**UNITED
      STATES**


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


**Washington,
      D.C. 20549**





**FORM
      10-KSB**





x
            **ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**
              **FOR
                THE FISCAL YEAR ENDED DECEMBER 31,
                2007**





o
            **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 in its charter)**





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





**8th
      Floor, LG Palace Building, 165-8 Donggyo-Dong, Mapo-Gu, Seoul,
      Korea**


**(Address
      of principal executive offices)**





**Issuer’s
      telephone number: 82-2-338-6283**





**Securities
      registered pursuant to Section 12(b) of the Act: None**





**Securities
      registered under Section 12(g) of the Exchange Act:**





**Common
      Stock, par value $0.0001 per share**


(Title
      of
      Class)




Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act.  ̈




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  ̈




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB.  ̈




The
      issuer’s revenues for the most recent fiscal year were $538,988.




As
      of
      March 31, 2008, the aggregate market value of voting and non-voting common
      stock
      held by non-affiliates of the issuer, based upon the closing sales price of
      $0.17 per share of common stock on March 31, 2008, was approximately
      $7,963,893.




The
      number of outstanding shares of the issuer’s common stock as of March 31, 2008
      was 46,846,434




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





*This
      Annual Report on Form 10-KSB contains forward-looking statements relating to
      future events or our future financial performance, including but not limited
      to
      statements contained in “Description of Business” and “Management’s Discussion
      and Analysis or Plan of Operation-Factors Which May Affect Future Operating
      Results.” Readers are cautioned that such statements, which may be identified by
      words including “anticipates,” “believes,” “intends,” “estimates,” “expects,”
and similar expressions, are only predictions or estimations and are subject
      to
      known and unknown risks and uncertainties. In evaluating such statements,
      readers should consider the various factors identified in this Annual Report
      on
      Form 10-KSB, including, but not limited to, matters set forth in “Management’s
      Discussion and Analysis or Plan of Operation-Risk Factors,” which could cause
      actual events, performance or results to differ materially from those indicated
      by such statements.*




**PART
      I**




**Item
      1. Description of Business****.**




**Overview**




We
      are a
      global biotechnology company that develops, manufactures and markets
      nutraceuticals, or 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.




Our
      primary products are a series of cholesterol-lowering food additives, consisting
      of specially formulated plant sterols that are soluble in both oil and water.
      The key technology to produce such plant sterols is a patented nanotechnology
      which allows plant sterols to be added to a wide range of oil and water-based
      foods. Our nano-sized plant sterols used as food additives are branded as
      "CZ-series" additives and our food and consumable products containing CZ-series
      additives are being marketed under the brand name of CholZero. Our initial
      CholZero-branded products include CholZero capsules containing our CZ-S Series
      additive and a CholZero beverage.




We
      also
      generate revenue from the sale of supplemental products, including raw cooking
      oil (oils used in the manufacturing of cooking oil). We have an approximately
      73% ownership interest in UcoleBio Corp., a company originally formed to provide
      sales and distribution services for our products in Korea.




**Corporate
      History and Exchange Transaction**




We
      were
      incorporated on August 26, 1998 under the name 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, and changed our name to Ezcomm, Inc. to reflect this change
      in
      business. We were unable to raise enough capital to finance the research and
      development of our proposed consumer incentive and loyalty program in Asia
      and
      all efforts to develop the business were abandoned in January 2001. We remained
      inactive until July 2004, when we changed our name to Ezcomm Enterprises, Inc.,
      or Ezcomm Enterprises, and began to consider and investigate potential business
      opportunities, including an acquisition by merger.




On
      September 30, 2005, pursuant to an Exchange Agreement dated September 1, 2005
      by
      and among us, Eugene Science and certain stockholders of Eugene Science, we
      acquired approximately 89.5% of the issued and outstanding shares of Eugene
      Science in exchange for the issuance of an aggregate of 272,790,948 shares
      of
      our common stock to the former Eugene Science stockholders. In addition, and
      pursuant to the Exchange Agreement, we exchanged an equal amount of cash with
      the Eugene Science stockholders (an aggregate of $103,514.48) and we assumed
      all
      of Eugene Science's outstanding options. As a result of the Exchange
      Transaction, Eugene Science became our wholly-owned subsidiary, and the former
      Eugene Science stockholders held approximately 89% of our voting stock on a
      fully-diluted basis immediately following completion of the exchange
      transaction. Prior to the exchange transaction, we were a "shell company" as
      defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.
      In
      conjunction with the exchange transaction we also issued a warrant to purchase
      7,073,760 shares of our common stock to WestPark Capital, Inc., at $0.17 per
      share as partial compensation for their financial advisory services with respect
      to the exchange transaction.




The
      exchange transaction was accounted for as a reverse merger (recapitalization)
      with Eugene Science deemed to be the accounting acquirer, and us deemed to
      be
      the legal acquirer. Accordingly, the historical financial information presented
      in the consolidated financial statements included in this report are that of
      Eugene Science as adjusted to give effect to any difference in the par value
      of
      ours and Eugene Science's 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, have been carried over in the
      recapitalization.




On
      January 13, 2006, we changed our name from Ezcomm Enterprises to Eugene
      Science.




**Industry**




The
      nutraceutical industry includes many small and medium-sized companies that
      manufacture and distribute products intended to aid in the maintenance of the
      body's health and general well being. Nutraceutical products include the
      following categories of products manufactured and sold by us:





*Dietary
      Supplements* .
      Products such as vitamins and minerals, specialty supplements, herbs and
      botanicals, sports performance enhancers, meal replacements, dietary
      supplements, and compounds derived from these substances




*Functional
      Foods* .
      Products with added ingredients or fortifications specifically designed for
      health or performance purposes.




**Products**




*Plant
      Sterol and Cholesterol-Reduction Products*




It
      has
      been well established that blood cholesterol, particularly low-density
      lipoprotein, or LDL, cholesterol, should be controlled in the body in order
      to
      minimize the risk of coronary heart disease. Excess LDL cholesterol can be
      oxidized to ultimately form plaque that can build up on artery walls, thereby
      restricting blood flow and elevating blood pressure. People with high blood
      cholesterol levels are typically advised by health professionals to exercise
      and
      consume a diet high in fiber and low in saturated fats and cholesterol. Although
      these measures can reduce blood cholesterol, other cholesterol-lowering
      interventions may be needed, including cholesterol-lowering medicines or adding
      plant sterol to the diet.




Plant
      sterols are natural substances that are present as minor components in seeds,
      legumes and vegetable oils. Plant sterols are essential components of plant
      cell
      membranes and structurally resemble cholesterol. Plant sterols have been
      approved by the United States Food and Drug Administration, or FDA, for their
      cholesterol-lowering health function in humans, and are recommended by the
      United States National Institutes of Health to treat cholesterol problems.
      Although people consume plant sterols every day in food, the amounts are often
      not great enough to have significant blood cholesterol-lowering effects. Plant
      sterols are naturally insoluble in oil and water, making it difficult to
      incorporate plant sterols in foods as an additive. However, several companies
      have developed plant sterol products that are oil-soluble by esterifying plant
      sterols and adding them to dietary fat (in oils and spreads). While this allows
      plant sterols to be incorporated in oil-based foods, this delivery strategy
      requires the consumption of large amounts of fats (23-50 grams of dietary
      triacylglyceride per day). We have developed and patented a series of
      cholesterol-lowering food additives, consisting of specially formulated plant
      sterols that are soluble in both oil and water. The key technology to produce
      such plant sterols is a patented nanotechnology which allows plant sterols
      to be
      added to a wide range of oil and water-based foods. Our nano-sized plant sterols
      used as food additives are branded as "CZ-series" additives and our food and
      consumable products containing CZ-series additives are being marketed under
      the
      brand name of “CholZero.” Our initial CholZero-branded products include CholZero
      capsules containing our CZ-S Series additive and a CholZero
      beverage.




We
      produce the following specific plant sterol food ingredients:




·
            CZ-L,
                an oil soluble plant sterol and fatty
                acid;




·
            CZ-S,
                a water dispersible natural plant sterol;
                and




·
            CZ-H,
                a water-soluble, next generation CZ-series
                additive.




The
      plant
      sterol in the CZ-series additives reduces the absorption of both dietary and
      biliary cholesterol into the body. Normally, approximately 30% of all
      cholesterol is supplied through food. When food is consumed along with the
      CZ-series additives, the absorption level of cholesterol is greatly reduced,
      the
      plant sterol is not absorbed and the plant sterol is excreted from the
      body.




*Liphophilic
      Quality - CZ-L*




CZ-L
      is a
      plant sterol in ester form which is soluble in oil and fat. CZ-L may be added
      to
      foods with a significant fat content and does not influence the taste or flavor
      of such foods.




*Water
      Dispersible Plant Sterol - CZ-S*




CZ-S
      is a
      water dispersible plant sterol. Prior to the development of our CZ-S products,
      only fat soluble plant sterol food additives were available to consumers.
      Because such products were only fat soluble, their application was limited
      to
      foods that are inherently high in fat content. CZ-S can be used to integrate
      plant sterol into beverages, dairy products, and other water-based foods. CZ-S
      comes in the form of a water dispersible powder that makes very fine micelles
      (less than 1 micro meter) in an aqueous solution. Like CZ-L, CZ-S does not
      influence the taste and flavor of the food or beverage to which it is added.
      In
      November 2000, we produced our first CholZero-branded beverage product with
      CZ-S.





*Next
      Generation - CZ-H*




CZ-H
      is
      also a plant sterol in ester form which is water soluble and transparent in
      water. Like the other CZ-series ingredients, CZ-H has a cholesterol-lowering
      effect upon ingestion by blocking the absorption of cholesterol in the
      intestines and can be added to water-based products.




*Supplemental
      Products*




In
      addition to our CZ-series and CholZero-branded products, we currently distribute
      DG Oil, a functional cooking oil with a body fat lowering effect manufactured
      by
      OnBio Corporation, animal feed, pet shampoo and deodorant in Korea. From January
      2004 through March 2005, the majority of our revenues were from the sale of
      raw
      cooking oil to OnBio Corporation. We obtained our raw cooking oil on favorable
      terms pursuant to a contract with a Korean supplier. In March 2005, we
      determined that it was in our best interests to cease our distribution of raw
      cooking oil and we assigned the supply contract to OnBio Corporation. Our chief
      executive officer and significant stockholder, Seung Kwon Noh, is also the
      chief
      executive officer and a significant stockholder of OnBio Corporation. The
      distribution of the raw cooking oil and supplemental products provided necessary
      cash flow during our development stage, and the sale of our supplemental
      products continues to support the costs of the research, development and
      marketing of our CZ-series ingredients and nutraceuticals and our
      CholZero-branded products.




**Research
      and Development**




We
      invested approximately $291,803 and $52,543 in research and development of
      new
      products during our fiscal years ending December 31, 2006 and 2007,
      respectively. In addition to refining the manufacturing processes for our
      CZ-series products, we continue to perform research and development on other
      dietary supplements and nutraceuticals. For example, we have developed a
      microbial conversion technology for steroid hormone intermediates called AD/ADD.
      The production of chemicals utilizing microbial conversion technology is
      cost-effective since it produces less inactive isomers than the chemical
      synthesis and, therefore, requires less purification costs, and is friendly
      to
      the environment. AD/ADD is used as a raw material in steroid hormones such
      as
      Androgen, Estrogen, gluco-corticoids and mineral-corticoids. We have completed
      the development of the microbial strain used to establish the AD/ADD
      manufacturing process which secures an economically efficient level of
      production. In December 2007, we entered into a contract with the Korea Research
      Institute of Bioscience & Biotechnology, or KRIBB, for the joint testing of
      the AD/ADD which was developed by us. We expect to complete these joint tests
      during the first half of the 2008 fiscal year.




**Intellectual
      Property Protection**




We
      regard
      our technology as proprietary and attempt to protect it by relying on patent,
      trademark, service mark, copyright and trade secret laws and restrictions on
      disclosure and transferring title and other methods. We currently have 31
      registered patents or patents pending in the United States, Japan, Europe,
      China, Korea, Taiwan, Australia and Brazil, and we anticipate that patents
      will
      become a significant part of our intellectual property in the foreseeable
      future. We currently have patents or have applied for patents for the following
      CZ-series additives and manufacturing processes in the following
      countries:




·
            CZ-L.
                Korea.




·
            CZ-S.
                Korea, Japan, and an International Patent (application only) covering
                the
                United States, Europe, China, Australia, Brazil, India and
                Singapore.




·
            CZ-H.
                Korea (application only).




We
      generally enter into confidentiality or license agreements with our employees
      and consultants, and control access to and the distribution of our documentation
      and other proprietary information. Despite these precautions, it may be possible
      for a third party to copy or otherwise obtain and use our proprietary
      information without authorization or to develop similar technology
      independently. We intend to pursue the registration of our trademarks, CZ and
      CholZero in the United States and internationally.




**Government
      Regulation**




Our
      CZ-series additives and CholZero-branded products contain additives that are
      generally regulated by governmental agencies of the countries in which they
      are
      sold. To date, we have only distributed our products in Korea and Japan. We
      began distributing our CZ-S additive and CholZero-branded products containing
      our CZ-S additive in the United States immediately upon the approval of our
      "Generally Recognized as Safe," or GRAS, application with the FDA, which we
      received in January 2006.




*Korea*




In
      May
      2005, plant sterols, the main ingredient of our CZ-series additives, were
      formally approved as a health function food ingredient by the South Korean
      Food
& Drug Administration, making it possible for us to advertise the
      cholesterol-lowering function of our CZ-series additives and food enriched
      with
      CZ-series additives. Because plant sterol is registered as a health functional
      food material, we do not have to apply for any additional approvals for our
      plant sterol products if they comply with requirements set forth in the
      Amendment of Health Functional Food Standards.





*Japan*




In
      Japan,
      the government allows Foods for Specified Health Use, of FOSHU, marks for
      products showing scientifically proven health functions. These marks are
      authorized for use pursuant to the requirements of the Nutrition Improvement
      Act
      of 1994 and the Food Sanitation Act of 1991. Under FOSHU law, any food
      containing plant sterols showing more than a 5% cholesterol-lowering efficacy
      through its clinical test may claim the health benefit of plant sterols in
      the
      food label. None of our current products are permitted to be sold with a FOSHU
      mark at this time. We have commenced the application process for the use of
      a
      FOSHU mark for our CZ-series additives, and we expect to complete the
      application process and to receive permission to use a FOSHU mark for our
      CZ-Series additives during the first half of our 2008 fiscal year.




*United
      States*




FDA
      regulations require that certain informational labeling be presented in a
      prescribed manner on all foods, drugs, dietary supplements and cosmetics.
      Specifically, the United States Federal Food, Drug, and Cosmetic Act, or FDCA,
      requires that foods, including dietary supplements, drugs and cosmetics, not
      be
      misbranded. In 1994, the Dietary Supplement Health and Education Act, or the
      DSHEA, which amended the FDCA, created a new regulatory framework for the safety
      and labeling of dietary supplements. Under the DSHEA, a manufacturer or
      distributor must notify the FDA if it intends to market a dietary supplement
      in
      the United States that contains a "new dietary ingredient." The manufacturer
      and
      distributor must demonstrate to the FDA why the ingredient is reasonably
      expected to be safe for use in a dietary supplement, unless it has been
      recognized as a food substance and is present in the food supply. This type
      of
      demonstration is referred to as a GRAS application.




In
      addition, the FDA has issued regulations that allow dietary supplement
      manufacturers to make three types of claims: (i) nutrient-content claims, (ii)
      health claims, and (iii) structure-function claims based upon DSHEA and specific
      food labeling laws. Under these regulations, the FDA has specifically approved
      claims that link plant sterol/stanol esters and a reduced risk of heart disease.
      Our CZ-S additives have received GRAS approval from the FDA in cooperation
      with
      our United States distributor, Archer Daniels Midland Company, or ADM, which
      makes it possible for any products containing certain amounts of CZ-S to make
      certain health claims.




*European
      Market*




The
      European Parliament and the Council of the European Union have approved plant
      sterols as cholesterol-lowering ingredients under the regulation (EC) No. 258/97
      of the European Parliament and of the Council of 27 January 1997 concerning
      novel foods and novel food ingredients. This approval allows us to make claims
      that products containing our CZ-series additives aid in reducing cholesterol
      in
      those markets.




