**SECURITIES
      AND EXCHANGE COMMISSION**




**WASHINGTON,
      D.C. 20549**


**FORM
        10-QSB**


**T** **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**




For
      Quarter Ended March 31, 2006




**OR**




£  **TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**




For
      the
      transition period from _______ to _______




Commission
      file number: 000-32307




SEA
      SUN CAPITAL CORPORATION


(Exact
      Name of Registrant as Specified in its Charter)




DELAWARE
            59-3518707State
                or other jurisdiction
                of
            (I.R.S.
                Employerincorporation
                or
                organization
            Identification
                No.)





940
      Sheldon Court; Suite 201, Burlington, Ontario, Canada L7L 5K6


(Address
      of Principal Executive Office) (Zip Code)




(250)
      717-3003


(Registrant's
      telephone number including area code)




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 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 **£** No **T**




Indicate
      by check mark whether the Registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Act). Yes **£** No **T**





The
      number of shares of registrant's Common Stock, $.001 par value, outstanding
      as
      of November 29, 2006 was 20,565,141 shares.










**Sea
      Sun Capital Corporation and Subsidiary**





**Index**




Page
                No.Item
              1.
            
            
            Financial
                Statements
            
            
            3Consolidated
                Balance Sheet - March 31, 2006 -
                Unaudited
            
            
            3Consolidated
                Statements of Operations and
                Comprehensive Loss -Three
                months ended March 31, 2006 and 2005 -
                Unaudited
            
            
            4Consolidated
                Statements of Cash Flows - Three
                months endedMarch
                31, 2006 and 2005-
                Unaudited
            
            
            5Notes
                to Consolidated Financial Statements -
                Unaudited
            
            
            6Item
              2.
            
            
            Management's
                Discussion And Analysis of Financial
                Condition And Results Of
                Operations
            
            
            11Item
              3.
            
            
            Controls
                and Procedures
            
            
            15PART
              II -
              OTHER INFORMATIONItem
              6.
            
            
            Exhibits
                and Reports on Form 8-K
            
            
            15SIGNATURES
            
            
            
            
            16









**PART
      I - FINANCIAL INFORMATION:**


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


**SEA
                  SUN CAPITAL CORPORATION****CONSOLIDATED
                  BALANCE SHEET****March
                  31, 2006****(UNAUDITED)****ASSETS**
  **CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              456,501Accounts
                  receivable - location sales, current portion (Note 3)
              
              
              832,110Equipment
                  deposits
              
              
              252,966Prepaid
                  expenses
              
              
              54,282Total
                  Current Assets
              
              
              1,595,859**PROPERTY
                  AND EQUIPMENT - NET**
              
              
              2,214,239**OTHER
                  ASSETS**Accounts
                  receivable - location sales, long-term portion (Note 3)
              
              
              3,236,200Intangible
                  asset (Note 5)
              
              
              131,558Total
                  Other Assets
              
              
              3,367,758**TOTAL
                  ASSETS**
              
              $
              7,177,856**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              18,023Accounts
                  payable - related parties
              
              
              130,008Accrued
                  liabilities
              
              
              210,083Total
                  Current Liabilities
              
              
              358,114**LONG-TERM
                  DEBT - LOCATION SALES**
              
              
              8,783,400**TOTAL
                  LIABILITIES**
              
              
              9,141,514**STOCKHOLDERS'
                  DEFICIT**Preferred
                  stock, $0.001 USD par value; 50,000,000 sharesauthorized,
                  no shares issued and outstanding (Note 4)
              
              
              -Common
                  stock, $0.001 USD par value; 100,000,000 sharesauthorized,
                  20,261,461 shares issued and outstanding (Note 4)
              
              
              20,261Additional
                  paid-in capital
              
              
              2,939,972Accumulated
                  deficit
              
              
              (4,884,488
              )Foreign
                  currency translation adjustment
              
              
              (39,403
              )Total
                  Stockholders' Deficit
              
              
              (1,963,658
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT**
              
              $
              7,177,856




See
      notes to financial statements




3





**SEA
                SUN CAPITAL CORPORATION****CONSOLIDATED
                STATEMENTS OF OPERATIONS AND COMPREHENSIVE
                LOSS****(UNAUDITED)**For
                the Three MonthsEnded
                March 31,2006
            
