable related party loans
            
            
            2,981,240
            
            
            --Gain
                on sale of property
            
            
            (5,504,264
            )
            
            --(Increase)
                decrease in assets:Accounts
                receivable
            
            
            (715,800
            )
            
            818,252Inventory
            
            
            36,437
            
            
            (47,018
            )Prepaid
                expenses and other current assets
            
            
            (94,203
            )
            
            (1,261
            )Increase
                (decrease) in liabilities:Accounts
                payable
            
            
            1,293,008
            
            
            1,356,224Accrued
                severance
            
            
            201,106
            
            
            (35,801
            )Rental
                deposits
            
            
            10,893
            
            
            --Cash
                Used for Operating Activities
            
            
            (2,257,828
            )
            
            (317,681
            )Cash
                Flows from Investing Activities:Acquisition
                of fixed assets
            
            
            --
            
            
            (7,364
            )Intangible
                assets
            
            
            (60,919
            )
            
            (33,859
            )Cash
                Used for Investing Activities
            
            
            (60,919
            )
            
            (41,223
            )Cash
                Flows from Financing Activities:Advance
                from shareholder and officers
            
            
            --
            
            
            236,133Net
                proceeds from issuance of common stock
            
            
            83,000
            
            
            1,282,769Net
                proceeds from sale of property
            
            
            11,784,939
            
            
            --Advance
                made to related party
            
            
            (3,149,241
            )
            
            (578,666
            )Deposits
            
            
            (1,378,692
            )
            
            (343,112
            )Repayment
                of loans
            
            
            (5,017,689
            )
            
            (224,181
            )Cash
                Provided by Financing Activities
            
            
            2,322,317
            
            
            372,943Foreign
                Exchange on Cash and Cash Equivalents
            
            
            1,270
            
            
            (911
            )Net
                Increase in Cash
            
            
            4,840
            
            
            13,128Cash
                and Cash Equivalent - Beginning of Period
            
            
            23,356
            
            
            36,681Cash
                and Cash Equivalent - End of Period
            
            $
            28,196
            
            $
            49,809Supplemental
                Information:Cash
                Paid During the Period For:Interest
            
            $
            -
            
            $
            87,262




The
      accompanying notes are an integral part of these financial
      statements




-9-




**EUGENE
        SCIENCE, INC.** **AND SUBSIDIARIES**
 Notes
        to
        Consolidated Financial Statements
 September
        30, 2006 and 2005
 (Unaudited)


**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 has had a number of name changes; it
      changed the 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 Kyonggi-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. The Company experienced net
      losses of $725,136 and $2,950,316 for the nine months ended September 30, 2006
      and 2005, and had negative working capital of $13,469,245 and $13,918,735,
      as of
      September 30, 2006 and 2005, respectively. These factors raise substantial
      doubt
      as to its 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 such as Archer
      Daniels Midland Compan y.
      For
      marketing the CZ TM capsules, the Company plans to establish a distribution channel for a large
      volume in the United States market beginning in early 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.


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**


-10-
  **EUGENE
          SCIENCE, INC.** **AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 September
          30, 2006 and 2005
 (Unaudited)


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 ex tent
      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.




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




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




***(e)***
            ***Government
                Grants***




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




***(f)***
            ***Currency
                Translation***




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


-11-
  **EUGENE
          SCIENCE, INC.** **AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 September
          30, 2006 and 2005
 (Unaudited)


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




***(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 $54,625 and $22,224 as
      of
      September 30, 2006 and 2005, 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.




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 September 30, 2006 and 2005 were
      as
      follows:




2006
            
            2005Raw
                materials
            
            $
            17,452
            
            $
            37,024Finished
                goods
            
            
            6,554
            
            
            23,559Merchandise
                available for sale
            
            
            143
            
            
            257Total
            
            $
            24,149
            
            $
            60,840




***(******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***


-12-
  **EUGENE
          SCIENCE, INC.** **AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 September
          30, 2006 and 2005
 (Unaudited)




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.




**Note
      3 - Cash and Cash Equivalents**




Cash
      and
      cash equivalents included a bond valued at $10,788 and $9,590 as of September
      30, 2006 and 2005 respectively. This bond 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
      $1,417,023 and $1,476,055 as of September 30, 2006 and 2005, respectively.
      These
      loans are pledged by marketable securities, and bear interest at 9% and are
      due
      on demand. The collectability of these loans appeared uncertain unless the
      pledged assets are liquidated, and for this reason the loans were adjusted
      to
      the realizable value of the assets pledged as of September 30,
      2006.