**Revenue**




During
      our fiscal year ending December 31, 2006, we generated revenue from the sale
      of
      our CholZero capsules to Nutra Nano Tech and other distributors, from the sale
      of our functional cooking oil products to Amway Korea, from the sale of our
      crude oil products to OnBio Corporation and from the sale of our functional
      health foods. Sales to four major customers, including Amway Korea, accounted
      for 52% of our total revenue during the fiscal year ended December 31, 2006.
      During our fiscal year ending December 31, 2007, we generated revenue from
      sales
      of CZ-S to ADM, sales of our CholZero capsule to a single customer, sales of
      our
      functional cooking oil products to Amway Korea and sales of CZ-SO to a single
      customer. Sales to four major customers, including Amway Korea, accounted for
      89.8% of our total revenue during the fiscal year ended December 31,
      2007.




**Manufacturing**




We
      manufacture our CZ-series additives, corn oil and animal feed at our facility
      in
      Bucheon, Korea. Our CholZero-branded products are manufactured by third parties.
      We have several suppliers for our raw materials. However, we cannot easily
      replace ADM as the supplier of our raw plant sterol. Pursuant to our strategic
      alliance agreement with ADM, we are obligated to use their plant sterols when
      manufacturing products for the North American and European markets.




**Market
      Demographic**




The
      primary consumers of our CholZero-branded products are health conscious
      individuals in their mid-30s and older. The same demographic is generally the
      target market for food and supplement manufacturers to whom we market our
      CZ-series additives. Currently, we only sell our CholZero-branded products
      and
      CZ-series additives in the United States, Korea and Japan.




**Marketing
      and Distribution**




To
      date,
      with respect to our nutraceutical and functional food products, we have focused
      on developing strong partnerships with large food and beverage manufacturers
      in
      Korea and Japan. We have also engaged distributors familiar with the domestic
      markets of Japan, Taiwan, North America and Europe.





In
      March
      2002, we entered into an exclusive distribution agreement with Hokuyo Koeki
      Co.
      to distribute our nutraceutical and functional food products in the Japanese
      market. Currently, seven products containing our CZ-series additives—fermented
      soy milk, instant rice, ice cream, cheese cake, Japanese Kyoja, Lamen instant
      noodles and tablets—are being manufactured in Japan.




In
      June
      2005, we entered into a strategic alliance agreement with ADM for the exclusive
      marketing of our CZ-series additives in North America and Europe. ADM has been
      assisting us in developing a market for our CZ-series additives worldwide.
      ADM
      is one of the largest producers of plant sterol, which is the raw material
      of
      our CZ-series additives, and the company has a strong interest in increasing
      the
      value of plant sterols. Because we are obligated to purchase ADM's plant sterols
      as a raw material in the production of our CZ-series additives for use in North
      America and Europe, ADM will also benefit from the development of a strong
      market for CZ-series additives. In 2005, we also entered into an exclusive
      distribution agreement with Nutra Nano Tech to distribute our CholZero capsules
      in the United States, primarily via television infomercials. We terminated
      the
      agreement with Nutra Nano Tech on November 13, 2006.




On
      September 27, 2006, we entered into a distribution agreement with Ceragem
      International for the sale and distribution of our CholZero capsules in North
      America. In November 2006, we entered into a commissioned production and
      resource supply agreement with RexGene Biotech for the manufacture and marketing
      of several of our CZ-series products. RexGene Biotech began marketing CZ-series
      products through multiple channels, including network marketing, drug store
      chains, online shopping malls and direct response home shopping television,
      in
      January 2007. Under the terms of the agreement, we retain overseas distribution
      rights, including rights in the United States, for CZ-series products
      manufactured by RexGene Biotech, providing us with additional products to
      distribute through our distribution partners in Asia and elsewhere.




As
      our
      presence grows in Japan, the United States, Europe and Korea, we expect to
      employ conventional methods of distribution to create awareness of our products,
      including the following:




·
            ***Free
                samples***.
                Our products will be available in the aisles of grocery stores and
                through
                third-party service providers for free sample
                testing.




·
            ***Co-marketing***.
                We intend to market our products through a combination of in-store
                and
                other forms of advertising, including in-store advertising on high
                traffic
                area and traditional industry print, trade shows and targeted direct
                mail.




·
            ***Viral
                Marketing***.
                We intend to select distribution partners based on the value of their
                existing brands. We expect to be able to take advantage of the value
                of
                established brands by associating our CZ-series products with such
                branded
                products in foreign markets and cooperating with our partners to
                establish
                public relations campaigns that create a sense of growing community
                and a
                grass-roots movement that promotes the use of functional
                foods.




**Competition**




Due
      to
      the recently achieved commercial success of products such as Benecol margarine,
      the use of plant sterols as food supplements to reduce cholesterol has become
      an
      attractive and competitive market. We expect competition to intensify in the
      future. A range of cholesterol-lowering foods and dietary supplements are
      currently on the market, primarily in the United States and Europe, but we
      are
      not aware of any products produced by our competitors that are water-soluble.
      However, the industry is characterized by intensive research and development
      activity. Our present competitors include the following companies:




·
            ***Functional
                Foods***.
                (i) Benecol (Raisio's joint venture with Johnson & Johnson); (ii) Take
                Control (Unilever); (iii) Aviva Heart Benefits (Novartis); (iv) Cheerios
                (General Mills); (v) Ensemble (Kellogg); (vi) Health Source (Ross
                Products
                Division of Abbott Laboratories); and (vii) Quaker Oats (Quaker Oat
                Company).




·
            ***Dietary
                Supplements***.
                (i) LO-CHOL (Applied Plant Pharmaceuticals, Inc.); (ii) Cholestin
                (Pharmanex); (iii) Kholestrol Blocker (Nutrition For Life International);
                (iv) EvolvE (Bionutrics); (v) Kwai (Lichtwer Pharma); and (vi) Metamucil
                (Procter & Gamble).




While
      other major companies have the financial and technical ability and greater
      resources than us to compete aggressively in the market for health products,
      we
      believe that, at present, we may have a competitive advantage over our
      competition because our plant sterol products have a wide variety of
      applications (including in water-based products) and our products are more
      efficient than many of our competitors' products at prohibiting cholesterol
      absorption due to the nano-size of plant sterol in our CZ-series
      additives.




**Employees**




As
      of
      December 31, 2006, we employed 8 people on a full-time basis. We believe that
      the success of our business will depend, in part, on our ability to attract
      and
      retain qualified personnel. Our employees are not subject to a collective
      bargaining agreement, and we believe we have good relations with our
      employees.





**Filing
      Status**




We
      file
      periodic reports, current reports, proxy and information statements and other
      information with the Securities and Exchange Commission, or the Commission.
      We
      intend to make available on our website free of charge our annual reports on
      Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K
      and
      amendments to those reports as soon as reasonably practicable after we
      electronically file such materials with or furnish them to the Commission.
      You
      may also read and copy any materials we file with the Commission at its Public
      Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain
      additional information about the operation of the Public Reference Room by
      calling the Commission at 1-800-SEC-0330. In addition, the Commission maintains
      an Internet website, www.sec.gov , that
      contains our periodic reports, current reports, proxy and information
      statements, and other information regarding us that we file electronically
      with
      the Commission.




**Item
      2. Description of Property.**




We
      own
      116,962 square feet of land and 63,142 square feet of building space in Bucheon,
      Korea. In January 2004, we entered into an agreement to sell the land and
      building in Bucheon, Korea. The transfer of title pursuant to the agreement
      will
      occur on January 31, 2009. We own 19,978 square feet of office space in Seoul,
      Korea, which we use for our executive offices. In addition, due to the Korean
      government’s support for promising bio-tech companies, we entered
      into a 20 year lease agreement with the Kyonggi-Do provincial government
      for approximately 22,000 square feet of office, research and development, and
      production space and six acres of land in the Jang-An Industrial Complex, Hwa
      Sung City, Kyonggi-Do, Korea, under an operating lease that expires September
      30, 2026. We will not be required to make any monthly rent payments to the
      Kyonggi-Do provincial government for this property. We believe that our current
      facilities will be adequate and suitable for our operations for the foreseeable
      future. We
      intend to keep the office space in Seoul for the time being. We will determine
      at a later date whether we would like to continue using the space as our
      corporate office or consolidate all operations in our new facility in
      Kyonggi-Do, at which time, we would either sell the space or rent it out for
      additional income.




**Item
      3. Legal Proceedings** **.**




None.




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




None.




**PART
      II**




**Item
      5. Market for Common Equity and Related Stockholder Matters and Small Business
      Issuer Purchases of Securities.**




Our
      symbol on the Over-the-Counter Bulletin Board, or OTCBB, is “EUSI,” or,
      depending on the service that quotes stocks trading on the OTCBB, “EUSI.OB.” The
      following table sets forth the high and low sale prices for our common stock
      as
      reported on the OTCBB. The quotations reflect inter-dealer prices, without
      retail mark-up, mark-down or commission and may not necessarily represent actual
      transactions.




**High**
            
            **Low**Year
                Ended December 31, 2006First
                Quarter
            
            $
            1.75
            
            $
            0.41Second
                Quarter
            
            
            1.55
            
            
            0.75Third
                Quarter
            
            
            1.19
            
            
            0.38Fourth
                Quarter
            
            
            1.00
            
            
            0.35Year
                Ended December 31, 2007First
                Quarter
            
            $
            0.50
            
            $
            0.30Second
                Quarter
            
            
            0.56
            
            
            0.15Third
                Quarter
            
            
            0.55
            
            
            0.25Fourth
                Quarter
            
            
            0.50
            
            
            0.20




On
      March
      31, 2008, the closing sale price of our common stock on the OTCBB was $0.17
      per
      share and there were 500 record holders of our common stock.




***Dividend
      Policy***




We
      have
      never paid any dividends on our common stock. We currently intend to retain
      all
      earnings, if any, for use in the expansion of our business and therefore do
      not
      anticipate paying any dividends in the foreseeable future.





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




*In
      addition to other information included in this report, the following factors,
      among others, could cause actual results to differ materially from those
      contained in forward-looking statements contained in this Annual Report on
      Form
      10-KSB, and thus should be considered carefully in evaluating our business
      and
      future prospects* .




**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-series of food additives, and our
      CholZero-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, 2007, 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 Fiscal Years Ended December 31, 2007 and 2006*




Our
      total
      revenue decreased 7.4%, or $49,253, to $620,076 for the fiscal year ended
      December 31, 2007 as compared to $669,329 for the fiscal year ended December
      31,
      2006. The decrease in total revenue for the fiscal year ended December 31,
      2007
      was primarily attributable to a decrease in sales of our cooking oil products,
      partially offset by an increase in sales of our CZ-S additives to ADM. During
      the fiscal year ended December 31, 2007, we shipped an aggregate amount of
      ten
      tons of our CZ-S additives to ADM, which markets CZ-S as CardioAidTM CZ. ADM
      distributes CZ-S in North America and Europe and holds exclusive marketing
      rights to CZ-S as a beverage additive in those regions. Subsequent to the
      closing of the fiscal year ended December 31, 2007, we received additional
      orders from ADM for two tons of CZ-S, which we expect to ship and recognize
      in
      the second quarter of the 2008 fiscal year. Approximately 46.8% of our revenue
      in 2007, was derived from the sale of our supplemental products, including
      the
      sale of our CholZero-branded products and CZ-series additives.




*Comparison
      of Fiscal Years Ended December 31, 2006 and 2005*




We
      experienced a 24% decrease in revenue for our fiscal year ended December 31,
      2006 as compared to our fiscal year ended December 31, 2005. Such decrease
      in
      revenue was primarily attributable to a decrease in sales of our cooking oil
      products, which was partially offset by an increase in sales of our
      CholZero-branded products. Revenue from our CholZero-branded products was
      $291,271 for our 2006 fiscal year, representing an increase of $107,129 from
      our
      2005 fiscal year. This increase is primarily a result of increased sales of
      our
      CholZero-branded products in the United States and Southeast Asia. Approximately
      81% of our revenue in 2006, or $541,914, was derived from the sale of our
      supplemental products, including the sale of our CholZero-branded
      products.





**Cost
      of Goods Sold**




*Comparison
      of Fiscal Years Ended December 31, 2007 and 2006*




Cost
      of
      goods sold decreased 9.8%, or $44,998, to $414,962 for the fiscal year ended
      December 31, 2007, as compared to $459,960 for the fiscal year ended December
      31, 2006. The decrease in cost of goods sold for the fiscal year ended December
      31, 2007 was primarily attributable to a decrease in sales of our functional
      cooking oil products to Amway Korea. Our gross margin for the fiscal year ended
      December 31, 2007 was approximately 33% of our revenue as compared to a gross
      margin of approximately 31% of our revenue for the fiscal year ended December
      31, 2006. The change in our gross margin for the fiscal year ended December
      31,
      2007 was primarily attributable to an increase in sales of CZ-S to
      ADM.




*Comparison
      of Fiscal Years Ended December 31, 2006 and 2005*




For
      our
      fiscal year ended December 31, 2006, our cost of goods sold consisted primarily
      of $28,732 of production costs for our CholZero capsule, which we paid to a
      third party manufacturer. Our gross margin for the fiscal year ended December
      31, 2006 was approximately 31% of our gross revenue, as compared to a gross
      margin of approximately 16.9% of our gross revenue for the fiscal year ended
      December 31, 2005. The change in our gross margin is due primarily to our
      purchase of raw materials for our cooking oil products and CholZero
      capsules.




**Operating
      Expenses**




*Comparison
      of Fiscal Years Ended December 31, 2007 and 2006*




Our
      operating expenses decreased 45.6%, or $1,276,420, to $1,524,341 for the fiscal
      year ended December 31, 2007, as compared to $2,800,761 for the fiscal year
      ended December 31, 2006. The decrease in operating expenses was primarily
      attributable to a decrease in professional fees and depreciation
      expenses.




*Comparison
      of Fiscal Years Ended December 31, 2006 and 2005*




We
      experienced a $329,178 increase in operating expenses in the fiscal year ended
      December 31, 2006 as compared to the fiscal year ended December 31, 2005 due
      primarily to an increase in professional fees and depreciation from our sale
      of
      certain real property.




**Other
      Income (Expense)**




*Comparison
      of Fiscal Years Ended December 31, 2007 and 2006*




Other
      expense primarily represents interest expenses and an impairment loss on
      investment securities. Other expense increased 294.3%, or $1,719,415, to
      $1,135,235 for the fiscal year ended December 31, 2007 as compared to other
      income of $584,180 for the fiscal year ended December 31, 2006. The increase
      in
      other expense for the fiscal year ended December 31, 2007 was primarily
      attributable to interest expenses and an impairment loss on investment
      securities without the offset from the gain on sale of real property that we
      recognized in the fiscal year ending December 31, 2006. All of our bank loans
      were in default as of December 31, 2007. The interest rate on such loans ranges
      from 15% to 18%.




*Comparison
      of Fiscal Years Ended December 31, 2006 and 2005*




The
      increase in interest expense for the fiscal year ended December 31, 2006 as
      compared to the fiscal year ended December 31, 2005 was 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 December 31, 2006. The interest rates
      on
      such loans range from 15% to 18%.




**Liquidity
      and Capital Resources**




As
      of
      December 31, 2007, we had cash and cash equivalents of approximately $32,342
      and
      negative working capital of approximately $14,639,965. As of December 31, 2006,
      we had cash and cash equivalents of approximately $9,031 and negative working
      capital of approximately $14,072,600. The increase in cash and cash equivalents
      at December 31, 2007 was primarily attributable to the proceeds from offerings
      of convertible promissory notes during the third quarter of our 2007 fiscal
      year. The increase in negative working capital at December 31, 2007 was
      primarily attributable to an increase in short-term debt resulting from our
      offerings of convertible promissory notes during the third quarter of our 2007
      fiscal year.




We
      currently satisfy our working capital requirements primarily through cash flows
      generated from operations, bank loans and sales of equity and debt securities.
      For the fiscal year ended December 31, 2007, we had a net increase in cash
      and
      cash equivalents of approximately $23,311, as compared to a net decrease in
      cash
      and cash equivalents of approximately $4,435 for the fiscal year ended December
      31, 2006.