            2005**REVENUE**
            
            $
            -
            
            $
            -**OPERATING
                EXPENSES**Location
                sales costs (Note 3)
            
            
            834,042
            
            
            -Wages
                and contractor fees
            
            
            320,649
            
            
            95,551Professional
                fees
            
            
            48,301
            
            
            16,279Depreciation
            
            
            131,631
            
            
            10,651Travel,
                meals, and entertainment
            
            
            809
            
            
            9,297Research
                and development
            
            
            2,175
            
            
            3,979Office
                expenses
            
            
            96,570
            
            
            1,923Advertising
            
            
            -
            
            
            49Facilities
                rent
            
            
            9,605
            
            
            -Other
                general and administrative
            
            
            -
            
            
            15,096Total
                Operating Expenses
            
            
            1,443,782
            
            
            152,825**LOSS
                FROM OPERATIONS**
            
            
            (1,443,782
            )
            
            (152,825
            )**OTHER
                INCOME**Interest
                income
            
            
            135
            
            
            10Total
                Other Income
            
            
            135
            
            
            10**LOSS
                BEFORE INCOME TAXES**
            
            
            (1,443,647
            )
            
            (152,815
            )**PROVISION
                FOR INCOME TAX EXPENSE**
            
            
            -
            
            
            -**NET
                LOSS**
            
            $
            (1,443,647
            )
            $
            (152,815
            )**BASIC
                AND DILUTED:**Net
                loss per common share
            
            $
            (0.07
            )
            $
            (0.01
            )Weighted
                average shares outstanding
            
            
            20,125,352
            
            
            16,937,228**OTHER
                COMPREHENSIVE LOSS****NET
                LOSS**
            
            $
            (1,443,647
            )
            $
            (152,815
            )Foreign
                currency translation adjustment
            
            
            (5,539
            )
            
            (479
            )**COMPREHENSIVE
                LOSS**
            
            $
            (1,449,186
            )
            $
            (153,294
            )




See
                notes to financial statements




4







**SEA
                SUN CAPITAL CORPORATION****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****(UNAUDITED)**For
                the Three MonthsEnded
                March 31,2006
            
            2005**CASH
                FLOWS FROM OPERATING ACTIVITIES:****Net
                loss**
            
            $
            (1,443,647
            )
            $
            (152,815
            )Adjustments
                to reconcile net income to net cashused
                in operating activities:Depreciation
            
            
            131,631
            
            
            10,651Stock
                option compensation expense
            
            
            229,991
            
            
            -Changes
                in operating assets and liabilities:Decrease
                in accounts receivable - other
            
            
            21,448
            
            
            -Increase
                in equipment deposits
            
            
            (252,966
            )
            
            -Increase
                in prepaid expenses
            
            
            (29,038
            )
            
            (1,654
            )Increase
                (Decrease) in accounts payable
            
            
            (26,203
            )
            
            4,394Increase
                (Decrease) in accounts payable - related parties
            
            
            12,728
            
            
            (5,112
            )Increase
                in unearned revenue
            
            
            -
            
            
            24,806Decrease
                in accrued liabilities
            
            
            (1,869
            )
            
            -Net
                Cash Used by Operating Activities
            
            
            (1,357,925
            )
            
            (119,730
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES:**Purchases
                of fixed assets
            
            
            (310,656
            )
            
            (81,479
            )Net
                Cash Used by Investing Activities
            
            
            (310,656
            )
            
            (81,479
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                from long-term debt - location sales
            
            
            811,500
            
            
            -Proceeds
                from common stock subscriptions
            
            
            -
            
            
            500Net
                Cash Provided by Financing Activities
            
            $
            811,500
            
            $
            500**EFFECT
                OF FOREIGN CURRENCY TRANSLATION ADJUSTMENT**
            
            
            (5,397
            )
            
            (479
            )**NET
                DECREASE IN CASH AND CASH EQUIVALENTS**
            
            $
            (862,478
            )
            $
            (201,188
            )**CASH
                AND CASH EQUIVALENTS, BEGINNING OF PERIOD**
            
            
            1,318,979
            
            
            213,771**CASH
                AND CASH EQUIVALENTS, END OF PERIOD**
            
            $
            456,501
            
            $
            12,583**SUPPLEMENTAL
                CASH FLOW INFORMATION**Cash
                Payments For:Interest
            