**Note
      5 - Properties and Equipment**




Properties
      and equipment co nsisted
      of the following at September 30:




2006
            
            2005Land
            
            $
            –
            
            $
            4,328,306Buildings
            
            
            838,363
            
            
            3,314,886Equipment
                and vehicles
            
            
            4,454,370
            
            
            3,955,597Furniture
                and fixtures
            
            
            1,071,380
            
            
            932,6986,364,113
            
            
            12,531,487Less:
                accumulated depreciation
            
            
            (3,605,584
            )
            
            (3,383,771
            )Net
                property and equipment
            
            $
            2,758,529
            
            $
            9,147,716




On
      March
      3, 2006, the Company cancelled a sales agreement entered into in January 2004
      to
      sell the land and buildings. In return, the company paid the purchaser
      approximately $2,100,000 representing repayment of the deposit and a
      cancellation fee. On the same date, the Company signed a new agreement to sell
      the land and building to another purchaser for approximately $11,700,000. The
      title of the land and building transferred April 27, 2006. The gain on the
      sale
      of the property is approximately $5,504,000. In accordance with the new
      agreement, the proceeds from the sale of the property were used to repay a
      portion of the bank loans.


-13-
  **EUGENE
          SCIENCE, INC.** **AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 September
          30, 2006 and 2005
 (Unaudited)
  **Note
        6 - Investments**




The
      following is a summary of investments at September 30:





2006
            
            20057.5%
                equity of a unlisted company
            
            $
            588,414
            
            $
            509,1174.58%
                equity in a unlisted company
            
            
            1
            
            
            1Other
                marketable securities
            
            
            402
            
            
            364Total
            
            $
            588,817
            
            $
            509,482




Fifty
      three percent (53%) of the 7.5% equity investment with carrying value of
      $311,859 and $269,832 at September 30, 2006 and 2005, respectively, was pledged
      as security for a trade payable in the amount of $328,174 and $297,725 at
      September 30, 2006 and 2005.




**Note
      7 - Rental Deposits**




The
      Company leases an office space to an unrelated party and received rental
      deposits of $63,425 and $57,540 as of September 30, 2006 and 2005, respectively.




**Note
      8 - Loans Payable**




Loans
                payable consisted of the following at September
                30;




2006
            
            2005Bank
                loans - Loans payable to a bank with interest at 4.5% to 21%, due
                on
                demand, guaranteed by Korea Technology Credit Guarantee Fund or chief
                executive officer. Principal reduced by $4,000,000 in April
                2006.
            
            $
            1,624,069
            
            $
            5,703,812Bank
                loan - Loan payable to a bank with interest at 4.6% to 18% per annum,
                paid
                off in June 30, 2006.
            
            
            --
            
            
            1,913,972Note
                payable - Note payable to Korea Technology Credit Guarantee Fund,
                a
                government operated fund, bears interest at 21% per annum, is guaranteed
                by the chief executive officer, and is due on demand. As of the period
                end, the Company is in default of its payment.
            
            
            2,114,160
            
            
            2,281,086Note
                payable - Note payable to Korea Technology Credit Guarantee Fund,
                a
                government operated fund, bears interest at 18% per annum and is
                due June
                30, 2006. As of the period end, the Company is in default of its
                payment.
            
            
            1,396,146
            
            
            --Notes
                payables (#3-10) - Various notes payable to related party bear interest
                at
                9% to 10% are unsecured, and due on demand.
            
            
            590,566
            
            
            179,997Government
                loan #1 - Loan is non-interest bearing, unsecured, repayable in three
                annual payments of $21,798 and matured in February 2006. The Company
                is in
                arrears on the 2004, 2005 and 2006 annual payments.
              Government
                loan #2 - Loan is non-interest bearing, unsecured, and is repayable
                when
                the projects related to the loan have been completed.
              Government
                loan #3 - Loan is non-interest bearing, unsecured, and is repayable
                on
                demand as the Company completed the contract in 2005.
            