As
      of
      December 31, 2006, we had cash and cash equivalents of approximately $9,031
      and
      negative working capital of approximately $13,819,618. As of December 31, 2005,
      we had cash and cash equivalents of approximately $13,466 and negative working
      capital of approximately $17,757,508. The decrease in cash and working capital
      during the fiscal year ended December 31, 2006 was due primarily 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, Korea.




**Cash
      Used In Operating Activities**




Cash
      used
      in operating activities decreased 42.6%, or $1,657,023, to $2,234,264 for the
      fiscal year ended December 31, 2007, as compared to $3,891,287 for the fiscal
      year ended December 31, 2006. The decrease is cash used in operating activities
      for the fiscal year ended December 31, 2007 was primarily attributable to
      decreases in accounts receivable and accrued interest payable and an increase
      in
      accounts payable.




Cash
      used
      in operating activities increased 1,067% to $3,891,287 for the fiscal year
      ended
      December 31, 2006, as compared to $333,423 for the fiscal year ended December
      31, 2005. This increase of $3,557,864 resulted primarily from a gain on the
      sale
      of our real property in Bucheon, Kyonggi-Do, Korea, partially offset by a
      provision for loss on uncollectible related party loans.




**Cash
      Used in Investing Activities**




Cash
      used
      in investing activities increased 81.0%, or $226,088, to $505,139 for the fiscal
      year ended December 31, 2007, as compared to $279,051 for the fiscal year ended
      December 31, 2006. The increase in cash used in investing activities for the
      fiscal year ended December 31, 2006 was primarily attributable to acquisitions
      of equipment and increases in construction costs for our new manufacturing
      facility.




Cash
      used
      in investing activities increased 1,151% to $279,051 for the fiscal year ended
      December 31, 2006, as compared to $22,302 for the fiscal year ended December
      31,
      2005. This increase of $256,749 resulted primarily from our investment in
      securities available for sale.




**Cash
      Provided By Financing Activities**




Cash
      provided by financing activities decreased 31.5%, or $1,313,780, to $2,852,123
      for the fiscal year ended December 31, 2007, as compared to $4,165,903 for
      the
      fiscal year ended December 31, 2006. The decrease in cash provided by financing
      activities was primarily attributable to our inability to raise additional
      funds
      from, among other things, the sale of our assets and debt and equity
      securities.




Cash
      provided by financing activities increased 1,118% to $4,165,903 for the fiscal
      year ended December 31, 2006, as compared to $342,025 for the fiscal year ended
      December 31, 2005. This increase of $3,823,878 resulted primarily from net
      proceeds on the sale of our real property in Bucheon, Kyonggi-Do, 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, or IBK. These loans bear interest at rates of 4.5%
      to
      18% per annum and are due and payable on demand. A portion of these loans was
      secured by our real property located in Bucheon, Korea. Loans in the aggregate
      principal amount of $1,301,919 were guaranteed by the Korea Technology Credit
      Guarantee Fund, or KOTEC, a fund operated by the Korean government. During
      the
      first half of the 2006 fiscal year, we used the proceeds from the sale of our
      real property in Bucheon, Korea to repay all of the outstanding principal and
      a
      portion of the accrued and unpaid interest owed under the loans from IBK. At
      December 31, 2007, the accrued and unpaid interest owed by us to IBK under
      these
      loans was approximately $2,112,520.




In
      December 2004, we obtained a short-term loan from the National Agricultural
      Cooperative Federation, or the NACF, in the principal amount of $1,946,105.
      This
      loan bears interest at a rate of 4.6% per annum and was due on December 22,
      2005. This loan is guaranteed by KOTEC. At December 31, 2007, the loan had
      not
      been repaid to NACF and the aggregate outstanding principal balance and accrued
      and unpaid interest on such loan was approximately $$1,365,934.




In
      September 2002, we obtained a short-term loan from ChoHeung Bank in the
      principal amount of $278,805. This loan has an interest rate of 9.5%, was due
      on
      August 1, 2004 and is personally guaranteed by Mr. Noh, our president, chief
      executive officer, chairman of the board and principal stockholder. At December
      31, 2007, the aggregate principal balance and accrued and unpaid interest on
      such loan was approximately $304,148. In each of July 2001 and December 2002,
      we
      entered into loan arrangements with Kookmin Bank. Each loan has a principal
      amount of $1,000,000, is unsecured and bears interest at the rate of 6.22%
      or
      11.22% per annum, respectively. Both loans were due and payable on November
      15,
      2004. At December 31, 2007, the aggregate principal balance and accrued and
      unpaid interest on such loans was approximately $1,337,620.




On
      July
      12, 2007, we entered into a debt restructuring agreement with KOTEC pursuant
      to
      which we paid approximately $82,000, or 75,000,000 Korean Won, in principal
      on
      debt of approximately $3,300,000 in exchange for which KOTEC agreed to
      extinguish $1,200,000 in debt. The remaining $2,110,000 will be paid, interest
      free, and following a three-year grace period, over a ten-year period beginning
      in 2010.





Additionally,
      we held advanced discussions and reached preliminary restructuring or workout
      agreements with creditors holding approximately $12,000,000 in debt which we
      intend to implement through the first half of 2008 in order to further
      strengthen our balance sheet.




**N** **otes**




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
      December 31, 2007, the outstanding balance of this note was
      $$2,250,000.




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. At December 31, 2007, the
      outstanding balance of this note was $52,353.




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. At December 31, 2007, the outstanding balance of this note was
      $19,982.




In
      July
      and August 2007, we issued $2,250,000 in secured convertible notes to several
      investors along with warrants to purchase 3,200,000 shares of our common stock
      at an exercise price of $0.25 per share. The notes bear interest at 10% per
      annum, and, at the option of the investors, were convertible into shares of
      our
      common stock during the first six months following the issue date of the notes
      at a conversion price of $0.65. None of the investors converted the notes into
      shares of our common stock during such six-month period.




**Government
      Loans**




On
      March
      2, 2003, we received a non-interest bearing, unsecured loan from the Korean
      government in the principal amount of $61,779. Pursuant to its terms, the loan
      was to be repaid in three annual installments of $20,593, beginning February
      26,
      2004. The loan matured in its entirety in February 2006. At December 31, 2007,
      we were $22,568 in arrears under this loan.




We
      received a $316,181 loan from the Korean government in connection with certain
      of our research and development projects over the period from 1999 to 2002.
      These research and development projects were not successful and, as a result,
      we
      are obligated to repay the principal amount of the loan to the Korean
      government. We repaid $21,034 of the amount due under this loan in our 2004
      fiscal year. At December 31, 2007, we were $45,134 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 Financial Statement Presentation* .
      Our
      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 has been
      recorded as a recapitalization, with our net assets brought forward at their
      historical basis. Since we were a shell company listed on a United States stock
      market, Eugene Science Korea acquired us in order to enter the United States
      market. As such, accounting for the reverse-takeover as a recapitalization
      was
      deemed appropriate. The consolidated financial statements include our accounts
      in the United States and the accounts of Eugene Science Korea and 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.




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




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





*Government
      Grants* .
      Government grants are recognized as income over the periods that are necessary
      to match them with the related costs.




*Currency
      Translation* .
      Our
      functional currency is the Korean Won. Adjustments occurring in translating
      the
      currency into United States dollars at the balance sheet date are recorded
      as a
      component of other comprehensive income (loss). Foreign currency transactions
      of
      our Korean operations have been translated to Korean Won at the rate prevailing
      at the time of the transaction. Realized foreign exchange gains and losses
      were
      taken into current period.




*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.




*Allowance
      for Doubtful Accounts* .
      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 $0 and $67,783 at December
      31,
      2007 and 2006, respectively.




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




Building
                and improvements
            
            
            20-40
                yearsMachinery
                and equipment
            
            
            10
                yearsVehicles
            
            
            5
                yearsOffice
                furniture and fixtures
            
            
            3-5
                years




*Intangible
      Assets* .
      Intangible assets such as cost of obtaining industrial rights and patents are
      stated at cost, net of amortization 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.
      The components of inventories at December 31, 2007 and 2006 were as
      follows:




**2007**
            
            **2006**Raw
                materials
            
            $
            15,156
            
            $
            14,725Finished
                goods
            
            
            24,796
            
            
            19,374Total
            
            $
            39,952
            
            $
            34,099




*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.




*Concentration
      of Credit Risk* .
      SFAS
      No. 105, “Disclosure of Information about Financial Instruments with Off-Balance
      Sheet Risk and Financial Instruments with Concentration of Credit Risk,”
requires disclosure of any significant off-balance sheet risk and credit risk
      concentration. We do not have significant off-balance sheet risk or credit
      concentration. We maintain cash, cash equivalents and short-term investments
      with major Korean financial institutions. We provide credit to our customers
      in
      the normal course of operations. We carry out, on a continuing basis, credit
      checks of our customers, and maintain allowance for credit losses contingent
      upon our management’s forecasts. For other receivables, we determine, on a
      continuing basis, the probable losses and set up a provision for losses based
      on
      the estimated realizable value. Concentration of credit risk arises when a
      group
      of clients having similar characteristics such that their ability to meet their
      obligations is expected to be affected similarly by changes in economic
      conditions.





*Income
      Taxes* .
      We
      account for income taxes pursuant to SFAS No. 109, “Accounting for Income
      Taxes.” Deferred tax assets and liabilities are recognized for the future tax
      consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective tax
      bases and operating loss and tax credit carry forwards. Deferred tax assets
      are
      reduced by a valuation allowance when, in the opinion of our management, it
      is
      more likely than not that some portion or all of the deferred tax assets will
      not be realized. Deferred tax assets and liabilities are adjusted for the
      effects of changes in tax laws and rates on the date of enactment.




*Comprehensive
      Income* .
      We
      record our other comprehensive income under SFAS No. 130, “Reporting of
      Comprehensive Income,” which establishes standards for reporting and
      presentation of comprehensive income and its components. Our other comprehensive
      income represents unrealized gain or loss on available-for-sale marketable
      securities and foreign currency translation adjustment.




*Earnings
      per Share* .
      SFAS
      No. 128, “Earnings per Share,” requires disclosure on the financial statements
      of basic and diluted earnings per share. Basic earning (loss) per share is
      computed by dividing the net earning (loss) by the weighted average number
      of
      shares of common stock outstanding during the year. Diluted earning (loss)
      per
      share is determined using the weighted average number of common shares
      outstanding during the year, adjusted for the dilutive effect of common stock
      equivalents, consisting of shares that might be issued upon exercise of common
      stock options and warrants.




*Commitments
      and Contingencies* .
      Liabilities for loss contingencies arising from claims, assessments, litigation,
      fines and other sources are recorded when it is probable that a liability has
      been incurred and the amount of the assessment can be reasonable
      estimated.




**Recent
      Accounting Pronouncements**




In
      June
      2006, the Financial Accounting Standard Board, or the FASB, issued
      Interpretation No. 48, Accounting for Uncertainty in Income Taxes, or FIN 48.
      FIN 48 clarifies the accounting for uncertainty in income taxes recognized
      in
      our financial statements in accordance with Statement of Financial Accounting
      Standards, or SFAS, No. 109. FIN 48 prescribes a recognition threshold and
      measurement attributes for the financial statement recognition and measurement
      of a tax position taken or expected to be taken in a tax return. The provisions
      of FIN 48 are effective for the fiscal years beginning after December 15, 2006.
      We do not expect that the adoption of FIN 48 will have a significant effect
      on
      our financial statements.




In
      September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements, or SAB No 108. SAB No. 108 provides
      interpretive guidance on how the effects of the carryover or reversal of prior
      year misstatements should be considered in quantifying a current year
      misstatement. Under SAB No. 108, we should quantify errors using both a balance
      sheet and income statement approach and evaluate whether either approach results
      in a misstatement that is material when all relevant quantitative and
      qualitative factors are considered. The adoption of SAB 108 did not have any
      impact on our financial statements.




In
      February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities," or SFAS No. 159, which permits
      entities to measure financial instruments and certain other items at fair value
      that are not currently required to be measured at fair value. An entity would
      report unrealized gains and losses on items for which the fair value option
      has
      been elected in earnings at each subsequent reporting date. The objective is
      to
      improve financial reporting by providing entities with the opportunity to
      mitigate volatility in reported earnings caused by measuring related assets
      and
      liabilities differently without having to apply complex hedge accounting
      provisions. The decision about whether to elect the fair value option is applied
      instrument by instrument, with a few exceptions. The decision is irrevocable
      and
      it is applied only to entire instruments and not to portions of instruments.
      SFAS No. 159 requires disclosures that facilitate comparisons (a) between
      entities that choose different measurement attributes for similar assets and
      liabilities and (b) between assets and liabilities in the financial statements
      of an entity that selects different measurement attributes for similar assets
      and liabilities. SFAS No. 159 is effective for financial statements issued
      for
      fiscal years beginning after November 15, 2007. Early adoption is permitted
      as
      of the beginning of a fiscal year provided the entity also elects to apply
      the
      provisions of SFAS No. 157 "Fair Value Measurements.” Upon implementation, an
      entity shall report the effect of the first remeasurement to fair value as
      a
      cumulative-effect adjustment to the opening balance of retained earnings. Since
      the provisions of SFAS No. 159 are applied prospectively, any potential impact
      will depend on the instruments selected for fair value measurement at the time
      of implementation. We are currently evaluating the impact, if any, that the
      adoption of SFAS No. 159 will have on our financial statements.




**Risk
      Factors**




*The
      following risks could affect our business, financial results and results of
      operations. These risk factors should be considered in connection with
      evaluating the forward-looking statements contained in this Annual Report on
      Form 10-KSB because these factors could cause the 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, 2007 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
      fiscal year ended December 31, 2007, sales to four major customers accounted
      for
      89.8% of our total revenue. We may fail to capture a share of the market for
      such products. Because we are dependent on a limited number of customers, any
      decrease or elimination of such customers’ purchases could materially harm our
      business.




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




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




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




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




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




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




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




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





***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.




***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.




***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 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 Korea, a substantial portion of our costs are and
      will continue to be denominated in the Korean Won. Adverse changes in the
      exchange rates of the Korean Won to the United States Dollar will affect our
      costs of goods sold and operating margins and could result in exchange
      losses.




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




Except
      with respect to the adoption of our Code of Conduct and Ethics and our
      compliance with certain requirements specifically applicable to our Annual
      Report on Form 10-KSB and our other periodic reports, our management has not
      completed all of the processes necessary to comply with certain 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
      control over financial reporting and include an assertion in our annual report
      as to the effectiveness of our internal control over financial reporting for
      the
      fiscal year ending December 31, 2007. Beginning with our annual report for
      the
      fiscal year ending December 31, 2008, unless otherwise amended by the
      Commission, our independent registered public 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 control over financial reporting. Because of our
      management's lack of resources, and our limited operations, we have not
      completed 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 our management is required to report on our internal
      controls, or by the end of fiscal year 2008 when we are required to provide
      our
      auditor's opinion thereon. Additionally, even in the event we attempt to comply
      with Section 404, in the course of evaluation and testing, management may
      identify deficiencies that will need to be addressed and remediated, which
      could
      potentially have a material adverse effect on our stock price and could result
      in significant additional expenditures.





**Risks
      Related to Our Industry**




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




The
      formulation, manufacturing, packaging, labeling, advertising, distribution,
      and
      sale of functional foods and food additives, such as those sold by us, are
      subject to regulation by a number of federal, state and local agencies,
      including the United States Food and Drug Administration, 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.





**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.




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
      December 31, 2007, our officers and directors and their affiliates owned
      approximately 29.48% 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
      7. Financial Statements** **.**




Our
      consolidated balance sheet as at December 31, 2007 and 2006, consolidated
      statements of operations, stockholders’ deficit and cash flows for the years
      ended December 31, 2007 and 2006, notes to our consolidated financial statements
      and the report of our independent registered public accounting firm are
      referenced below.




**Item
      8. Changes In and Disagreements With Accountants on Accounting and Financial
      Disclosure.**




None .