            $
            -
            
            $
            -Income
                taxes
            
            $
            -
            
            $
            -Non-Cash
                Investing and Financing Activities:Location
                sales financed with notes receivable
            
            $
            642,500
            
            $
            -




See
                notes to financial statements




5


**SEA
        SUN CAPITAL CORPORATION**
 **Notes
        to Consolidated Financial Statements**
 **For
        the Three Months Ended March 31, 2006 and 2005**
 **(UNAUDITED)**







The
      accompanying unaudited interim financial statements have been prepared pursuant
      to the rules and regulations of the Securities and Exchange Commission and
      should be read in conjunction with the Company’s December 31, 2005 Annual Report
      on Form 10-KSB. Certain information and footnote disclosures normally included
      in the financial statements prepared in accordance with US Generally Accepted
      Accounting Principles have been omitted or condensed pursuant to such rules
      and
      regulations.




The
        unaudited financial statements include all normal recurring adjustments which
        are, in the opinion of our management, necessary to present a fair statement of the Company’s financial position as of March 31, 2006 and the
        results of operations and cash flows for the three month periods ended March
        31,
        2006 and 2005. Results of operations for these  periods are not
        necessarily indicative of the results to be expected for the full
        year.





**Note
      1 - Organization**





Sea
      Sun
      Capital Corporation (the Parent) was organized under the name Alpha Holding,
      Inc. as a blank check company under the laws of the state of Delaware on August
      19, 1997. A name change to Sea Sun Capital Corporation was effected September
      29, 2004. The Parent engaged in minimal operations from its inception until
      December 16, 2004, on which date it acquired 100% of the stock of Sea Sun
      Capital Corporation (the Subsidiary), which was organized under the laws of
      Alberta, Canada on February 19, 2003. The acquisition was accounted for as
      a
      recapitalization, commonly referred to as a reverse merger, inasmuch as the
      post-acquisition owners and control persons of the Parent are substantially
      the
      same as the pre-acquisition owners and control persons of the Subsidiary. The
      financial statements reflect primarily the operations of the Subsidiary, with
      a
      recapitalization to illustrate the effects of the reverse merger. The
      consolidated entity is referred to throughout these notes as the
      Company.





The
      Company sells, rents and licenses the use of water leisure craft manufactured
      by
      unaffiliated entities pursuant to the Company’s proprietary designs and
      specifications to an unaffiliated master licensee and other ecotour operators
      located in domestic and international markets.





**Note
      2 - Basis of Presentation and Significant Accounting
      Policies**





Generally
      Accepted Accounting Principles - The
      accompanying financial statements have been prepared in accordance with
      accounting principles generally accepted in the United States of America (US
      GAAP). This basis differs from that used in the statutory accounts of the
      Subsidiary, which were prepared in accordance with the accounting principles
      and
      relevant financial regulations applicable to enterprises in Canada. All
      necessary adjustments have been made to present the financial statements in
      accordance with US GAAP.




6




**SEA
        SUN CAPITAL CORPORATION**
 **Notes
        to Consolidated Financial Statements**
 **For
        the Three Months Ended March 31, 2006 and 2005**
 **(UNAUDITED)**


**Note
      2 - Basis of Presentation and Significant Accounting Policies
      (continued)**





Foreign
      Currency and Comprehensive Income - The
      Subsidiary’s functional currency is the Canadian dollar (CND), while the
      Parent’s functional currency is the United States dollar (USD).  The
      financial statements of the Subsidiary were translated to USD prior to
      consolidation using March 31, 2006 exchange rates for the balance sheet, and
      weighted average exchange rates over the three months ended March 31, 2006
      and
      2005 for the statements of operations.  All amounts in the financial
      statements and footnotes are presumed to be stated in USD, unless otherwise
      identified. Foreign currency translation gains or losses as a result of
      fluctuations in the exchange rates are reflected in the Statement of Other
      Comprehensive Income or Loss.





Net
      Earnings Per Share - The
      computation of net income (loss) per share of common stock is based on the
      weighted average number of shares outstanding during the periods
      presented.