            
            42,091
            
            
            371,720Loan
                payable to a customer, due on demand
            
            
            --
            
            
            14,385Total
                notes payable
            
            
            5,767,032
            
            
            10,464,972Less:
                current portion
            
            
            (5,744,708
            )
            
            (10,154,011
            )Total
                long-term debt
            
            $
            22,324
            
            $
            310,961




-14-
  **EUGENE
          SCIENCE, INC.** **AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 September
          30, 2006 and 2005
 (Unaudited)
  **Note
        9 - Due to Shareholders and Officers**




Due
                to shareholders and officerconsisted
                of the following at September 30;






2006
            
            2005Short
                term advance payable to shareholder is unsecured and bears interest
                at 9%
                per annum and is due on demand.
            
            $
            70,470
            
            $
            70,470Short-terms
                advances payable to corporate officer is unsecured and bears interest
                at
                9% per annum and is due on demand.
            
            
            586,539
            
            
            237,065Total
            
            $
            657,009
            
            $
            307,535




**Note
      10 - Capital Stock**


Authorized:480,000,000
                  common shares, par value $0.00120,000,000
                  preferred shares, par value $0.0012006
              
              2005Issued:35,375,180
                  (2005 - 30,815,974) common shares
              
              $
              35,375
              
              $
              30,816




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




On
      September 30, 2005, in accordance with a Share Exchange Agreement dated
      September 1, 2005, the Company entered into a reverse-takeover transaction
      with
      Eugene Science, Inc. (Korea), whereby 89.5% of all the outstanding shares of
      the
      Korean subsidiary were exchanged for 304,882,998 shares (30,488,300 post reverse
      split shares) of the Company. As a result of the transaction, the shareholders
      of Eugene Science, Inc. (Korea) will control 88.5% of the Company. While the
      Company is the legal parent, Eugene Science, Inc. (Korea), as a result of the
      reverse-takeover, became the parent company for accounting
      purposes.




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




On
      October 12, 2005, the Company issued 3,500,000 common shares, (350,000 common
      shares post reverse split) for $350,000 for consulting services
      provided.




On
      January 13, 2006 the company had a reverse stock split whereby one new common
      share was exchanged for ten old common shares. The financial statements have
      been retroactively restated to reflect the reverse split.


-15-
 **EUGENE
        SCIENCE, INC.** **AND SUBSIDIARIES**
 Notes
        to
        Consolidated Financial Statements
 September
        30, 2006 and 2005
 (Unaudited)


On
      February 21, 2006 the company issued 1,000,000 restricted common shares for
      $83,000 for consulting services provided.




On
      September 19, 2006 the company issued 390,000 restricted common shares for
      consulting services provided.




**Stock
      Warrants and Options of the Korean Subsidiary**




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


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


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




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




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




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




In
      May
      2001, 71,246 stock options were granted having a $0.0869 nominal par value
      each
      and an exercise price of $1.93. In 2002, 20,356 stock options were cancelled.
      As
      at March 31, 2006, 50,890 options are still outstanding.




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




In
      September 2002, 220,000 stock options were granted having a $0.0869 nominal
      par
      value each and an exercise price of $1.96. During 2005, 14,916 options were
      granted. In addition, the exercise price of the options was reduced to
      $1.84.




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




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


-16-
 **EUGENE
          SCIENCE, INC.** **AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 September
          30, 2006 and 2005
 (Unaudited)


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 nine months
      ended September 30:


2006
              
              2005Outstanding,
                  beginning of period
              
              
              1,456,246
              
              
              2,851,249Granted
              
              
              --
              
              
              56,276Exercised
              
              
              --
              
              
              (1,351,279
              )Cancelled
              
              
              --
              
              
              (100,000
              )Outstanding,
                  end of period
              
              
              1,456,246
              
              
              2,751,249Weighted
                  average fair value of common stock options, granted during the
                  period
              
              
              --
              
              
              --Weighted
                  average exercise price of common stock options, beginning of
                  period
              
              $
              1.88
              
              $
              1.12Weighted
                  average exercise price of common stock options, granted during
                  the
                  period
              
              
              --
              
              
              --Weighted
                  average exercise price of common stock options, end of
                  period
              
              $
              1.88
              
              $
              1.12Weighted
                  average remaining contractual life of common stock options
              