**Item
      8A. Controls and Procedures.**




**Internal
      Control Over Financial Reporting**





We
      are a
      non-accelerated filer and are required to comply with the internal control
      reporting requirements mandated by Section 404 of the Sarbanes-Oxley Act of
      2002
      beginning with this Annual Report of Form 10-KSB for the fiscal year ending
      December 31, 2007. Although we are in the process of implementing internal
      control systems and procedures which comply with these requirements, due to
      our
      lack of resources and personnel and our limited operations we have not completed
      the process of preparing the systems and procedures necessary for such
      compliance and, therefore, our management has not begun testing and cannot
      issue
      a report on the effectiveness of our internal control over financial reporting.
      We have retained an outside consultant to assist us in the process of
      implementing these internal control systems and procedures, and we expect to
      be
      compliant with Section 404 of the Sarbanes-Oxley Act of 2002 and the internal
      control reporting requirements set forth therein beginning with our Quarterly
      Report on Form 10-Q for the quarter ending June 30, 2008.




This
      Annual Report on Form 10-KSB does not include an attestation report from our
      independent registered public accounting firm regarding our internal control
      over financial reporting and our independent registered public accounting firm
      has not attested to management’s report on our internal control over financial
      reporting.




**Disclosure
      Controls and Procedures**




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




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




**Changes
      In Internal Control Over Financial Reporting**




There
      were no changes in our internal control over financial reporting (as defined
      in
      Rules 13(a)-15(f) and 15(d)-15(f) under the Exchange Act) during the fourth
      fiscal quarter ended December 31, 2007, that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.




**Item
      8B. Other Information.**




None




**Item
      9. Directors, Executive Officers, Promoters and Control Persons; Compliance
      With
      Section 16(a) of the Exchange Act****.**




**Directors**




The
      following table and biographical summaries set forth, with respect to each
      director, his or her age, position or positions in the Company, the year in
      which he first became a director of the Company, and his principal occupations
      or employment during at least the past five years.








Name
            
            Age
            
            PositionSeung
                Kwon Noh
            
            47
            
            President,
                Chief Executive Officer and Chairman of the BoardTae
                Hwan Lee
            
            45
            
            Senior
                Vice President, Sales and Marketing, and DirectorSe
                Cheon Ahn
            
            47
            
            Senior
                Vice President, Plant and Manufacturing, and DirectorTony
                Kim
            
            35
            
            Director




*Seung
      Kwon Noh* is our
      founder and has served as our president, chief executive officer and chairman
      of
      our board of directors since our inception in July 1997. Mr. Noh is also the
      president and chief executive officer of On-Bio Corporation, a company that
      manufactures functional cooking oil. Mr. Noh also serves a director of the
      Korea
      Bio-venture Association. Mr. Noh received a bachelor of arts degree in
      microbiology from Seoul National University, a master of science degree in
      biological engineering from the Korea Advanced Institute of Science and
      Technology and a master of science degree in bio-technology from Durham
      University in the United Kingdom.




*Tae
      Hwan Lee* has
      served as our senior vice president, sales and marketing, and as a member of
      our
      board of directors since March 2004. Prior to joining us, Mr. Lee worked in
      sales and marketing for EucholBio, Inc. from April 2003 to March 2004. From
      January 2002 to December 2002, Mr. Lee worked in marketing for IGM, Inc. Prior
      to that, Mr. Lee provided marketing-related consulting services to JTB Planning,
      Inc. for the period from January 2000 through January 2002. Mr. Lee received
      a
      bachelor of arts degree in liberal arts from Korea University.




*Se
      Cheon Ahn* has
      served as our vice president, plant and manufacturing, and as a member of our
      board of directors since March 2004. Prior to being appointed vice president,
      Mr. Ahn served as our director of production from June 2001 through March 2004.
      Prior to joining us, Mr. Ahn served as the director of products for Sindongbang
      Company, Ltd. from January 2000 to March 2001. Mr. Ahn received a bachelor
      of
      arts degree in chemical engineering from Hanyang University.




*Tony
      Kim*joined
      our board of directors in April 2005. Since November 2004, Mr. Kim has been
      president and a member of the board of directors of Telos, LLC, an investment
      management company. Mr. Kim also serves on the board of directors of Red Queen
      Entertainment, a multi-media entertainment company. From February 1998 through
      April 2002, Mr. Kim was vice president of Saymee K, Inc., the parent company
      of
      several fashion brands including Drunknmunky Clothing, Hudson Jeans and Protrend
      Limited. Mr. Kim graduated from the University of California, Los Angeles with
      a
      bachelor of arts degree in sociology.




Until
      further determination by our board of directors, the full board of directors
      will undertake the duties of an audit committee, a compensation committee and
      a
      nominating and corporate governance committee.




**Executive
      Officers**




The
      following table and biographical summaries set forth, with respect to each
      of
      our executive officers, his age, position or positions with us, the period
      during which he has served as such and his principal occupations or employment
      during at least the past five years.




Name
            
            Age
            
            PositionSeung
                Kwon Noh
            
            47
            
            President,
                Chief Executive Officer and DirectorTae
                Hwan Lee
            
            45
            
            Senior
                Vice President, Sales and Marketing, and DirectorSe
                Cheon Ahn
            
            47
            
            Senior
                Vice President, Plant and Manufacturing, and DirectorByung
                Ho Hoang
            
            42
            
            Chief
                Financial Officer




Biographical
      summaries regarding Messrs. Noh, Lee and Ahn were presented above.




*Byung
      Ho Hoang* joined
      us in 2008 and serves as our chief financial officer. Prior to joining us,
      Mr.
      Hoang served on the staff of the accounting department for Daewoo Corporation
      from 1991 to 1999, as a manager of the accounting department for HP Man.com
      from
      2000 to 2002, and as manager of the accounting department for OnBio Corporation
      from 2002 to 2007. Mr. Hoang received a bachelor of arts degree in business
      administration from Korea University .




None
      of
      our executive officers is a party to any employment agreement with us. Each
      of
      Mr. Lee and Mr. Ahn is a party to employment agreements with Eugene Science
      Korea, our majority-owned subsidiary.




None
      of
      our executive officers and directors, nor any of their affiliates, beneficially
      owns any of our equity securities or rights to acquire any of our securities
      except as otherwise described herein, and no such persons have been involved
      in
      any transactions with us or any of our directors, executive officers or
      affiliates that is required to be disclosed pursuant to the Commission’s rules
      and regulations, other than with respect to the transactions that have been
      described in this report or in any prior reports filed by us with the
      Commission.





**Section
      16(a) Beneficial Ownership Reporting Compliance**




Section
      16(a) of the Exchange Act requires our directors and executive officers, and
      persons who own more than ten percent of a registered class of our equity
      securities, to file with the Commission initial reports of ownership and reports
      of changes in ownership of our common stock and other equity securities.
      Officers, directors and greater than ten percent shareholders are required
      by
      the rules and regulations of the Commission to furnish us with copies of all
      Section 16(a) forms they file. To our knowledge and based solely on a review
      of
      the copies of such reports furnished to us and written representations that
      no
      other reports were required, during the year ended December 31, 2007, all
      Section 16(a) filing requirements applicable to our officers, directors and
      greater than ten percent beneficial owners were complied with.




**Code
      of Ethics**




We
      adopted a Code of Conduct and Ethics that applies to our principal executive
      officer, principal financial officer and principal accounting officer. We intend
      to make a copy of the Code of Conduct and Ethics available on our website and
      a
      copy of the Code of Conduct and Ethics may be obtained by any person, without
      charge, upon written request delivered to Eugene Science, Inc., Attn: Corporate
      Secretary, Eugene Science, Inc., 8th Floor, LG Palace Building, 165-8
      Donggyo-Dong, Mapo-Gu, Seoul, Korea. We will disclose any amendment to, or
      waiver from, a provision of the Code of Conduct and Ethics by posting such
      information on our website when we have completed the process of making the
      Code
      of Conduct and Ethics available on our website.




**Item
      10.****Executive
      Compensation**




**Eugene
      Science**




The
      following table sets forth the salary and bonus earned for the fiscal years
      ended December 31, 2007 and December 31, 2006, by our chief executive officer.
      None of our other executive officers earned total annual salary and bonus in
      excess of $100,000 during the fiscal year ended December 31, 2007. Our chief
      executive officer shall be referred to herein as the “Named Executive
      Officer.”




**SUMMARY COMPENSATION TABLE**Name and
              principal
              position
            
            Year
            
            Salary ($)
            
            Bonus
              ($)
            
            Stock
              Awards
              ($)
            
            Option
              Awards
              ($)(1)
            
            Non-Equity
              Incentive Plan
              Compensation
              ($)
            
            Nonqualified
              Deferred
              CompensationEarnings ($)
            
            All Other
              Compensation
              ($)
            
            Total ($)Seung
                Kwon Noh
            
            
            2007
            
            $
            73,000
            
            
            —
            
            
            —
            
            $
            —
            
            
            —
            
            
            —
            
            
            —
            
            $
            73,000Chief
                Executive Officer and President
            
            
            2006
            
            
            145,000
            
            
            —
            
            
            —
            
            
            342,000
            
            
            —
            
            
            —
            
            
            —
            
            
            487,000





(1)
            Option
                awards reflect the dollar amount recognized for financial statement
                purposes for 2007, in accordance with SFAS 123(R), "Accounting for
                Stock
                Based Compensation," and SFAS 148, "Accounting for Stock Based
                Compensation—Transition and Disclosure." Assumptions used in the
                calculation of these amounts are included in note 13 to our audited
                financial statements for the fiscal year ended December 31, 2007
                included
                herein.




**Outstanding
      Equity Awards at Fiscal Year-End**




Our
      named
      Executive Officer did not hold any unexercised stock options, unvested shares
      of
      stock or equity incentive plan awards as of December 31, 2007.




**Director
      Compensation**




We
      currently do not pay any fees to our directors or any fees for each board
      meeting which is attended in person or telephonically. We do, however, reimburse
      directors for their reasonable travel expenses to attend meetings.




**Employment
      Agreements**




We
      have
      not entered into an employment agreement with our Named Executive
      Officer.




**Item
      11.****Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder
      Matters**




The
      following table sets forth certain information known to us regarding the
      beneficial ownership of our common stock as of March 31, 2008 by: (i) each
      stockholder known to us to be a beneficial owner of more than five percent
      (5%)
      of our common stock; (ii) each of our directors; (iii) our Named Executive
      Officer; and (iv) all of our current directors and executive officers as a
      group.








**Name and Address (1)**
            
            **Number of**
              **Shares**
              **Beneficially**
              **Owned (2)**
            
            **Percentage of**
              **Outstanding Shares**
              **(2)**Seung
                Kwon Noh(3)
            
            
            10,007,178
            
            
            21.36
            %Tony
                Kim(4)
            
            
            2,306,339
            
            
            4.92
            %Se
                Cheon Ahn
            
            
            —
            
            
            *Tae
                Hwan Lee
            
            
            —
            
            
            *H&Q
                Asia Pacific(5)
            
            
            2,767,339
            
            
            5.90
            %Telos,
                LLC(6)
            
            
            2,306,339
            
            
            4.92
            %All
                directors and executive officers as a group (4 persons)
            
            
            12,313,517
            
            
            26.28
            %





*
            less
                than one percent (1%).(1)
            Unless
                otherwise indicated, the business address of each holder is: c/o
                Eugene
                Science, Inc., 8th Floor, LG Palace Building, 165-8 Donggyo-Dong,
                Mapo-Gu,
                Seoul, Korea.(2)
            Beneficial
                ownership is determined in accordance with the rules of the Commission
                and
                includes voting and investment power with respect to shares. Unless
                otherwise indicated, the persons named in the table have sole voting
                and
                sole investment control with respect to all shares beneficially owned,
                subject to community property laws where applicable. The number and
                percentage of shares beneficially owned are based on 46,846,434 shares
                of
                common stock outstanding as of March 31, 2008. Shares of common stock
                subject to options and warrants currently exercisable, or exercisable
                within 60 days of March 31, 2008, are deemed beneficially owned and
                outstanding for purposes of computing the percentage of the person
                holding
                such securities, but are not considered outstanding for computing
                the
                percentage of any other person.(3)
            Includes
                (i) 728,346 shares beneficially owned by Mr. Noh's spouse, and (ii)
                628,635 shares held by OnBio Corporation, an entity of which Mr.
                Noh is an
                executive officer and has an ownership interest. Mr. Noh may be deemed
                to
                beneficially own the shares held by OnBio Corporation, but disclaims
                beneficial ownership in such shares except to the extent of his pecuniary
                interest therein.(4)
            Consists
                of 2,306,339 shares of common stock held by Telos, LLC, an entity
                of which
                Mr. Kim is a director and executive officer and has an ownership
                interest.
                Mr. Kim may be deemed to beneficially own the shares held by Telos,
                LLC,
                but disclaims beneficial ownership in such shares except to the extent
                of
                his pecuniary interest therein.(5)
            Includes
                1,383,803 shares held by APGF3 Korea Investment and 1,383,803 shares
                held
                by KGRF Korea Investment, both of which are affiliates of H&Q Asia
                Pacific.(6)
            Address
                is 6300 Wilshire Blvd., Suite 1730, Los Angeles, California 90048.
                Mr.
                Kim, one of our directors, is a director and executive officer and
                has an
                ownership interest in Telos, LLC.





**Equity
      Compensation Plan Information**




The
      following table sets forth information regarding outstanding options and rights
      and shares reserved for future issuance under our existing equity compensation
      plan as of December 31, 2007:




**Plan Category**
            
            **Number of**
              **Securities to be**
              **Issued upon**
              **Exercise of**
              **Outstanding**
              **Options**
            
            **Weighted Average**
              **Exercise Price of**
              **Outstanding**
              **Options**
            
            **Number of**
              **Securities**
              **Remaining**
              **Available for**
              **Future**
              **Issuance**Equity
                compensation plan approved by security holders:2006
                Stock Incentive Plan
            
            
            —
            
            $
            —
            
            
            400,000Equity
                compensation plans not approved by security holders: None
            
            
            —
            
            
            —
            
            
            —




**Item
      12.****Certain
      Relationships and Related Transactions, and Director
      Independence**




***Transactions
      with Affiliated Companies***




**OnBio
      Corporation**




In
      March
      2005, we assigned our raw cooking oil supply contract to OnBio Corporation.
      Mr.
      Noh, our president, chief executive officer, chairman of the board and principal
      stockholder, is also the chief executive officer and a significant stockholder
      of OnBio Corporation.




OnBio
      Corporation is one of our suppliers for DG oil and was our largest customer
      in
      2006. At December 31, 2006, we had an account receivable from OnBio Corporation
      in the amount of $2,052,390 resulting primarily from the purchase of our raw
      cooking oil. The total amount of
      the
      account receivable from OnBio Corporation was written off at the end of our
      2006
      fiscal year.





We
      provided a $418,600 term deposit at December 31, 2003 as security for a loan
      incurred by OnBio Corporation. During our 2004 fiscal year, the term deposit
      ceased and we loaned the proceeds to Onbio Corporation for repayment of the
      outstanding bank loan. At December 31, 2006, OnBio Corporation had repaid the
      entire outstanding amount due to us under this loan arrangement.




**Nutra
      Nano Tech**




Tony
      Kim,
      a member of our board of directors, is the chief executive officer of Nutra
      Nano
      Tech. We entered into a license agreement with Nutra Nano Tech which gave it
      an
      exclusive right and license to distribute, market, advertise, sell and otherwise
      exploit our CholZero-branded products, including, but not limited to, our
      CholZero capsules, CholZero green tea and CholZero seaweed. Our CholZero-branded
      products contain our patented CZ-series ingredient. As a result of this license
      agreement, every CholZero-branded product distributed in North America would
      only be distributed through Nutra Nano Tech. Nutra Nano Tech launched an
      infomercial marketing campaign for our CholZero capsules in May 2006. On
      November 3, 2006, we terminated this agreement with Nutro Nano Tech and, as
      a
      result, Nutra Nano Tech no longer retains exclusive North American distribution
      rights to our CholZero-branded products.




**Boo
      Won Sil Up**




During
      our 2007 and 2006 fiscal years, we purchased goods from Boo Won Sil Up, an
      entity controlled by the father of Mr. Noh, our president, chief executive
      officer, chairman of the board and principal stockholder. As of December 31,
      2007, we had an account payable of $49,565 due to Boo Won Sil Up.