Income
      Taxes - The
      Company recognizes the tax effects of transactions in the year in which such
      transactions enter into the determination of net income, regardless of when
      reported for tax purposes. Deferred taxes are provided in the financial
      statements under SFAS No. 109, *“Accounting
      for Income Taxes,”* to give
      effect to the resulting temporary differences which may arise from differences
      in the bases of fixed assets, depreciation methods, allowances, etc., based
      on
      the income taxes expected to be payable in future years.





Cash
      and Cash Equivalents - For
      purposes of the statement of cash flows, the Company considers all highly liquid
      debt instruments purchased with a maturity of three months or less to be cash
      equivalents.  During the three months ended March 31, 2006, the Company did
      not have non-cash investing activities other than as disclosed on the statements
      of cash flows.





Use
      of
      Estimates - The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.





Fixed
      Assets - Fixed
      assets are stated at cost less accumulated depreciation, which is computed
      using
      the straight-line method based on estimated useful lives ranging from two (2)
      to
      five (5) years. Long-term assets of the Company are reviewed annually to assess
      whether the carrying value has become impaired, according to the guidelines
      established in Statement of Accounting Standards (SFAS) No. 144, *“Accounting
      for the Impairment or Disposal of Long-Lived Assets.”* The
      Company also evaluates the periods of amortization to determine whether
      subsequent events and circumstances warrant revised estimates of useful lives.
      No impairment of assets was recorded in the periods reported.




7




**SEA
        SUN CAPITAL CORPORATION**
 **Notes
        to Consolidated Financial Statements**
 **For
        the Three Months Ended March 31, 2006 and 2005**
 **(UNAUDITED)**


**Note
      2 - Basis of Presentation and Significant Accounting Policies
      (continued)**





Revenue
      Recognition - The
      Company has four sources of revenue pertaining to its revised business model;
      (1) Sales of watercraft products; (2) Initial licensing fees on locations
      financed by the Master Licensee; (3) Monthly rental income from the Master
      Licensee and (4) On-going licensing fees from the Master Licensee from locations
      financed by the Company.





Product
      Warranty Costs - The
      Company records a liability for product warranties at the time revenue is
      recognized. As the Company has no historical experience, the liability is
      estimated using management’s best judgment. The Company adjusts its liability
      for specific warranty matters when they become known and the exposure can be
      estimated. The Company’s warranty reserves are affected by product failure rates
      and material usage and labor costs incurred in correcting a product failure.
      If
      these estimated costs differ from actual costs, a revision to the warranty
      reserve would be required.





Accounts
      Receivable - The
      Company believes that its credit review procedures have adequately provided
      for
      usual and customary credit-related losses. The allowance account and accounts
      receivable are charged to bad debts expense when an amount is determined to
      be
      uncollectible based on a periodic review of the accounts by management. Based
      on
      the Company’s policy for charging off accounts receivables and the low risk of
      uncollectibility of Ecotour License sales, the bad debts allowance is
      insignificant at March 31, 2006. In the future, the Company plans to sell its
      watercrafts to independent dealers, at which time the Company will set up an
      allowance based on estimation of uncollectible accounts.





**Note
      3 - Location Sales**





During
      the three months ended March 31, 2006 and 2005, the Company continued to pursue
      the business plan it initiated in February 2003, i.e. ,
      the
      sale of investment opportunities in international maritime Ecotour Locations
      (the “Locations”) to individuals or entities (“Location Investors”).





During
      the three months ended March 31, 2006, the Company entered into eight Location
      Agreements pertaining to nine Locations, for which it became entitled to receive
      a total of $1,280,000, of which $637,500 was paid to the Company. Also during
      that period, the Company received additional payments on existing Location
      Agreements totaling $246,000. As of March 31, 2006, the aggregate sales price
      of
      all Location Agreements (total long-term debt) was $8,783,400, and the related
      Location sales receivable was $4,068,310. The Company did not enter into any
      Location Agreements during the three months ended March 31, 2005.





The
      Company has accounted for its Location sales in accordance with EITF
      88-18, *“Sales
      of Future Revenues,”* which
      requires the total Location sales price stated in the Agreements to be
      recognized not as revenue, but rather as debt that is amortized using the
      effective interest method. Since none of the Locations had commenced operations
      prior to March 31, 2006, no amortization has been recorded and the entire debt
      amount has been reported as long-term debt.





In
      June
      2006, the Company transferred and assigned all of its rights and interests
      in
      its Location Agreements to an unaffiliated entity (Note 7).