              
              4
                  years
              
              
              5
                  years




**Note
      11 - Income Taxes**




The
      Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for
      Income Taxes". This Standard prescribes the use of the liability method whereby
      deferred tax asset and liability account balances are determined based on
      differences between financial reporting and tax bases of assets and liabilities
      and are measured using the enacted tax rates. The effects of future changes
      in
      tax laws or rates are not anticipated. Corporate income tax rates applicable
      to
      the Company in 2006 and 2005 are 16.5 percent of the first 100 million Korean
      Won ($84,000) of taxable income and 29.7 percent on the excess. For the United
      States operation, the corporate tax rate is approximately 34%. Tax losses from
      the Korean subsidiary can be carried forward for five years to offset future
      taxable income. The U.S. tax losses can be carried forward for fifteen years
      to
      offset future taxable income. The company has accumulated approximately
      $17,317,000 of taxable losses, which can be used to offset future taxable
      income. The utilization of the losses expires in years 2006 to
      2010.




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




The
      Company has deferred income tax assets as follows:


2006
              
              2005Deferred
                  income tax assets:Research
                  and development expenses amortizedover
                  5 years for tax purposes
              
              $
              207,040
              
              $
              313,080Other
                  timing differences
              
              
              10,397
              
              
              64,895Net
                  operating loss carryforwards
              
              
              2,857,300
              
              
              2,947,4043,074,737
              
              
              3,325,379Valuation
                  allowance fordeferred
                  income tax assets
              
              
              (3,074,737
              )
              
              (3,325,379
              )$
              --
              
              $
              --


-17-
 **EUGENE
        SCIENCE, INC.** **AND SUBSIDIARIES**
 Notes
        to
        Consolidated Financial Statements
 September
        30, 2006 and 2005
 (Unaudited)


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




**Note
      12 - Business Segment Information**




Sales
                and cost of goods sold of the Company’s segments during the three and nine
                months ended September 30, 2006 and 2005 were as
                follows:




Three
                months ended
              September
                30,
            
            Nine
                months ended
              September
                30,2006
            
            2005
            
            2006
            
            2005Sales:Manufacturing
            
            $
            36,781
            
            $
            104,410
            
            $
            309,236
            
            $
            399,201Merchandise
            
            
            277,945
            
            
            169,755
            
            
            348,330
            
            
            391,278$
            314,726
            
            $
            274,165
            
            $
            657,566
            
            $
            790,479Cost
                of Sales:Manufacturing
            
            $
            88,103
            
            $
            59,215
            
            $
            196,762
            
            $
            308,203Merchandise
            
            
            176,368
            
            
            134,487
            
            
            232,779
            
            
            310,028$
            264,471
            
            $
            193,702
            
            $
            429,541
            
            $
            618,231




**Note
      13 - Major Customers**




In
      2006,
      the Company had four major customers which accounted for 93% of the total
      revenue, of which one single customer accounted for 44%. In 2005, sales to
      two
      of the major customers accounted for 72% of the total revenue.




**Note
      14 - Related Party Transactions**




Significant
      transactions with companies related or affiliates by common control for the
      nine
      months ended September 30, 2006 and 2005 are summarized as follows:




Sales
            
            Net
                rental/
              Interest
                income
            
            Purchases
            
            Accounts
                Receivable
            
            Accounts
              Payable
            
            Rental
              DepositCompany
                related by common control2005
            
            $
            108,148
            
            $
            67,244
            
            $
            310,985
            
            $
            1,841,484
            
            $
            410,573
            
            $
            95,9002006
            
            $
            136,559
            
            $
            238,160
            
            $
            232,726
            
            $
            -
            
            $
            246,134
            
            $
            105,708Companies
                affiliated by common control2005
            
            $
            31,316
            
            $
            1,323
            
            $
            57,363
            
            $
            1,434
            
            $
            63,247
            
            $
            --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.




-18-


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




**Overview**




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




**Going
      Concern**




Our
      independent registered public accounting firm has expressed substantial doubt
      as
      to our ability to continue as a going concern, in its report for the fiscal
      year
      ended December 31, 2005, 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 September 30, 2006 and 2005*




-19-




Revenue
      increased 14% to $314,726 for the three months ended September 30, 2006, as
      compared to revenue of $274,165 for the three months ended September 30, 2005.
      This increase is primarily attributable to an increase in sales of our cooking
      oil products.




*Comparison
      of the Nine Months Ended September 30, 2006 and 2005*




Revenue
      decreased 16% to $657,566 for the nine months ended September 30, 2006, as
      compared to revenue of $790,479 for the nine months ended September 30, 2005.
      This decrease is primarily attributable to decreased sales of our health and
      functional food products, partially offset by increased sales of our cooking
      oil
      products.