***Transactions
      with Officers and Directors***




At
      various times during our 2007 fiscal year, we received advances from Mr. Noh,
      our president, chief executive officer, chairman of the board and principal
      stockholder, in the aggregate amount of $132,137. The advances accrue interest
      at a rate of 9% per annum and are due and payable on demand. At December 31,
      2007, we had received $6,407 in advances from Mr. Noh.




***Director
      Independence***




None
      of
      our directors is considered "independent" under any definition of independence
      set forth by a national securities exchange or an inter-dealer quotation system
      which has requirements that a majority of the board of directors be
      independent.




**Item
      13. Exhibits.**




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




**Exhibit****Number**
            
            **Description**2.1
            
            Exchange
                Agreement by and among Ezcomm Enterprises, Inc., Eugene Science (Korea)
                and certain stockholders of Eugene Science (Korea), dated September
                1,
                2005 (incorporated by reference to Exhibit 10.1 to our Current Report
                on
                Form 8-K filed with the Commission on September 7,
                2005).2.2
            
            Amendment
                No. 1 to Exchange Agreement (incorporated by reference to Exhibit
                2.2 to
                our Current Report on Form 8-K filed with the Commission on October
                6,
                2005).3.1
            
            Certificate
                of Incorporation (incorporated by reference to Exhibit 3.11 to our
                Registration Statement on Form 10-SB filed with the Commission on
                February
                20, 2004).3.2
            
            Certificate
                of Amendment to Certificate of Incorporation (incorporated by reference
                to
                Exhibit 3.12 to our Registration Statement on Form 10-SB filed with
                the
                Commission on February 20, 2004).3.3
            
            Certificate
                of Amendment to Certificate of Incorporation (incorporated by reference
                to
                Exhibit 3.3 to our Current Report on Form 8-K filed with the Commission
                on
                October 6, 2005).3.4
            
            Certificate
                of Amendment to Certificate of Incorporation (incorporated by reference
                to
                Exhibit A to our Information Statement on Schedule 14C filed with
                the
                Commission on December 1, 2005).3.5
            
            Bylaws
                (incorporated by reference to Exhibit 3.2 to our Registration Statement
                on
                Form 10-SB filed with the Commission with the Commission on February
                20,
                2004).4.1
            
            Warrant
                to Purchase Common Stock of Eugene Science, Inc., dated September
                30,
                2005, issued to WestPark Capital, Inc. (incorporated by reference
                to
                Exhibit 4.1 to our Current Report on Form 8-K filed with the Commission
                on
                October 6, 2005).10.1
            
            Agreement
                of Property Sales Contract between Eugene Science (Korea) and Wando
                Seafood Distributions, Co., Ltd., dated January 16, 2004 (incorporated
                by
                reference to Exhibit 10.1 to our Current Report on Form 8-K filed
                with the
                Commission on October 6, 2005).








10.2
            
            Memorandum
                of Understanding between Korea Ginseng Corp. and Eugene Science (Korea),
                dated March 12, 2004 (incorporated by reference to Exhibit 10.2 to
                our
                Current Report on Form 8-K filed with the Commission on October 6,
                2005).10.3
            
            Agreement
                of Product Supply between Amway Korea, Ltd. and Eugene Science (Korea),
                dated November 11, 2004 (incorporated by reference to Exhibit 10.3
                to our
                Current Report on Form 8-K filed with the Commission on October 6,
                2005).10.4
            
            Strategic
                Alliance Agreement between Archer Daniels Midland Company and Eugene
                Science (Korea), dated April 8, 2004 (incorporated by reference to
                Exhibit
                10.4 to our Current Report on Form 8-K filed with the Commission
                on
                October 6, 2005).10.5
            
            Distribution
                Agreement by and between Toong Yeuan Enterprise Co., Ltd. and Eugene
                Science (Korea), dated February 18, 2003 (incorporated by reference
                to
                Exhibit 10.5 to our Current Report on Form 8-K filed with the Commission
                on October 6, 2005).10.6
            
            Distribution
                Agreement by and between Hokuyo Koeki Co., Ltd. and Eugene Science
                (Korea), dated May 21, 2002 (incorporated by reference to Exhibit
                10.6 to
                our Current Report on Form 8-K filed with the Commission on October
                6,
                2005).10.7
            
            License
                Agreement between Nutra Nano Tech, Inc. and Eugene Science (Korea),
                dated
                May 20, 2005 (incorporated by reference to Exhibit 10.7 to our Current
                Report on Form 8-K filed with the Commission on October 6,
                2005).10.8
            
            Marketing
                Agreement between Hokuyo Koeki Co., Ltd. and Eugene Science (Korea),
                dated
                March 8, 2001 (incorporated by reference to Exhibit 10.8 to our Current
                Report on Form 8-K filed with the Commission on October 6,
                2005).10.9
            
            Material
                Transfer Agreement between Archer Daniels Midland Company and Eugene
                Science (Korea), dated November 19, 2001 (incorporated by reference
                to
                Exhibit 10.9 to our Current Report on Form 8-K filed with the Commission
                on October 6, 2005).10.10
            
            Investment
                Agreement by and between Hokuyo Koeki Co., Ltd. and Eugene Science
                (Korea), dated March 21, 2002 (incorporated by reference to Exhibit
                10.10
                to our Current Report on Form 8-K filed with the Commission on October
                6,
                2005).10.11
            
            Share
                Subscription Agreement by and between Telos, LLC and Eugene Science
                (Korea), dated January 19, 2005 (incorporated by reference to Exhibit
                10.11 to our Current Report on Form 8-K filed with the Commission
                on
                October 6, 2005).10.12
            
            Amendment
                to Subscription Agreement by and between Telos, LLC and Eugene Science
                (Korea), dated February 2, 2005 (incorporated by reference to Exhibit
                10.12 to our Current Report on Form 8-K filed with the Commission
                on
                October 6, 2005).10.13
            
            Lease
                Agreement by and between Bestian Partners Co., Ltd. and Eugene Science
                (Korea), dated June 24, 2005 (incorporated by reference to Exhibit
                10.14
                to our Current Report on Form 8-K filed with the Commission on October
                6,
                2005).10.14
            
            Employment
                Agreement between Eugene Science (Korea) and Jae Hong Yoo, dated
                July 28,
                2002 (incorporated by reference to Exhibit 10.15 to our Current Report
                on
                Form 8-K filed with the Commission on October 6,
                2005).*10.15
            
            Employment
                Agreement between Eugene Science (Korea) and Se Cheon Ahn, dated
                January
                4, 2003 (incorporated by reference to Exhibit 10.16 to our Current
                Report
                on Form 8-K filed with the Commission on October 6,
                2005).*10.16
            
            Employment
                Agreement between Eugene Science (Korea) and Tae Hwan Lee, dated
                January
                7, 2001 (incorporated by reference to Exhibit 10.17 to our Current
                Report
                on Form 8-K filed with the Commission on October 6,
                2005).*10.17
            
            Commissioned
                Production and Resource Supply Agreement between Eugene Science (Korea)
                and RexGene Biotech Co., Ltd., dated January 3, 2007 (incorporated
                by
                reference to Exhibit 10.18 to our Annual Report on Form 10-KSB filed
                with
                the Commission on April 17, 2007).10.18
            
            Distribution
                Agreement between Eugene Science (Korea) and Ceragem International,
                Inc.,
                dated September 27, 2006 (incorporated by reference to Exhibit 10.19
                to
                our Annual Report on Form 10-KSB filed with the Commission on April
                17,
                2007).10.19
            
            Form
                of Note and Warrant Purchase Agreement, dated as of July 2, 2007,
                by and
                between Eugene Science, Inc. and the investor named therein (incorporated
                by reference to Exhibit 10.1 to Amendment No. 1 to our Current Report
                on
                Form 8-K filed with the Commission on November 16,
                2007).10.20
            
            Form
                of Secured Senior Promissory Note issued pursuant to the Note and
                Warrant
                Purchase Agreement dated as of July 2, 2007 (incorporated by reference
                to
                Exhibit 10.2 to Amendment No. 1 to our Current Report on Form 8-K
                filed
                with the Commission on November 16, 2007).10.21
            
            Form
                of Common Stock Purchase Warrant issued pursuant to the Note and
                Warrant
                Purchase Agreement dated as of July 2, 2007 (incorporated by reference
                to
                Exhibit 10.3 to Amendment No. 1 to our Current Report on Form 8-K
                filed
                with the Commission on November 16, 2007).10.22
            
            Form
                of Note and Warrant Purchase Agreement, dated as of August 24, 2007,
                by
                and between Eugene Science, Inc. and the investors named therein
                (incorporated by reference to Exhibit 10.1 to our Current Report
                on Form
                8-K filed with the Commission on August 30, 2007).10.23
            
            Form
                of Secured Senior Promissory Note issued pursuant to the Note and
                Warrant
                Purchase Agreement dated as of August 24, 2007 (incorporated by reference
                to Exhibit 10.2 to our Current Report on Form 8-K filed with the
                Commission on August 30, 2007).








10.24
            
            Form
                of Common Stock Purchase Warrant issued pursuant to the Note and
                Warrant
                Purchase Agreement dated as of August 24, 2007 (incorporated by reference
                to Exhibit 10.3 to our Current Report on Form 8-K filed with the
                Commission on August 30, 2007).14.1
            
            Code
                of Conduct and Ethics (incorporated by reference to Exhibit 14.1
                to our
                Annual Report on Form 10-KSB filed with the Commission on April 17,
                2006).21.1
            
            List
                of Subsidiaries.24.1
            
            Power
                of Attorney (included on signature page hereto).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.





*
            These
                exhibits are identified as management contracts or compensatory plans
                or
                arrangements pursuant to Item 13 of Form
                10-KSB.





**Item
      14.**  **Principal
      Accountant Fees and Services**




The
      following table sets forth the aggregate fees billed to us by our current
      independent registered public accounting firm and SF Partnership, LLP, our
      former independent registered public accounting firm, for the fiscal years
      ended
      December 31, 2006 and December 31, 2007:




December 31,
              2006
            
            December 31,
              2007Audit
                Fees (1)
            
            $
            72,725
            
            $
            76,431Audit-Related
                Fees
            
            
            —
            
            
            —Tax
                Fees (2)
            
            
            7,439
            
            
            —All
                Other Fees
            
            
            —
            
            
            —Total
            
            $
            80,164
            
            $
            76,431





(1)
            Includes
                fees for the professional services rendered for the audit of our
                annual
                financial statements included in our annual report on Form 10-KSB
                and for
                review of the financial statements included in our quarterly reports
                on
                Form 10-QSB.(2)
            Includes
                fees for the preparation and filing of our annual corporate tax
                returns.





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized





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




Date:
      April 14, 2008




**POWER
      OF ATTORNEY**




We,
      the
      undersigned directors and officers of Eugene Science, Inc., do hereby constitute
      and appoint Seung Kwon Noh and Byung Ho Hwang, and each of them, as our true
      and
      lawful attorneys-in-fact and agents with power of substitution, to do any and
      all acts and things in our name and behalf in our capacities as directors and
      officers and to execute any and all instruments for us and in our names in
      the
      capacities indicated below, which said attorneys-in-fact and agents may deem
      necessary or advisable to enable said corporation to comply with the Securities
      Exchange Act of 1934, as amended, and any rules, regulations and requirements
      of
      the Securities and Exchange Commission, in connection with this Annual Report
      on
      Form 10-KSB, including specifically but without limitation, power and authority
      to sign for us or any of us in our names in the capacities indicated below,
      any
      and all amendments (including post-effective amendments) hereto; and we do
      hereby ratify and confirm all that said attorneys-in-fact and agents, shall
      do
      or cause to be done by virtue hereof.




In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.


Signature
              
              **Title**
              
              **Date**/s/
                  Seung Kwon Noh
              
              President,
                  Chief Executive Officer and
                DirectorSeung
                  Kwon Noh
              
              (Principal
                  Executive Officer)
              
              April
                  14, 2008/s/
                  Byung Ho Hwang
              
              Chief
                  Financial OfficerByung
                  Ho Hwang
              
              (Principal
                  Financial and Accounting
                Officer)
              
              April
                  14, 2008/s/
                  Tae Hwan LeeTae
                  Hwan Lee
              
              Director
              
              April
                  14, 2008/s/
                  Se Cheon AhnSe
                  Cheon Ahn
              
              Director
              
              April
                  14, 2008/s/
                  Tony KimTony
                  Kim
              
              Director
              
              April
                  14, 2008







**EUGENE
      SCIENCE, INC.**


**AND
      SUBSIDIARIES**




CONSOLIDATED
      FINANCIAL STATEMENTS




DECEMBER
      31, 2007 AND 2006




WITH




INDEPENDENT
      ACCOUNTANTS’ REPORT




**EUGENE
      SCIENCE, INC. AND SUBSIDIARIES**




CONSOLIDATED
      FINANCIAL STATEMENTS




DECEMBER
      31, 2007 AND 2006




**CONTENTS**
            **PAGE****REPORTS
                OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
            F-1**FINANCIAL
                STATEMENTS**Consolidated
                Balance Sheets
            F-2Consolidated
                Statements of Operation s and Comprehensive Loss
            F-4Consolidated
                Statements of Stockholders’ Deficit
            F-5Consolidated
                Statements of Cash Flows
            F-6Notes
                to Consolidated Financial Statements
            F-7







**REPORT
          OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 To
          the
          Board of Directors and Stockholders
 of
          Eugene
          Science, Inc.
  We
          have
          audited the accompanying consolidate d
          balance
          sheets of Eugene
          Science, Inc. and Subsidiaries (a
          Delaware corporation)
          (collectively, the “Company”) as
          of December
          31, 2007 and
          2006 ,
          and the
          related consolidated statements of operations, stockholders’ deficit and
          comprehensive loss, and cash fl ows
          for
          the years
          then ended. These consolidated
          financial statements are the responsibility of the company’s management. Our
          responsibility is to express an opinion on these consolidated financial
          statements based on our audits.
  We
          conducted our audit in accordance with the standards of the Public Company
          Accounting Oversight Board (United States of America). Those standards
          require
          that we plan and perform the audit to obtain reasonable assurance about
          whether
          the financial statements are free of material misstatement. The Company
          is not
          required to have, nor were engaged to perform, an audit of its internal
          control
          over financial reporting. Our audit included consideration of internal
          control
          over financial reporting as a basis for designing audit procedures that
          are
          appropriate in the circumstances, but not for the purposes of expressing
          an
          opinion on the effectiveness of the Company’s internal control over financial
          reporting. Accordingly, we express no such opinion. An audit also includes
          examining, on a test basis, evidence supporting the amounts and disclosures in
          the financial statements, assessing the accounting principles used and
          significant estimates made by management, as well as evaluating the overall
          financial statement presentation. We believe that our audit provides a
          reasonable basis for our opinion.
 
 In
          our
          opinion, the consolidated financial statements referred to above present
          fairly,
          in all material respects, the financial position of Eugene
          Science, Inc. and Subsidiaries as of December
          31, 2007 and
          2006 ,
          and the
          results of its operations and its cash flows for the years then ended 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 consolidated financial statements, the Company
          has
          suffered recurring losses from operations and had working capital deficiencies
          as of December
          31, 2007 and
          2006 ,
          which raise 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.
 