8




**SEA
        SUN CAPITAL CORPORATION**
 **Notes
        to Consolidated Financial Statements**
 **For
        the Three Months Ended March 31, 2006 and 2005**
 **(UNAUDITED)**






**Note
      4 - Stockholders’ Equity**





In
      February 2006, the Company issued 266,300 shares of its common stock at $.40
      per
      share in connection with the exercise of warrants that were outstanding at
      December 31, 2005.





The
      Company is authorized to issue 50,000,000 shares of its preferred stock and
      100,000,000 shares of its common stock, both with a $.001 par value.  The
      Company has not issued any preferred stock. On March 31, 2006, there were
      20,261,461 shares of common stock outstanding.





**Note
      5 - Intangible Asset**





In
      December 2003, the Company acquired watercrafts and accessories with a fair
      market value of $196,490 CND from an entity with which one of the Company’s
      directors is affiliated.  The Company paid that entity $350,000 CND, which
      resulted in an intangible asset of $153,510 CND.  The intangible asset
      consisted of marketing and other efforts made by the entity to establish brand
      recognition of the Company’s product.  Using the exchange rate at March 31,
      2006, the intangible asset had a value of $131,558.  Minimal (if any)
      impairment in accordance with SFAS 142, ‘ *Goodwill
      and Other Intangible Assets* ,’
was
      noted, and therefore, not recorded.





**Note
      6 - Accounts Payable - Related Parties**





An
      entity
      affiliated with one of the Company’s directors regularly pays for expenses on
      the Company’s behalf.  The Company accumulated reimbursements owed to that
      entity of $130,008 at March 31, 2006.





**Note
      7 - Subsequent Events**





On
      June
      29, 2006, the Company sold for a total consideration of $10,000 all of the
      outstanding shares of the capital stock of Sea Sun Enterprises, Inc. (“SSEI”), a
      wholly owned non-operating subsidiary organized under the laws of Barbados
      to
      two unaffiliated persons.





As
      of
      June 29, 2006, the Company had entered into 57 Location Agreements, representing
      76 Locations, resulting in total debt of $8,933,400, of which $3,886,910 was
      still receivable from the Location Investors at that time. On that
      date:





·
            the
                Company transferred and assigned all of its rights and interests
                in the
                Location Agreements to SSEI; and





·
            SSEI
                assumed responsibility for the operation of the Locations, including
                set-up, marketing, tour operations, revenue collection and payment
                of all
                expenses associated with the operations, and for the payment of initial
                licensing fees, monthly boat rental fees and monthly licensing fees
                to the
                Company.




9




**SEA
        SUN CAPITAL CORPORATION**
 **Notes
        to Consolidated Financial Statements**
 **For
        the Three Months Ended March 31, 2006 and 2005**
 **(UNAUDITED)**





**Note
      7 - Subsequent Events (continued)**





The
      aggregate amount receivable represented the balance of the purchase prices
      payable for the Locations to the Company by SSEI as follows: the sum of $432,865
      was due on August 31, 2006; the sum of $109,845 was due on September 30, 2006;
      and the balance of $3,344,200 is payable in 24 equal monthly payments of
      $148,106 (including interest of 6% per annum accrued monthly) commencing January
      1, 2007.





**Note
      8 - Stock Options**





In
      December 2005, options to purchase 1,000,000 shares of common stock were granted
      to various consultants under the company’s Stock Option and Stock Appreciation
      Rights Plan (the “2005 Plan”). The 2005 Plan provides for the granting to
      officers, directors, employees and consultants of incentive and non-incentive
      stock options to purchase not more than 2,000,000 shares of common stock and
      stock appreciation rights. The Board of Directors administers the Plan and
      has
      authority to determine the persons to whom awards will be made, the terms of
      vesting and forfeiture, the amount of the awards, and other terms. At March
      31,
      2006, options to purchase a total of 1,000,000 shares had been granted under
      the
      2005 Plan, none of which had been exercised.




Also
      in
      December 2005, options to purchase an aggregate of 1,000,000 shares of common
      stock were granted to three executives pursuant to the terms of their respective
      employment agreements. These options are not administered under the 2005
      Plan.