**Operating
      Expenses**




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




**Cost
      of Sales**




Cost
      of
      sales increased 36% to $264,471 for the three months ended September 30, 2006,
      as compared to cost of sales of $193,702 for the three months ended September
      30, 2005. This increase is primarily attributable to an increase in sales of
      our
      cooking oil products. Our gross margin for the three months ended September
      30,
      2006 was approximately 84%, as compared to a gross margin of approximately
      30%
      for the three months ended September 30, 2005. The change in our gross margin
      is
      due primarily to higher margin rates on the sales of our CZ-series of products.




**Total
      Expenses**




Our
      total
      expenses for the three months ended September 30, 2006 were $560,055 as compared
      to $553,245 for the three months ended September 30, 2005, an increase of
      $6,810. This change is due primarily to an increase in our professional fees
      and
      travel expenses.




**Other
      Income (Expenses)**




Other
      expenses increased to $456,951 for the three months ended September 30, 2006,
      as
      compared to other expenses of $438,050 for the three months ended September
      30,
      2005. This increase in other expenses is primarily attributable to an increase
      in interest expense, as described below, and a provision for uncollectible
      related party loans, partially offset by an increase in rental income. Interest
      expense increased 5% to $493,973 for the three months ended September 30, 2006,
      as compared to interest expense of $469,167 for the three months ended September
      30, 2005. This increase in interest expense is primarily attributable to an
      increase in interest due on loans from our employees. In addition, all of our
      bank loans were in default as of September 30, 2006. The interest rates on
      such
      loans range 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 fourth quarter of our 2006 fiscal
      year.




*Comparison
      of the Nine Months Ended September 30, 2006 and 2005*




**Cost
      of Sales**




Cost
      of
      sales decreased 30% to $429,541 for the nine months ended September 30, 2006,
      as
      compared to cost of sales of $618,231 for the nine months ended September 30,
      2005. This decrease is primarily attributable to decreased sales of our health
      and functional food products. Our gross margin for the nine months ended
      September 30, 2006 was approximately 35%, as compared to a gross margin of
      approximately 22% for the nine months ended September 30, 2005. The change
      in
      our gross margin is due primarily to higher margin rates on the sales of our
      CZ-series of products.




**Total
      Expenses**




Our
      total
      expenses for the nine months ended September 30, 2006 were $1,970,715 as
      compared to total expenses of $1,773,171 for the nine months ended September
      30,
      2005, an increase of $197,544. This change is primarily attributable to an
      increase in research and development expenses and professional
      fees.








-20-


Other
      income increased to $1,017,554 for the nine months ended September 30, 2006,
      as
      compared to other expenses of $1,349,393 for the nine months ended September
      30,
      2005. This increase in other income resulted primarily from a gain on the sale
      of our real property in Bucheon, Kyonggi-Do, South Korea and an increase in
      rental income, partially offset by an increase in interest expense, as described
      below, and a provision for uncollectible related party loans. Interest expense
      increased 16% to $1,671,194 for the nine months ended September 30, 2006, as
      compared to interest expense of $1,436,861 for the nine months ended September
      30, 2005. This increase in interest expense is primarily attributable to an
      increase in interest due on loans from our employees.




**Liquidity
      and Capital Resources**




*Comparison
      of the Nine Months Ended September 30, 2006 and 2005*




**Cash
      and Cash Equivalents; Working Capital**




For
      the
      nine months ended September 30, 2006, we had cash and cash equivalents of
      approximately $28,196 and negative working capital of approximately $13,447,219.
      For the nine months ended September 30, 2005, we had cash and cash equivalents
      of approximately $49,809 and negative working capital of approximately
      $13,918,735. This decrease in our cash and working capital is primarily
      attributable to the repayment of the outstanding principal and a portion of
      the
      accrued and unpaid interest owed under certain of our outstanding bank loans
      upon the sale of our real property in Bucheon, Kyonggi-Do, South
      Korea.




**Cash
      Used In Operating Activities**




Net
      cash
      used in operating activities increased 610% to $2,257,828 for the nine months
      ended September 30, 2006, as compared to net cash of $317,681 used in operating
      activities during the nine months ended September 30, 2005. This increase of
      $1,940,147 resulted primarily from a gain on the sale of our real property
      in
      Bucheon, Kyonggi-Do, South Korea, partially offset by a provision for
      uncollectible related party loans.