 Los
          Angeles, California
  March 17,
          2008
  F-1
  **EUGENE
        SCIENCE, INC.** **AND SUBSIDIARIES**
 **CONSOLIDATED
        BALANCE SHEETS**
 **DECEMBER
        31, 2007 AND 2006**
 
  **ASSETS**
  **2007**
              
              **2006**Current
                  assets:Cash
                  and cash equivalents (Note 2)
              
              $
              32,342
              
              $
              9,031Restricted
                  cash (Note 3)
              
              
              6,112
              
              
              5,818Accounts
                  receivable (Notes 2 and 17)
              
              
              175,504
              
              
              77,064Inventories
                  (Note 2)
              
              
              39,952
              
              
              34,099Due
                  from related parties (Note 4)
              
              
              52,308
              
              
              1,250,211Receivable
                  from unsettled contract (Note 6)
              
              
              650,959
              
              
              942,686Prepaid
                  expenses and other current assets (Note 7)
              
              
              156,125
              
              
              181,909Total
                  current assets
              
              
              1,113,302
              
              
              2,500,818Property
                  and equipment (Note 5)
              
              
              1,482,680
              
              
              1,168,767Other
                  assets:Investments
                  (Note 8)
              
              
              354
              
              
              333,851Intangible
                  assets
              
              
              141,688
              
              
              188,181Deposits
              
              
              8,795
              
              
              83,195Total
                  other assets
              
              
              150,837
              
              
              605,227Total
                  assets
              
              $
              2,746,819
              
              $
              4,274,812
  See
        auditor’s report and the accompanying notes to the consolidated financial
        statements.
  F-2
 **EUGENE
          SCIENCE, INC.** **AND SUBSIDIARIES**
 **CONSOLIDATED
          BALANCE SHEETS**
 **DECEMBER
          31, 2007 AND 2006**
 
 **LIABILITIES
                  AND STOCKHOLDER'S DEFICIT**
  **2007**
              
              **2006**Current
                  liabilities:Accounts
                  payable and accrued expenses
              
              $
              2,942,034
              
              $
              3,739,452Accrued
                  interest payable
              
              
              4,848,221
              
              
              4,411,996Deposit
                  from customers
              
              
              98,951
              
              
              317,498Loan
                  payable, current portion (Note 9)
              
              
              5,548,996
              
              
              7,198,517Convertible
                  debenture (Note 10)
              
              
              2,250,000
              
              
              -Due
                  to shareholders and officers (Note 11)
              
              
              65,065
              
              
              905,955Total
                  current liabilities
              
              
              15,753,267
              
              
              16,573,418Long-term
                  liabilities:Accrued
                  severance benefits (Note 12)
              
              
              316,232
              
              
              592,981Rental
                  deposits
              
              
              64,116
              
              
              64,516Long-term
                  debt, net of current portion (Note 9)
              
              
              2,135,087
              
              
              22,709Long-term
                  liabilities
              
              
              2,515,435
              
              
              680,206Total
                  liabilities
              
              
              18,268,702
              
              
              17,253,624Stockholders'
                  deficit:Common
                  stock (Note 13)
              
              
              41,116
              
              
              40,316Additional
                  paid-in-capital
              
              
              16,579,251
              
              
              16,579,251Accumulated
                  other comprehensive loss
              
              
              (3,307,874
              )
              
              (3,218,465
              )Accumulated
                  deficit
              
              
              (28,834,376
              )
              
              (26,379,914
              )Total
                  stockholders' deficit
              
              
              (15,521,883
              )
              
              (12,978,812
              )Total
                  liabilities and stockholders' deficit
              
              $
              2,746,819
              
              $
              4,274,812
 See
          auditor’s report and the accompanying notes to the consolidated financial
          statements.
  F-3
  **EUGENE
        SCIENCE, INC.** **AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**
 **FOR
        THE YEARS ENDED** **DECEMBER
        31, 2007 AND 2006**
 
 
 **2007**
              
              **2006**Net
                  sales (Note 15)
              
              $
              620,076
              
              $
              669,329Cost
                  of goods sold (Note 15)
              
              
              414,962
              
              
              459,960Gross
                  profits
              
              
              205,114
              
              
              209,369Operating
                  expenses
              
              
              1,524,341
              
              
              2,800,761Operating
                  losses
              
              
              (1,319,227
              )
              
              (2,591,392
              )Other
                  income (expenses):Gain
                  from sale of property (Note 5)
              
              
              -
              
              
              5,314,728Gain
                  from discharge of related party loans
              
              
              222,665
              
              
              -Net
                  rental income
              
              
              -
              
              
              135,027Miscellaneous
                  income (expense)
              
              
              (16,572
              )
              
              9,475Net
                  interest expenses
              
              
              (859,041
              )
              
              (2,071,012
              )Impairment
                  loss on investment securities
              
              
              (482,287
              )
              
              -Loan
                  loss reserve on related party loans
              
              
              -
              
              
              (2,804,038
              )Net
                  other income (expenses)
              
              
              (1,135,235
              )
              
              584,180Loss
                  before income taxes
              
              
              (2,454,462
              )
              
              (2,007,212
              )Income
                  taxes (Note 14)
              
              
              -
              
              
              -Net
                  losses
              
              
              (2,454,462
              )
              
              (2,007,212
              )Other
                  comprehensive losses:Unrealized
                  loss on investment
              
              
              -
              
              
              (471,654
              )Foreign
                  currency translation adjustment
              
              
              (89,409
              )
              
              (968,945
              )(89,409
              )
              
              (1,440,599
              )Comprehensive
                  losses
              
              $
              (2,543,871
              )
              $
              (3,447,811
              )Basic
                  and diluted earnings (loss) per share
              
              $
              (0.06
              )
              $
              (0.05
              )Weighted
                  average number of shares outstandingduring
                  the periods – basic and diluted (Note 13)
              
              
              40,715,705
              
              
              37,345,443
 See
          auditor’s report and the accompanying notes to the consolidated financial
          statements.
  F-4
 **EUGENE
          SCIENCE, INC.** **AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF STOCKHOLDERS’ DEFICIT**
 **FOR
          THE YEARS ENDED** **DECEMBER
          31, 2007 AND 2006**
 **Paid
                  in**
              
              **Accumulated****Capital
                  in**
              
              **Other****Common
                  Stock**
              
              **Excess
                  of**
              
              **Comprehensive**
              
              **Accumulated****Shares**
              
              **Amount**
              
              **Par
                  value**
              
              **Income
                  (loss)**
              
              **Deficit**
              
              **Total**Balance,
                  January 1,
                2006
                  (Note 13)
              
              
              34,375,180
              
              $
              31,166
              
              $
              16,418,734
              
              $
              (1,777,866
              )
              $
              (24,372,702
              )
              $
              (9,700,668
              )Issuance
                  of shares for
                consulting
                  services (Note 13)
              
              
              2,590,525
              
              
              5,800
              
              
              82,000
              
              
              -
              
              
              -
              
              
              87,800Exercise
                  of non-vested
                common
                  stock options
              
              
              3,350,000
              
              
              3,350
              
              
              78,517
              
              
              -
              
              
              -
              
              
              81,867Unrealized
                  loss on available
                for
                  sale securities
              
              
              -
              
              
              -
              
              
              -
              
              
              (471,654
              )
              
              -
              
              
              (471,654
              )Foreign
                  currency
                translation
                  adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              (968,945
              )
              
              -
              
              
              (968,945
              )Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (2,007,212
              )
              
              (2,007,212
              )Balance,December
                  31, 2006
              
              
              40,315,705
              
              $
              40,316
              
              $
              16,579,251
              
              $
              (3,218,465
              )
              $
              (26,379,914
              )
              $
              (12,978,812
              )Balance,
                  January 1,
                2007
                  (Note 13)
              
              
              40,315,705
              
              $
              40,316
              
              $
              16,579,251
              
              $
              (3,218,465
              )
              $
              (26,379,914
              )
              $
              (12,978,812
              )Issuance
                  of shares for
                consulting
                  services (Note 13)
              
              
              800,000
              
              
              800
              
              
              -
              
              
              -
              
              
              -
              
              
              800Foreign
                  currency
                translation
                  adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              (89,409
              )
              
              -
              
              
              (89,409
              )Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (2,454,462
              )
              
              (2,454,462
              )Balance,December
                  31, 2007
              
              
              41,115,705
              
              $
              41,116
              
              $
              16,579,251
              
              $
              (3,307,874
              )
              $
              (28,834,376
              )
              $
              (15,521,883
              )
 See
          auditor’s report and the accompanying notes to the consolidated financial
          statements.
  F-5
  **EUGENE
        SCIENCE, INC.** **AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **FOR
        THE YEARS ENDED** **DECEMBER
        31, 2007 AND 2006**
 
  **2007**
              
              **2006**Cash
                  flows from operating activities:Net
                  loss
              
              $
              (2,454,462
              )
              $
              (2,007,212
              )Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Depreciation
                  and amortization
              
              
              88,929
              
              
              526,412Bad
                  debt allowance on related party loans
              
              
              -
              
              
              2,804,038Gain
                  on sale of property
              
              
              -
              
              
              (5,314,728
              )Impairment
                  loss on investments
              
              
              482,287
              
              
              -(Increase)
                  decrease in assets:Restricted
                  cash
              
              
              (294
              )
              
              4,072Accounts
                  receivable
              
              
              193,287
              
              
              17,905Inventory
              
              
              (5,853
              )
              
              26,487Prepaid
                  expenses and other assets
              
              
              25,784
              
              
              (83,090
              )Increase
                  (decrease) in liabilities:Accounts
                  payable
              
              
              (797,418
              )
              
              90,250Accrued
                  interest and expenses
              
              
              159,476
              
              
              138,303Rental
                  deposits
              
              
              74,000
              
              
              (93,724
              )Cash
                  used in operating activities
              
              
              (2,234,264
              )
              
              (3,891,287
              )Cash
                  flows from investing activities:Acquisition
                  of property and investment
              
              
              (551,632
              )
              
              (277,607
              )Intangible
                  assets
              
              
              46,493
              
              
              (1,444
              )Cash
                  used in investing activities
              
              
              (505,139
              )
              
              (279,051
              )Cash
                  flows from financing activities:Proceeds
                  from sale of property
              
              
              -
              
              
              10,992,258Proceeds
                  from convertible debenture
              
              
              2,250,000
              
              
              -Proceeds
                  from notes payable
              
              
              462,857
              
              
              -Issuance
                  of stock
              
              
              800
              
              
              91,150Net
                  advance from related parties
              
              
              357,013
              
              
              247,757Net
                  advance to customers
              
              
              (218,547
              )
              
              (1,129,904
              )Repayment
                  on loans
              
              
              -
              
              
              (6,035,358
              )Cash
                  provided by financing activities
              
              
              2,852,123
              
              
              4,165,903Net
                  increase (decrease) in cash and cash equivalents
              
              
              112,720
              
              
              (4,435
              )Foreign
                  currency translation adjustment
              
              
              (89,409
              )
              
              -Cash
                  and cash equivalent - beginning of period
              
              
              9,031
              
              
              13,466Cash
                  and cash equivalent - end of period
              
              $
              32,342
              
              $
              9,031Supplemental
                  Information:Cash
                  paid during the years for: Interest paid
              
              $
              482,929
              
              $
              164,704
 See
          auditor’s report and the accompanying notes to the consolidated financial
          statements
 F-6
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 **Note** **1 –
        Nature of Business and Going Concern**
  Description
        of Business
  Eugene
        Science Inc. (“the Company”) was incorporated in August 1998 under the laws of
        state of Delaware, and owns 89.5% of Eugene Science, Inc. in Korea (“the Korean
        subsidiary”) which manufactures certain cholesterol lowering food ingredients.
        The Company currently has no other business.
  Initially
        registered as Orcas, Ltd, the Company changed its name to Ezcomm Inc. in
        January
        2000, and again to Ezcomm Enterprises, Inc. (EEI) in July 2004, and finally
        to
        the current name in September 2005 as it acquired the control of the Korean
        subsidiary.
  The
        control of the Korean subsidiary was acquired in September 2005 by a share
        exchange transaction. By this exchange, EEI acquired 89.5% of Eugene Science,
        Inc. by issuing 88.5% of its own common stock to the shareholders of the
        Korean
        company. As a result, the Korean company has become 89.5% subsidiary of EEI
        while the shareholders of the Korean subsidiary hold 88.5% control in EEI
        in the
        United States. Immediately following the share exchange, EEI changed its
        name to
        Eugene Science, Inc. so that both companies are known under a common
        name.
  The
        Korean subsidiary, located in Kyunggi-Do, Korea, was organized in July 1997
        under the laws of the Republic of Korea, and is in business of manufacturing
        and
        selling CZ TM series cholesterol-lowering functional food ingredients, beverages and capsules,
        and
        vegetable oil products that include those ingredients.
  Going
        Concern
  The
        Company's financial statements are presented on a going concern basis, which
        contemplates the realization of assets and satisfaction of liabilities in
        the
        normal course of business. The Company has experienced recurring losses since
        2000 and has negative cash flows from operations. With the loss continuing,
        the
        Company’s net loss amounted to $2,454,462 for the
        year ended December
        31, 2007 and its
        working capital deficiency was $14,639,965 as of December
        31, 2007 .
        These
        factors raise substantial doubt about the Company’s ability to continue as a
        going concern.
  The
        Company's ability to continue as a going concern is also contingent upon
        its
        ability to secure additional financing, initiating sale of its product and
        attaining profitable operations.
  In
        May
        2005, plant sterols, the main ingredient of CZ TM series,
        was formally **** approved
        as a health function food ingredient by the Korean Food & Drug
        Administration, making it possible for the Company to advertise the
        cholesterol-lowering function of CZ TM and food
        enriched with CZ TM .
        The
        Company expects that the favorable change in the regulation will strongly
        help
        in selling CZ TM to major
        food companies. The Company has also developed new capsule products that
        are
        efficient and convenient in delivering the health function of CZ TM .
        The
        Company is actively developing sales channels for CZ TM and the
        capsule products.
  The
        Company also plans to strengthen the cooperation with its international partners
        to restart shipping to oversea s
        markets. The Company expects to sell CZ TM to major
        food companies through its international strategic partners. For
        marketing the CZ TM capsules, the Company established a distribution channel in the United States
        in
        2006.
  In
        addition, management is pursuing various sources of equity financing ,
        although there can be no assurance that the Company will be able to secure
        financing when needed or obtain such on terms satisfactory to the
        Company.
  F-7
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 The
        financial statements do not include any adjustments to reflect the possible
        future effects on the recoverability and classification of assets or the
        amounts
        and classification of liabilities that may result from the possible inability
        of
        the Company to continue as a going concern.
  **Note** **2
            -** **Significant
            Accounting Policies**
  The
        following summary of significant accounting polices of the Company is presented
        to assist in understanding the Company’s financial statements. These accounting
        policies conform to the accounting principles generally accepted in the United
        States of America, and have been consistently applied in the preparation
        of the
        financial statements.
  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.
  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. Since the
        company is a shell company listed on a U.S. stock market, Eugene Science
        Inc. in
        Korea acquired the Company to enter the U.S. 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.
 
 Use
        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.
  Revenue
        Recognition
  The
        Company generates revenues from sales of manufactured goods and merchandise
        and
        rental of the Company's buildings.
  Revenue
        from product sales is
        recognized in accordance with Staff Accounting Bulletin No. 101 "Revenue
        Recognition in Financial Statements" ("SAB No. 101").
  For
        manufactured finished goods, the Company recognizes revenue when there is
        a
        definitive sales agreement, and upon shipment of products, when title is
        passed
        and the amount collectible can reasonably be determined.
 
 For
        merchandise sales, the Company recognizes revenue upon shipment of products,
        when title is passed and the amount collectible can reasonably be
        determined.
  F-8
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 For
        rental income, the Company retains substantially all of the benefits and
        risks
        of ownership of its income properties and therefore recognizes revenue upon
        receipt of monthly rent.
 
 Government
        Grants
  Government
        grants are recognized as income over the periods that are necessary to match
        them with the related costs.
  Currency
        Translation
  The
        Company's functional currency is Korean Won. Adjustments occurring in
        translating the currency into U.S. dollars at the balance sheet date are
        recorded as a component of other comprehensive income (loss).
  Foreign
        currency transactions of the Korean operations have been translated to Korean
        Won at the rate prevailing at the time of the transaction. Realized foreign
        exchange gains and losses were taken into current period.
  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.
  Allowance
        for Doubtful Accounts
 
 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 $-0- and $67,783 at December
        31, 2007 and 2006 ,
        respectively.
  Properties
        and Equipment
  Properties
        and equipment are stated at cost. Major renewals and betterments are capitalized
        and expenditures for repairs and maintenance are charges to expense as incurred.
        Depreciation is computed using the straight-line method over the following
        periods:
 
 Building
                  and improvements
              
              20-40
                  yearsMachinery
                  and equipment
              
              10
                  yearsVehicles
              
              5
                  yearsOffice
                  furniture and fixtures
              
              3-5
                  years
  Intangible
        Assets
  Intangible
        assets such as cost of obtaining industrial rights and patents are stated
        at
        cost, net of amortization computed using the straight-line method over five
        to
        ten years.
  F-9
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 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 inventories at December
        31, 2007 and 2006 were as
        follows:
 
 **2007**
              
              **2006**Raw
                  materials
              
              $
              15,156
              
              $
              14,725Finished
                  goods
              
              
              24,796
              
              
              19,374Total
              
              $
              39,952
              
              $
              34,099
  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.
 