The
      Company has adopted the fair value recognition provisions of SFAS No. 123(R),
      under which compensation expense of $229,991 was recognized during the three
      months ended March 31, 2006. Compensation expense for all options not yet vested
      as of March 31, 2006 was based on the estimated fair value of the options on
      the
      grant date. The Company uses the Black-Scholes option-pricing model to compute
      compensation expense associated with the options. The risk-free interest rate
      is
      based on the U.S. Treasury rates at the date of grant. The forfeiture rate
      is
      based on past turnover experience of the Company. Expected volatility is based
      on the historical volatility of the Company’s stock. The options granted were
      valued assuming a risk-free interest rate between 4% and 5% per annum,
      volatility between 95% and 100%, zero dividend yield and forfeiture rate, and
      expected lives of ten years. The total grant date fair value price of the
      options was $1,839,926. The Company records stock compensation expense over
      the
      vesting period, which is generally two years. As of March 31, 2006, the Company
      had approximately $1,609,935 of unrecognized compensation expense that is
      expected to be recognized over the remaining vesting period of approximately
      1.75 years. That expectation does not take into account the potential effects
      of
      equity awards that may be granted in subsequent periods.




There
      were 2,000,000 equity awards outstanding at March 31, 2006 with a remaining
      life
      of 9.75 years, an exercise price of $.75 and an intrinsic value of $.25. There
      were no fully vested equity awards outstanding at March 31, 2006, And no options
      were granted or exercised during the three months ended March 31, 2006. Since
      the Company did not record any net earnings during the three months ended March
      31, 2006, the effect of the options on net earnings (loss) per share would
      have
      been antidilutive, and are therefore not considered in the computation of
      earnings (loss) per share.




10





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





The
      following discussion and analysis provides information which our management
      believes is relevant to an assessment and understanding of our results of
      operations and financial condition. This discussion should be read in
      conjunction with the financial statements and notes thereto appearing elsewhere
      in this report.





**Our
      History**





Prior
      to
      September 30, 2004, we were called Alpha Holding, Inc. On that date, we amended
      our certificate of incorporation to change our name to Sea Sun Capital
      Corporation, and to increase our authorized capitalization to 100 million $.001
      par value common shares and 50 million $.001 par value preferred shares.





On
      December 16, 2004, we and Sea Sun Capital Corporation, or Sea Sun Alberta,
      a
      private corporation incorporated under the Business Corporations Act of Alberta,
      Canada, completed a reverse merger in the form of a stock purchase transaction.
      As a result of that transaction, Sea Sun Alberta became our wholly owned
      subsidiary, and the former shareholders of Sea Sun Alberta and related parties
      became the owners of approximately 90% of our issued and outstanding common
      stock.





**Our
      Original Business Model**





In
      2003,
      Sea Sun Alberta began pursuing a business model that was based upon the sale
      of
      investment opportunities in international maritime eco-tour locations, or
      locations, to various individuals and entities who we will collectively call
      the
      location investors. Pursuant to the agreements that each location investor
      entered into with Sea Sun Alberta, the location investor was:





·
            required
                to pay a sales price for the location which typically ranged from
                $100,000
                - $150,000, to fund the:





§
            production
                of the glass-bottom watercraft manufactured pursuant to Sea Sun’s
                proprietary designs and specifications to be employed at the locations;
                and





§
            set-up
                of, and the licensing and marketing for, the locations, and





·
            entitled
                to receive between 30% and 40% of the net revenues (gross revenues
                less
                selling commissions) generated from the ongoing operations from the
                specific location in which the location investor had invested.





Sea
      Sun
      Alberta also began to manufacture, through unaffiliated parties, the watercraft
      to be delivered to each location, obtained, where necessary, the permits and
      licensing required by certain jurisdictions, undertook to engage the services
      of
      qualified eco-tour operators at each location, and also began to perform the
      accounting and other administrative functions for each location.