**Cash
      Used In Investing Activities**




Net
      cash
      used in investing activities increased 48% to $60,919 for the nine months ended
      September 30, 2006, as compared to net cash of $41,223 used in investing
      activities during the nine months ended September 30, 2005. This increase of
      $19,696 resulted primarily from an increase in our intangible
      assets.




**Cash
      Provided By Financing Activities**




Net
      cash
      provided by financing activities increased 525% to $2,322,317 for the nine
      months ended September 30, 2006, as compared to net cash provided by financing
      activities of $372,943 during the nine months ended September 30, 2005. This
      increase of $1,949,374 resulted primarily from net proceeds on the sale of
      our
      real property in Bucheon, Kyonggi-Do, South Korea, partially offset by the
      repayment of the outstanding principal and a portion of the accrued and unpaid
      interest due under certain of our outstanding bank loans and advances made
      by us
      to a related party.




**Bank
      Loans**




Since
      1999, we have borrowed an aggregate principal amount of $3,889,259 from the
      Industrial Bank of Korea, which we refer to herein as 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,
      South Korea. Loans in the aggregate principal amount of $1,301,919 were
      guaranteed by the Korea Technology Credit Guarantee Fund, which we refer to
      herein as KOTEC, a fund operated by the South Korean government. During the
      first half of the 2006 fiscal year, we used the proceeds from the sale of our
      real property in Bucheon, South Korea to repay all of the outstanding principal
      and a portion of the accrued and unpaid interest owed under these loans from
      IBK. During the quarter ended September 30, 2006, we did not pay IBK any accrued
      and unpaid interest owed under these loans. At September 30, 2006, the accrued
      and unpaid interest owed by us to IBK under these loans was approximately
      $243,157.




In
      December 2004, we obtained a short-term loan from the National Agricultural
      Cooperative Federation, which we refer to herein as 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 September 30,
      2006, the loan had not been repaid to NACF and the aggregate outstanding
      principal balance and accrued and unpaid interest on such loan was approximately
      $693,022.




-21-


In
      September 2002, we obtained a short-term loan from ChoHeung Bank in the
      principal amount of $278,805. This loan has an interest rate of 9.5%, was due
      on
      August 1, 2004 and was personally guaranteed by Mr. Noh, our president, chief
      executive officer, chairman of the board and principal stockholder. At September
      30, 2006, the aggregate principal balance and accrued and unpaid interest on
      such loan was approximately $344,648. 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 bear interest at rates of 6.22% and
      11.22% per annum, respectively. Both loans were due and payable on November
      15,
      2004. At September 30, 2006, the aggregate principal balance and accrued and
      unpaid interest on such loans was approximately $1,555,839.




**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
      September 30, 2006, the outstanding balance of this note was
      $2,483,519.




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 $51,714 at September 30, 2006.




In
      February 2002, we issued a note in the principal amount of $100,000, bearing
      interest at a rate of 8% per annum, to Kyungioils Co., Ltd. The note is due
      and
      payable on demand and, to date, no demands have been made to us for payment
      of
      this note. The outstanding balance on this note was $20,950 at September 30,
      2006.




**Government
      Loans**




On
      March
      2, 2003, we received a non-interest bearing, unsecured loan from the South
      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
      September 30, 2006, we were $66,972 in arrears under this loan.




We
      received a $316,181 loan from the South 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 to the South Korean government the principal
      amount of the loan. We repaid $21,034 of the amount due under this loan in
      our
      2004 fiscal year. At September 30, 2006, we were $42,091 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, Inc.) 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.




-22-


UNIT
      OF
      ESTIMATES. The 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 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," which we refer to herein as
      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. We retain substantially all of the benefits and risks
      of
      ownership of our income properties and therefore account for leases with our
      tenants as operating leases.




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.




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 $54,625
      and $22,224 as of September 30, 2006 and 2005, 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:


Buildings
              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.




-23-




**Recent
      Accounting Pronouncements**




In
      May
      2005, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards, or SFAS, No. 154, "Accounting Changes and Error
      Corrections," or SFAS 154, which replaces Accounting Principles Board, or 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 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, 2005 which raises substantial
      doubt about our ability to continue as a going concern. While we have relied
      principally in the past on external financing to provide liquidity and capital
      resources for our operations, we can provide no assurance that cash generated
      from our operations together with cash received in the future from external
      financing will be sufficient to enable us to continue as a going
      concern.