 Concentration
        of Credit Risk
 
 SFAS
        No.
        105, *Disclosure
        of Information about Financial Instruments with Off-Balance Sheet Risk and
        Financial Instruments with Concentration of Credit Risk* ,
        requires disclosure of any significant off-balance sheet risk and credit
        risk
        concentration. The Company does not have significant off-balance sheet risk
        or
        credit concentration. The Company maintains cash, cash equivalents and
        short-term investments with major Korean financial institutions.
 
 The
        Company provides credit to its customers in the normal course of operations.
        It
        carries out, on a continuing basis, credit checks of its customers, and
        maintains allowance for credit losses contingent upon management’s forecasts.
        For other receivables, the Company determines, on a continuing basis, the
        probable losses and sets up a provision for losses based on the estimated
        realizable value.
  Concentration
        of credit risk arises when a group of clients having similar characteristics
        such that their ability to meet their obligations is expected to be affected
        similarly by changes in economic conditions.
  F-10
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 Income
        Taxes
 
 The
        Company accounts for income taxes pursuant to SFAS No. 109, *Accounting
        for Income Taxes* .
        Deferred tax assets and liabilities are recognized for the future tax
        consequences attributable to differences between the financial statement
        carrying amounts of existing assets and liabilities and their respective
        tax
        bases and operating loss and tax credit carry forwards. Deferred tax assets
        are
        reduced by a valuation allowance when, in the opinion of management, it is
        more
        likely than not that some portion or all of the deferred tax assets will
        not be
        realized. Deferred tax assets and liabilities are adjusted for the effects
        of
        changes in tax laws and rates on the date of enactment.
 
 Comprehensive
        Income
 
 The
        Company records its other comprehensive income under SFAS No. 130, *Reporting
        of Comprehensive Income* .
        SFAS
        130 which establishes standards for reporting and presentation of comprehensive
        income and its components. The Company’s other comprehensive income represents
        unrealized gain or loss on available-for-sale marketable securities and foreign
        currency translation adjustment.
 
 Earnings
        per Share
 
 SFAS
        No.
        128, “Earnings per Share” requires disclosure on the financial statements of
        basic and diluted earnings per share. Basic earning (loss) per share is computed
        by dividing the net earning (loss) by the weighted average number of shares
        of
        common stock outstanding during the year. Diluted earning (loss) per share
        is
        determined using the weighted average number of common shares outstanding
        during
        the year, adjusted for the dilutive effect of common stock equivalents,
        consisting of shares that might be issued upon exercise of common stock options
        and warrants.
 
 Commitments
        and Contingencies
 
 Liabilities
        for loss contingencies arising from claims, assessments, litigation, fines
        and
        other sources are recorded when it is probable that a liability has been
        incurred and the amount of the assessment can be reasonable estimated.
 
 Recent
        Accounting Pronouncements
 
 In
        June
        2006, the Financial Accounting Standard Board (“FASB”) issued Interpretation
        No. 48, *Accounting
        for Uncertainty in Income Taxes* (“FIN
        48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized
        in the Company’s financial statements in accordance with SFAS No. 109. FIN
        48 prescribes a recognition threshold and measurement attributes for the
        financial statement recognition and measurement of a tax position taken or
        expected to be taken in a tax return. The provisions of FIN 48 are effective
        for
        the fiscal years beginning after December 15, 2006. The Company does not
        expect that the adoption of FIN 48 will have a significant effect on its
        financial statements.
  In
        September 2006, the SEC issued Staff Accounting Bulletin No. 108, *Considering
        the Effects of Prior Year Misstatements when Quantifying Misstatements in
        Current Year Financial Statements* (“SAB
        No
        108”). SAB No. 108 provides interpretive guidance on how the effects of the
        carryover or reversal of prior year misstatements should be considered in
        quantifying a current year misstatement. Under SAB No. 108, the Company
        should quantify errors using both a balance sheet and income statement approach
        (“dual approach”) and evaluate whether either approach results in a misstatement
        that is material when all relevant quantitative and qualitative factors are
        considered. The adoption of SAB 108 did not have any impact on the Company’s
        financial statements.
  F-11
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 In
        February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
        Financial Assets and Financial Liabilities" ("SFAS No. 159"), which permits
        entities to measure financial instruments and certain other items at fair
        value
        that are not currently required to be measured at fair value. An entity would
        report unrealized gains and losses on items for which the fair value option
        has
        been elected in earnings at each subsequent reporting date. The objective
        is to
        improve financial reporting by providing entities with the opportunity to
        mitigate volatility in reported earnings caused by measuring related assets
        and
        liabilities differently without having to apply complex hedge accounting
        provisions. The decision about whether to elect the fair value option is
        applied
        instrument by instrument, with a few exceptions; the decision is irrevocable;
        and it is applied only to entire instruments and not to portions of instruments.
        SFAS No. 159 requires disclosures that facilitate comparisons (a) between
        entities that choose different measurement attributes for similar assets
        and
        liabilities and (b) between assets and liabilities in the financial statements
        of an entity that selects different measurement attributes for similar assets
        and liabilities. SFAS No. 159 is effective for financial statements issued
        for
        fiscal years beginning after November 15, 2007. Early adoption is permitted
        as
        of the beginning of a fiscal year provided the entity also elects to apply
        the
        provisions of SFAS No. 157 "Fair Value Measurements.” Upon implementation, an
        entity shall report the effect of the first remeasurement to fair value as
        a
        cumulative-effect adjustment to the opening balance of retained earnings.
        Since
        the provisions of SFAS No. 159 are applied prospectively, any potential impact
        will depend on the instruments selected for fair value measurement at the
        time
        of implementation. The Company is currently evaluating the impact, if any,
        adoption of SFAS No. 159 will have on its financial statements.
 
 Reclassification
 
 Certain
        accounts in the 2006 consolidated financial statements have been reclassified for comparative
        purposes to conform with the presentation in the current year consolidated
        financial statements. Total equity and net income are unchanged due to these
        reclassifications.
 
 **Note
        3 – Restricted Cash**
  The
        Company had a restricted cash of $ 6,112 and
        $5,818 at December
        31, 2007 and
        2006 ,
        which
        were 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
        $ 52,308 and
        $1,250,211 as of December
        31, 2007 and
        2006 ,
        respectively. These loans are pledged by marketable securities, and bear
        interest at 9% and are due on demand.
  F-12
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 **Note
        5 – Properties and Equipment**
  Properties
        and equipment co nsisted
        of the following at December 31 :
 
 **2007**
              
              **2006**Buildings
              
              $
              857,522
              
              $
              852,789Equipment
                  and vehicles
              
              
              926,996
              
              
              829,372Furniture
                  and fixtures
              
              
              1,042,348
              
              
              1,091,429Construction
                  in progress
              
              
              259,184
              
              
              -3,086,050
              
              
              2,773,590Less:accumulated
                  depreciation
              
              
              1,603,370
              
              
              1,604,823Net
                  property and equipment
              
              $
              1,482,680
              
              $
              1,168,767
  On
        March
        3, 2006, the Company cancelled a sales agreement into which the Company entered
        in January 2004 to sell the land and buildings. In cancelling, the Company
        paid the buyer approximately $2,100,000 representing return of the deposit
        and a
        cancellation fee. On the April 27, 2006, the Company sold the property to
        a
        third party at approximately $11,700,000, realizing a gain of approximately
        $5,504,000. The proceeds from the sale were used to reduce a portion of the
        loans from Korea Trade Bank.
 
 On
        August
        11, 2006, the Company sold certain machinery and equipment located in the
        Bucheon facilities for about $1,021,500 realizing a loss of about $189,300.
 
 Depreciation
        expenses for the years ended December
        31, 2007 and
        2006 were
        $ 88,929 and
        $526,412, respectively.
 
 **Note
        6 – Receivables from Sale of Assets**
 
 As
        of December
        31, 2007 and
        2006 ,
        the
        Company had outstanding proceeds receivable of $ 650,959 and
        $942,686, respectively, from the sales of real estate property and machinery
        and
        equipment as discussed in Note 5.
 
 **Note
        7 – Prepaid Expenses and Other Current Assets**
  Prepaid
        expenses and other current assets consisted of the following at December
        31:
 
 **2007**
              
              **2006**Prepaid
                  fees for certain patent registration andrelated
                  legal costs
              
              $
              64,001
              
              $
              61,291Advance
                  payment to vendors
              
              
              92,124
              
              
              -Interest
                  receivable from related party loans
              
              
              -
              
              
              120,618Total
              
              $
              156,125
              
              $
              181,909
  F-13
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 **Note
        8 – Investments**
  The
        following is a summary of investments at December 31:
 
 **2007**
              
              **2006**7.50%
                  equity of a unlisted company
              
              $
              353
              
              $
              322,581Other
                  marketable securities
              
              
              1
              
              
              11,270Total
              
              $
              354
              
              $
              333,851
  During
        the years ended December
        31, 2007 and
        2006 ,
        the
        Company sold the investments in the equity securities and recognized losses
        of
        $333,497 and $194,047, respectively.
 
 **Note
        9 - Loans Payable**
 
 Loans
        payable consisted of the following at December
        31 :
 
 **2007**
              
              **2006**Notes
                  payable to Kook Min Bank with interest at 18% to 21%, unsecured,
                  due on
                  demand, and guaranteed by chief executive officer.These
                  loans are in default.
              
              $
              1,337,620
              
              $
              1,345,969Note
                  payable to Korea Technology Credit Guarantee Fund (KOTEC), a government
                  operated fund, with interest at 21%, and guaranteed by corporate
                  officer.
                  The loan was restructured in July 2007 and the detail terms are
                  noted
                  below.**(A)**
              
              
              2,112,520
              
              
              2,114,160Note
                  payable toNational
                  Agricultural Cooperative Federation (NACF) with interest at 4.6%
                  to 18%,
                  unsecured, due on demand and guaranteed
                  by KOTEC and corporate officer. The loan is in default.
              
              
              1,365,934
              
              
              1,386,006Note
                  payable to Shinhan Bank with interest at 18% due on demand. The
                  loan is in
                  default.
              
              
              304,148
              
              
              306,047Note
                  payable to a customer
                  (Hokuyo) with interest
                  at 3%, unsecured, and due on demand. The note is in
                  default.
              
              
              2,012,775
              
              
              2,026,227Notes
                  payable to unrelated parties with interest at 9%, unsecured and
                  due on
                  demand.
              
              
              438,066
              
              
              -
 
 (Continued)
  F-14
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 **2007**
              
              **2006**Notes
                  payableto
                  employees with interest at 9% to 10%, unsecured, and due on
                  demand.
              
              
              70,470
              
              
              -Government
                  loan,
                  non-interest bearing, unsecured, payable on demand.
              
              
              42,550
              
              
              42,817Total
                  notes payable
              
              
              7,684,083
              
              
              7,221,226Less:
                  current portion
              
              
              5,548,996
              
              
              7,198,517Long-term
                  debt, net of current
              
              $
              2,135,087
              
              $
              22,709
 
 In
        July
        2007, the Company successfully completed a Debt Rescheduling Agreement with Korea
        Technology Credit Guarantee Fund (KOTEC) ,
        in
        which the Company made a partial payment of $82,000 and KOTEC agreed to convert
        the remaining balance into a long term debt. The new loan is payable in monthly
        installments of $18,527 (KRW 17,093,620) over 10-year period beginning in
        2010.
 
 Following
        is a summary of principal maturities of notes payable over the next five
        years:
 
 Years ending December 31,
              
              Amount2008
              
              $
              5,571,5632009
              
              
              -2010
              
              
              92,6352011
              
              
              222,3242012
                  and thereafter
              
              
              1,797,561Total
              
              $
              7,684,083
 
 **Note
        10 – Convertible Debenture**
 
 In
        July
        2007, the Company issued $2,250,000 secured
        convertible notes with warrants to purchase 3,200,000 shares of the Company’s
        common stock at an exercise price of $0.25 per share. The notes bear interest
        at
        10% per annum, and, at the option of the purchasers, are convertible into
        shares
        of the common stock during the first six months following the issue date
        of the
        notes at a conversion price of $0.65. The Company intends to use the proceeds
        to
        complete the build out of its new 22,000-square-foot corporate production
        and
        research facility scheduled for opening in late November, restructure bank
        debt,
        advance its patented production process toward commercialization, and general
        corporate purposes.
  F-15
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 **Note
        11 – Due to Shareholders and Officers**
 
 Due
        to
        shareholders and officer consisted
        of the following at December 31:
  **2007**
              
              **2006**Unsecured
                  short term advance payable to shareholder with interest at 9% per
                  annum,
                  due on demand.
              
              $
              52,353
              
              $
              446,417Unsecured
                  short-term advances payable to corporate officer with interest
                  at 9% per
                  annum, due on demand.
              
              
              12,712
              
              
              459,538Total
              
              $
              65,065
              
              $
              905,955
 
 **Note
        12 – Accrued Severance Benefits**
 
 Employees
        and directors with one year or more of service are entitled to receive a
        lump-sum payment upon termination of their employment based on their length
        of
        service and rate of pay at the time of termination. Accrued severance benefits
        represent the amount which would be payable assuming all eligible employees
        and
        directors are to terminate their employment as of the balance sheet date.
        The
        accrued severance benefits at December
        31, 2007 and
        2006 ,
        were
        $ 316,232 and
        $ 592,981 ,
        respectively.
 
 **Note
        13 - Capital Stock**
 
 Total
                  shares authorized:480,000,000 shares of Common Stock, par value $0.00120,000,000 shares of Preferred Stock, par value $0.001
  Shares
              
              
              AmountShares
                  issued and outstanding:Common
                  stock at,December
                  31, 2007
              
              
              41,115,705
              
              $
              41,116December
                  31, 2006
              
              
              40,315,705
              
              $
              40,316Preferred
                  stock–
                  none issued and outstanding
  On
        January 13, 2006, the Company had a reverse stock split whereby one new common
        share was exchanged for ten common shares. The financial statements have
        been
        retroactively restated to reflect the reverse split.
  On
        February 21, 2006, the Company issued 1,000,000 shares of common stock for
        $83,000.
  On
        September 19, 2006, the Company issued 390,000 shares of common stock for
        consulting services provided.
  F-16
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 On
        October 1, 2006, the Company issued 1,200,000 shares of common stock for
        various
        consulting services provided.
  On
        October 1, 2006, in accordance of 2006 Stock Incentive Plan, the Company
        issued
        3,350,000 shares of common stock to employees and directors.
 
 On
        October 25, 2007, the Company issued 800,000 shares of common stock for various
        consulting services provided.
 
 **Stock
        Compensation Plan**
 
 The
        Company has accounted for its stock options and warrants in accordance with
        SFAS
        123(R) "Accounting for Stock Based Compensation" and SFAS 148 "Accounting
        for
        Stock Based compensation - Transition and Disclosure." Value of options granted
        has been estimated by the Black Scholes option pricing model. The assumptions
        are evaluated annually and revised as necessary to reflect market conditions
        and
        additional experience. The following weighted-average assumptions were used
        and
        a discussion of our methodology for developing each of the assumptions used
        in
        the valuation model follows:
 
 **2007**Dividend
                  yield
              
              
              0.0
              %Expected
                  volatility
              
              
              80
              %Risk-free
                  interest rate
              
              
              4.3
              %Expected
                  life of the option term (in years)
              
              
              10Forfeiture
                  rate
              
              
              7.0
              %
 
 Dividend
        Yield – The Company has not declared or paid dividends in the past and has
        no plan for dividend payments in the future.
 
 Expected
        Volatility – Volatility is a measure of the amount by which a financial
        variable such as a share price has fluctuated (historical volatility) or
        is
        expected to fluctuate (expected volatility) during a period. The Company
        uses
        the historical volatility since its expected volatility because the current
        business strategy, which is not expected to change materially, is fundamentally
        consistent with past strategy. The volatility has averaged at 80%.
 