11


We
      accounted for all revenues derived from the location agreements we entered
      into
      in 2005 in accordance with EITF Issue 88-18, *“Sales
      of Future Revenues,”* which
      requires all sums payable to us pursuant to those Agreements to be recognized
      not as revenue, but rather as debt to be amortized using the effective interest
      method. Since none of the locations commenced operations prior to March 31,
      2006, no amortization was recorded in that period, and the entire debt amount
      has been treated as long-term debt. During
      the three months ended March 31, 2006, we did not derive any revenues from
      the
      licensing of locations or from the rental of our watercraft. All of our
      activities during that quarter were focused on:





·
            negotiating
                location investment agreements with various
                investors,





·
            testing
                our initial production run of*Sea
                Spi*watercraft and formulating a retrofit package of electrical, steering
                and
                propulsion components to be installed in them,
                and





·
            marketing
                our Sea Sun eco-tour program to:





§
            potential
                eco-tour referral sources, such as hotel chains and cruise lines,
                and





§
            potential
                providers of our eco-tours, such as operators of scuba diving and
                other
                recreational water sports businesses located in the Caribbean and
                the
                South Pacific regions of the world.





**Our
      Present Business Model**





In
      June
      2006, we entered into a master license agreement with Sea Sun Enterprises,
      Inc.,
      or SSEI, a Barbados corporation that we do not own or control, and whose owners
      are not affiliated with us. Pursuant to that agreement:





·
            we
                granted to SSEI a worldwide license to develop and operate Sea Sun
                eco-tour business operations and to use our intellectual property
                in
                connection with those operations;





·
            SSEI
                became fully responsible for establishing and operating, either directly
                or through local water sports location operators trained and supervised
                by
                it, Sea Sun eco-tour operations at all of the locations that we had
                agreed
                to set up pursuant to the assigned location agreements and at all
                new
                locations to be established; and





·
            SSEI
                agreed to pay us boat rental fees and license fees with regard to
                the use
                of our watercraft and intellectual property in connection with the
                eco-tour operations to be conducted at the
                locations.





At
      the
      same time, we entered into a transfer and assignment agreement with SSEI
      pursuant to which:





·
            we
                assigned all of our rights and interests in





§
            the
                47 location agreements that we had entered into in 2005, plus 10
                additional location agreements that we entered into in 2006;
                and





§
            all
                accounts receivable due and owing to us pursuant to those agreements;
                and





·
            SSEI
                agreed to pay us, in consideration of such assignment, $3,886,910
                in
                various installments over a period of three
                years.




12




Inasmuch
      as SSEI is now responsible for the operation of the locations, including set-up,
      marketing, tour operations and revenue collection activities, and is obligated
      to pay all expenses associated with those operations, our revenues in 2006
      and
      subsequent years will no longer be accounted for pursuant to EITF Issue
      88-18.





**Revenues**





We
      did
      not enter into any agreements for the sale of locations with any location
      investors during the three months ended March 31, 2005. During the three months
      ended March 31, 2006, We entered into eight Location Agreements pertaining
      to
      nine Locations, for which we became entitled to receive a total of $1,280,000,
      of which $637,500 was paid to us. Also during that period, we received
      additional payments on existing Location Agreements totaling $246,000. As of
      March 31, 2006, the aggregate sales price of all Location Agreements (total
      long-term debt) was $8,783,400, and the related Location sales receivable was
      $4,068,310. One location agreement with a sales price of $240,000 was cancelled
      during the period ended March 31, 2006 and the initial payment of $72,000 was
      returned to the investor.





**Operating
      Expenses**





During
      the three months ended March 31, 2006, our operating expenses were approximately
      $1,444,000,000 as compared to approximately $153,000 during the comparable
      period of 2005. The almost eleven-fold increase was primarily due
      to:





·
            an
                increase of approximately $834,000 (from $0.00 in the first quarter
                of
                2005) in location sales costs,





·
            an
                increase of approximately $225,000 (from approximately $96,000 in
                the
                first quarter of 2005) in wages and contractor
                fees,





·
            an
                increase of approximately $121,000 (from approximately $11,000 during
                the
                quarter ended march 31, 2005) in depreciation;





·
            an
                increase of approximately $95,000 (from approximately $2,000 in the
                first
                quarter of 2005) in office expenses,
                and





·
            an
                increase of approximately $32,000 (from approximately $16,000 in
                the first
                quarter of 2005) in professional
                fees.




13




**Loss
      from Operations**





Our
      loss
      from operations during the three months ended March 31, 2006 was approximately
      $1,444,000 compared to a loss of approximately $153,000 during the comparable
      period of 2005. That eleven fold increase in our operating loss was due
      primarily to the increased investor location sales activities and the
      professional fees we incurred in pursuing those activities.