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




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




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




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




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




In
      the
      nine months ended September 30, 2006, sales to four major customers accounted
      for 84% 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.




-24-




***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
      and
      Erika Lee, our principal research scientists. 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.




***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: (i) changes in or interpretations of
      foreign regulations that may limit our ability to sell certain products; (ii)
      exposure to currency fluctuations; (iii) the potential imposition of trade
      or
      foreign exchange restrictions or increased tariffs; and (iv) political
      instability. In addition, there can be no assurance that we will be able to
      enter into agreements with additional international marketing partners and
      thereby would limit the expansion of our revenue base.




-25-


***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 foreign distributor
                relationships;




·
            longer
                accounts receivable collection cycles in certain foreign
                countries;




·
            adverse
                economic or political changes;




·
            unexpected
                changes in regulatory requirements;




·
            more
                limited protection for intellectual property in some
                countries;




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




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




·
            potentially
                adverse tax consequences of overlapping tax structure;
                and




·
            foreign
                currency fluctuations.




-26-




***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. The 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 South Korea, a substantial portion of our costs
      are
      and will continue to be denominated in the South Korean Won. Adverse changes
      in
      the exchange rates of the South Korean Won to the 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, which we refer to herein
      as
      the Commission, our independent registered accounting firm will be required
      to
      attest to whether our assessment of the effectiveness of our internal control
      over financial reporting is fairly stated in all material respects and
      separately report on whether it believes we maintained, in all material
      respects, effective internal controls over financial reporting as of December
      31, 2007. Because of our management's lack of resources, and our limited
      operations, we have not commenced the process of preparing the system and
      process documentation, performing an evaluation of our internal controls
      required for our management to make this assessment and for the auditors to
      provide their attestation report, and accordingly, have not begun testing the
      effectiveness of these internal controls. We expect that this process will
      require significant amounts of our management’s time and resources, as well as
      higher expenses in the form of higher audit and review fees, higher legal fees
      and higher internal costs to document, test and potentially remediate internal
      controls. Accordingly, with respect to Section 404 in particular, there exists
      a
      significant risk that we will not be able to meet all the requirements of
      Section 404 by the end of fiscal year 2007, when we are required to report
      on
      our internal controls and provide our auditor's opinion thereon. Additionally,
      even in the event we attempt to comply with Section 404, in the course of
      evaluation and testing, management may identify deficiencies that will need
      to
      be addressed and remediated, which could potentially have a material adverse
      effect on our stock price and could result in significant additional
      expenditures.




-27-


***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, which we refer to
      herein as the FDA, and the United States Federal Trade Commission, which we
      refer to herein as 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.




-28-


***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 Over-the-Counter Bulletin Board, are subject to
      rules adopted by the Commission 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 Commission has adopted a number of rules to regulate "penny
      stock." Because our securities may constitute "penny stock" within the meaning
      of the rules, the rules would apply to us and to our securities. The rules
      may
      further affect the ability of owners of our common stock to sell our securities
      in any market that might develop for them.




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




-29-


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




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




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




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




As
      of
      September 30, 2006, our officers and directors and their affiliates owned
      approximately 36.09% of our outstanding voting shares. As a result, our officers
      and directors are able to exert considerable influence over the outcome of
      any
      matters submitted to a vote of the holders of our common stock, including the
      election of our board of directors. The voting power of these stockholders
      could
      also discourage others from seeking to acquire control of us through the
      purchase of our common stock, which might depress the price of our common
      stock.




**ITEM
      3** . **CONTROLS
      AND PROCEDURES** .




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




There
      has
      been no change in our internal control over financial reporting (as defined
      in
      Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter
      ended September 30, 2006, that has materially affected, or is reasonably likely
      to materially affect, our internal control over financial reporting.




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




-30-


**PART
      II-OTHER INFORMATION**




**ITEM
      6. EXHIBITS.**




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




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





-31-


**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:
              November 20, 2006
            By:
            /s/ Seung
              Kwon NohSeung
              Kwon NohPresident,
              Chief
              Executive Officer and Director(Principal Executive
              Officer)


Date:
                November 20, 2006
              By:
              /s/ Jae
                Hong
                YooJae
                Hong YooChief
                Financial Officer(Principal Financial and Accounting
                Officer
  -32-


**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.





-33-