**Currency
      Exchange Rate Effects**





We
      did
      not incur any currency exchange rate gains or losses during the three months
      ended March 31, 2006 and 2005. However, Sea Sun Alberta’s functional currency is
      the Canadian dollar, while our functional currency is the United States dollar.
      Sea Sun Alberta’s financial statements were translated to US dollars prior to
      consolidation using quarter-end exchange rates for the balance sheet, and
      weighted average exchange rates for the statements of operations. Equity
      transactions were translated using historical rates. This resulted in a negative
      foreign currency translation adjustment of approximately $6,000 at March 31,
      2006 and a negative adjustment of approximately $500 at March 31,
      2005.





**Income
      Taxes**





Our
      effective tax rate for the three months ended March 31, 2006 was 0% based on
      our
      pre-tax loss for the period. As of December 31, 2005, we had net operating
      loss
      carryforwards of approximately $3,044,000, which begin to expire in 2017, for
      income tax reporting purposes for which no income tax benefit has been recorded
      due to the uncertainty over the level of future taxable income.





**Net
      Loss Per Share**





Our
      basic
      and diluted net loss per share for the quarter ended March 31, 2006 was $0.07
      compared to a basic and diluted net loss of $0.01 per share for the three months
      ended March 31, 2005. ****





**Liquidity
      and Capital Resources**





At
      March
      31, 2006, we held approximately $457,000 in cash and cash equivalents, and
      we
      had $832,000 in current accounts receivable. The decrease in cash and cash
      equivalents of approximately $862,000 resulted primarily from the manufacturing
      of boats and the expenses associated with the set-up of locations in the
      Caribbean, Australia and Europe.





Our
      working capital at March 31, 2006 was approximately $1,238,000 as compared
      to
      approximately $2,877,000 at year-end December 31, 2005. This decrease primarily
      was a result of the purchase of fixed assets (boats) and payment of operating
      expenses.





Our
      net
      cash used in operating activities for the three months ended March 31, 2006
      was
      approximately $1,358,000. That usage funded the operating loss we incurred
      during that period.





Cash
      used
      in investing activities during the first quarter of 2006 was approximately
      $311,000, all of which was attributable to capital expenditures for new
      watercraft.





14


Cash
      provided by financing activities of approximately $812,000 for the three months
      ended March 31, 2006 resulted entirely from our Location sales.





We
      do not
      have any revolving credit or other sources of debt financing. Furthermore,
      we do
      not intend to enter into any new location sales agreements. We believe that
      current levels of cash and cash equivalents, together with cash from operations,
      will be sufficient to meet our capital requirements for the next 12
      months.





**Forward-Looking
      Statements**





Some
      of
      the statements made in this Form 10-QSB are forward-looking in nature, including
      but not limited to our business strategy, marketing assumptions, product
      development, plans concerning the commercialization of products, certain
      financial information and other statements that are not historical facts. The
      occurrence of the events described, and the achievement of the intended results
      are subject to the future occurrence of certain events and scientific results,
      some or all of which are not predictable or within our control. Therefore,
      actual results may differ materially from those anticipated in any
      forward-looking statements.





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





The
      Company’s management evaluated, with the participation of the Chief Executive
      Officer and Chief Financial Officer, the effectiveness of the Company’s
      disclosure controls and procedures as of the end of the period covered by this
      report. Based on that evaluation, the Chief Executive Officer and Chief
      Financial Officer have concluded that the Company’s disclosure controls and
      procedures were effective as of the end of the period covered by this
      report.  There has been no change in the Company’s internal control over
      financial reporting that occurred during the quarter covered by this report
      that
      has materially affected, or is reasonably likely to materially affect, the
      Company’s internal control over financial reporting.





**PART
      II - OTHER INFORMATION**





**Item
      6**  **Exhibits**





Exhibits





31.1
            Certification
                Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
            Certification
                Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
            Certification
                Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002




15





**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report on Form 10-QSB for the Quarter ended March 31, 2006
      to
      be signed on its behalf by the undersigned thereunto duly authorized.




November
      29, 2006


SEA
              SUN CAPITAL
              CORPORATIONBy:
            /s/ Graham
              MillingtonGraham Millington, Chief Executive
              Officer


By:
            /s/ Gregory
              N.
              HellerGregory N. Heller, Chief Financial
              Officer




16