 Risk-Free
        Interest Rate – This is the U.S. Treasury rate for the week of each stock
        option granted during the quarter having a term that most closely resembles
        the
        expected life of the stock option.
 
 Expected
        Life of the Stock Option Term – This is the period of time that the stock
        options granted are expected to remain unexercised. Stock options granted
        during
        the fiscal year have a maximum term of ten years. The Company estimates the
        expected life of the stock option term using a lattice model with inputs
        regarding estimated exercise behavior that are consistent with actual past
        behavior for similar stock options.
 
 Forfeiture
        Rate – This is the estimated percentage of the stock options granted and
        expected to be forfeited or canceled on an annual basis before becoming fully
        vested. The Company estimates the forfeiture rate based on past turnover
        data
        ranging anywhere from one to three years with further consideration given
        to the
        class of employees to whom the options were granted.
 
 In
        February 2006, the Board of Directors of the Company adopted 2006 Stock
        Incentive Plan (the “2006 Plan”). Under this Plan, employees and directors of
        the Company and affiliated company may receive options to purchase common
        stock.
        A maximum of 4,000,000 shares have been authorized to be granted under the
        2006
        Plan.
  F-17
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 In
        May
        2006, the Plan granted 3,600,000 stock options for common stock having a
        $0.01
        nominal par value each and exercise price of $0.50 to $1.36. In October 2006,
        3,350,000 stock options were exercised, 250,000 options were canceled and
        no
        option is outstanding as of December
        31, 2007 .
  The
        Company issued 300,000 stock options to a non-employee during the year ended
        December 31, 2006. These stock options had a vesting period of 12 months.
        The
        fair value of these stock options was recorded as deferred compensation and
        was
        amortized over the performance period. Under variable plan accounting, the
        value
        of the unvested stock options was re-measured and recognized in operations
        at
        each period reporting date until fully vested.
 
 No
        option
        is outstanding as of December
        31, 2007 and for
        disclosure requirements set forth above under SFAS No 123(R), during the
        period
        ended December
        31, 2007 ,
        the
        Company recognized no additional stock-based compensation for options vested.
 
 **Stock
        Options of the Subsidiary in Korea**
  The
        following weighted-average assumptions were used in the valuation model for
        the
        stock option of the subsidiary:
 
 Period ended December 31,**2007**
              
              **2006**Dividend
                  yield
              
              
              0
              %
              
              0
              %Expected
                  volatility
              
              
              80
              %
              
              80
              %Risk-free
                  interest rate
              
              
              4.3
              %
              
              7.7
              %Expected
                  life of the option term (in years)
              
              
              3
              
              
              4
 
 In
        1999
        the Board of Directors of the Korea subsidiary adopted an option plan to
        allow
        employees to purchase common stock of the Company.
  In
        October 1999, the share option plan granted 928,350 options for the common
        stock
        having a $0.0869 nominal par value each and an exercise price of $0.12. In
        2000,
        236,240 options were cancelled. In 2005, the balance of the 692,110 options
        was
        exercised.
  In
        December 1999, 659,169 options were granted having a $0.0869 nominal par
        value
        each and an exercise price of $0.26. In 2005, the balance of the 659,169
        options
        was exercised.
  In
        October 2000, 971,999 options were granted having a $0.0869 nominal par value
        each and an exercise price of $1.93. 5,087, 162,848, 40,712, 244,272 options
        were cancelled in 2000, 2001, 2002 and 2003, respectively. As of December
        31,
        2006, 519,080 options are still outstanding.
  In
        May
        2001, 71,246 options were granted having a $0.0869 nominal par value each
        and an
        exercise price of $1.93. In 2002, 20,356 options were cancelled. As of December
        31, 2006, 50,890 options are still outstanding.
  In
        March
        2002, 1,000,000 options were granted having a $0.0869 nominal par value each
        and
        exercise price of $1.96. 330,000, 110,000, 100,000 options were cancelled
        in
        2002, 2003, and 2005, respectively. In addition, 31,190 options were granted
        in
        2005. There was also a change in the exercise price to $1.84. As of December
        31,
        2006, 491,190 options are still outstanding.
  F-18
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 In
        September 2002, 220,000 options were granted having a $0.0869 nominal par
        value
        each and an exercise price of $1.96. During 2005, 14,916 options were granted.
        In addition, the exercise price of the options was reduced to
        $1.84.
  In
        March
        2003, 350,000 options were granted having a $0.0869 nominal par value each
        and
        an exercise price of $1.96. In 2003 and 2004, 180,000 and 20,000 stock options
        were cancelled respectively. During 2005, 10,170 options were granted and
        the
        exercise price was reduced to $1.84. As of December 31, 2006, 160,170 stock
        options are still outstanding.
  The
        options vest gradually over a period of 2 to 3 years from the date of grant.
        The
        term of each option does not exceed 7 years from the date of grant. 285,806
        and
        651,360 options have vested in 2004 and 2005 respectively. However, as the
        exercise price of the options was substantially higher than the fair market
        value, the options have no value and no benefits have been recorded since
        inception of the 2000 plan.
 
 The
        stock
        options have not been included in the calculation of the diluted earnings
        per
        share as their inclusion would be anti-dilutive.
 
 The
        following table summarizes the stock option activity during the periods ended
        December 31:
 **2007**
                
                **2006**Shares
                
                Weighted-
                  Average
                  Excise
                  Price
                
                Shares
                
                Weighted-
                  Average
                  Excise
                  PriceOutstanding,
                    beginning of period
                
                
                1,456,246
                
                $
                1.88
                
                
                1,456,246
                
                $
                1.88Granted
                
                
                -
                
                
                -
                
                
                -
                
                
                -Exercised
                
                
                -
                
                
                -
                
                
                -
                
                
                -Cancelled
                
                
                -
                
                
                -
                
                
                -
                
                
                -Outstanding,
                    end of period
                
                
                1,456,246
                
                $
                1.88
                
                
                1,456,246
                
                $
                1.88Weighted
                    average remaining contractual life of common stock options
                
                
                3
                    years
                
                
                
                
                
                4
                    years
 
 **Note
        14 - Income Taxes**
  The
        Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for
        Income Taxes". This Standard prescribes the use of the liability method whereby
        deferred tax asset and liability account balances are determined based on
        differences between financial reporting and tax bases of assets and liabilities
        and are measured using the enacted tax rates. The effects of future changes
        in
        tax laws or rates are not anticipated. Corporate income tax rates applicable
        to
        the Company in 2007 and 2006 were
        16.5% of the first 100 million Korean Won ($84,000) of taxable income and
        29.7%
        on the excess. For the United States operation, the corporate tax rate is
        approximately 34%. Tax losses from the Korean subsidiary can be carried forward
        for five years. The U.S. tax losses can be carried forward for fifteen to
        twenty
        years. The company has accumulated approximately $24,260,000 of taxable losses
        which can be used to offset future taxable income. The utilization of the
        losses
        expires in years 2008 through 2027.
  F-19
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 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 at December
        31, 2007 and
        2006 were as
        follows:
 
 **2007**
              
              **2006**Deferred
                  income tax assets:Research
                  and development expenses amortized over 5 years for tax
                  purposes
              
              $
              150,722
              
              $
              422,410Other
                  timing differences
              
              
              -
              
              
              2,876Net
                  operating loss carryforwards
              
              
              4,002,900
              
              
              2,919,4494,153,622
              
              
              3,344,735Valuation
                  allowance for deferred income tax assets
              
              
              (4,153,622
              )
              
              (3,344,735
              )$
              -
              
              $
              -
  The
        Company provided a valuation allowance equal to the deferred income tax assets
        because it is presently considered that they will not be realized.
 
 **Note
        15 – Business Segment Information**
  Sales
        and
        cost of goods sold of the Company’s segments for the periods ended December
        31, 2007 and
        2006 were as
        follows:
 
 **2007**
              
              **2006**Sales:Manufacturing
              
              $
              402,052
              
              $
              354,810Merchandise
              
              
              218,024
              
              
              314,519$
              620,076
              
              $
              669,329Cost
                  of Sales:Manufacturing
              
              $
              348,311
              
              $
              225,761Merchandise
              
              
              66,651
              
              
              234,199$
              414,962
              
              $
              459,960
  **Note
        16 - Major Customers**
  For
        the
        years ended December
        31, 2007 and
        2006 ,
        sales
        to the two major customers accounted for 65% and 49%, respectively, of the
        Company’s total revenue.
  F-20
  **EUGENE
        SCIENCE, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**
 
 **Note
        17 - Related Party Transactions**
 
 Significant
        transactions with companies related or affiliates by common control for the
        periods ended and as of December
        31, 2007 and
        2006 are
        summarized as follows:
  Sales
              
              Net
                  rental/
                Interest
                income
              
              Purchases
              
              Accounts
                Receivable
              
              Accounts
                Payable
              
              Rental
                DepositCompany
                  related by common control2007
              
              $
              97,354
              
              $
              -
              
              $
              66,306
              
              $
              -
              
              $
              247,417
              
              $
              65,6742006
              
              $
              46,297
              
              $
              337,186
              
              $
              244,048
              
              $
              71,301
              
              $
              250,370
              
              $
              -Companies
                  affiliated by common control2007
              
              $
              201
              
              $
              1,582
              
              $
              -
              
              $
              4,542
              
              $
              73,179
              
              $
              -2006
              
              $
              198
              
              $
              1,415
              
              $
              -
              
              $
              1,597
              
              $
              -
              
              $
              -
  These
        transactions were in the normal course of business and recorded at an exchange
        value established and agreed upon by the above mentioned parties, which
        approximates fair market value.
  F-21




**Exhibit
      Index**




**Exhibit****Number**
            
            **Description**2.1
            
            Exchange
                Agreement by and among Ezcomm Enterprises, Inc., Eugene Science (Korea)
                and certain stockholders of Eugene Science (Korea), dated September
                1,
                2005 (incorporated by reference to Exhibit 10.1 to our Current Report
                on
                Form 8-K filed with the Commission on September 7,
                2005).2.2
            
            Amendment
                No. 1 to Exchange Agreement (incorporated by reference to Exhibit
                2.2 to
                our Current Report on Form 8-K filed with the Commission on October
                6,
                2005).3.1
            
            Certificate
                of Incorporation (incorporated by reference to Exhibit 3.11 to our
                Registration Statement on Form 10-SB filed with the Commission on
                February
                20, 2004).3.2
            
            Certificate
                of Amendment to Certificate of Incorporation (incorporated by reference
                to
                Exhibit 3.12 to our Registration Statement on Form 10-SB filed with
                the
                Commission on February 20, 2004).3.3
            
            Certificate
                of Amendment to Certificate of Incorporation (incorporated by reference
                to
                Exhibit 3.3 to our Current Report on Form 8-K filed with the Commission
                on
                October 6, 2005).3.4
            
            Certificate
                of Amendment to Certificate of Incorporation (incorporated by reference
                to
                Exhibit A to our Information Statement on Schedule 14C filed with
                the
                Commission on December 1, 2005).3.5
            
            Bylaws
                (incorporated by reference to Exhibit 3.2 to our Registration Statement
                on
                Form 10-SB filed with the Commission with the Commission on February
                20,
                2004).4.1
            
            Warrant
                to Purchase Common Stock of Eugene Science, Inc., dated September
                30,
                2005, issued to WestPark Capital, Inc. (incorporated by reference
                to
                Exhibit 4.1 to our Current Report on Form 8-K filed with the Commission
                on
                October 6, 2005).10.1
            
            Agreement
                of Property Sales Contract between Eugene Science (Korea) and Wando
                Seafood Distributions, Co., Ltd., dated January 16, 2004 (incorporated
                by
                reference to Exhibit 10.1 to our Current Report on Form 8-K filed
                with the
                Commission on October 6, 2005).10.2
            
            Memorandum
                of Understanding between Korea Ginseng Corp. and Eugene Science (Korea),
                dated March 12, 2004 (incorporated by reference to Exhibit 10.2 to
                our
                Current Report on Form 8-K filed with the Commission on October 6,
                2005).10.3
            
            Agreement
                of Product Supply between Amway Korea, Ltd. and Eugene Science (Korea),
                dated November 11, 2004 (incorporated by reference to Exhibit 10.3
                to our
                Current Report on Form 8-K filed with the Commission on October 6,
                2005).10.4
            
            Strategic
                Alliance Agreement between Archer Daniels Midland Company and Eugene
                Science (Korea), dated April 8, 2004 (incorporated by reference to
                Exhibit
                10.4 to our Current Report on Form 8-K filed with the Commission
                on
                October 6, 2005).10.5
            
            Distribution
                Agreement by and between Toong Yeuan Enterprise Co., Ltd. and Eugene
                Science (Korea), dated February 18, 2003 (incorporated by reference
                to
                Exhibit 10.5 to our Current Report on Form 8-K filed with the Commission
                on October 6, 2005).10.6
            
            Distribution
                Agreement by and between Hokuyo Koeki Co., Ltd. and Eugene Science
                (Korea), dated May 21, 2002 (incorporated by reference to Exhibit
                10.6 to
                our Current Report on Form 8-K filed with the Commission on October
                6,
                2005).10.7
            
            License
                Agreement between Nutra Nano Tech, Inc. and Eugene Science (Korea),
                dated
                May 20, 2005 (incorporated by reference to Exhibit 10.7 to our Current
                Report on Form 8-K filed with the Commission on October 6,
                2005).10.8
            
            Marketing
                Agreement between Hokuyo Koeki Co., Ltd. and Eugene Science (Korea),
                dated
                March 8, 2001 (incorporated by reference to Exhibit 10.8 to our Current
                Report on Form 8-K filed with the Commission on October 6,
                2005).10.9
            
            Material
                Transfer Agreement between Archer Daniels Midland Company and Eugene
                Science (Korea), dated November 19, 2001 (incorporated by reference
                to
                Exhibit 10.9 to our Current Report on Form 8-K filed with the Commission
                on October 6, 2005).10.10
            
            Investment
                Agreement by and between Hokuyo Koeki Co., Ltd. and Eugene Science
                (Korea), dated March 21, 2002 (incorporated by reference to Exhibit
                10.10
                to our Current Report on Form 8-K filed with the Commission on October
                6,
                2005).10.11
            
            Share
                Subscription Agreement by and between Telos, LLC and Eugene Science
                (Korea), dated January 19, 2005 (incorporated by reference to Exhibit
                10.11 to our Current Report on Form 8-K filed with the Commission
                on
                October 6, 2005).10.12
            
            Amendment
                to Subscription Agreement by and between Telos, LLC and Eugene Science
                (Korea), dated February 2, 2005 (incorporated by reference to Exhibit
                10.12 to our Current Report on Form 8-K filed with the Commission
                on
                October 6, 2005).10.13
            
            Lease
                Agreement by and between Bestian Partners Co., Ltd. and Eugene Science
                (Korea), dated June 24, 2005 (incorporated by reference to Exhibit
                10.14
                to our Current Report on Form 8-K filed with the Commission on October
                6,
                2005).








10.14
            
            Employment
                Agreement between Eugene Science (Korea) and Jae Hong Yoo, dated
                July 28,
                2002 (incorporated by reference to Exhibit 10.15 to our Current Report
                on
                Form 8-K filed with the Commission on October 6,
                2005).*10.15
            
            Employment
                Agreement between Eugene Science (Korea) and Se Cheon Ahn, dated
                January
                4, 2003 (incorporated by reference to Exhibit 10.16 to our Current
                Report
                on Form 8-K filed with the Commission on October 6,
                2005).*10.16
            
            Employment
                Agreement between Eugene Science (Korea) and Tae Hwan Lee, dated
                January
                7, 2001 (incorporated by reference to Exhibit 10.17 to our Current
                Report
                on Form 8-K filed with the Commission on October 6,
                2005).*10.17
            
            Commissioned
                Production and Resource Supply Agreement between Eugene Science (Korea)
                and RexGene Biotech Co., Ltd., dated January 3, 2007 (incorporated
                by
                reference to Exhibit 10.18 to our Annual Report on Form 10-KSB filed
                with
                the Commission on April 17, 2007).10.18
            
            Distribution
                Agreement between Eugene Science (Korea) and Ceragem International,
                Inc.,
                dated September 27, 2006 (incorporated by reference to Exhibit 10.19
                to
                our Annual Report on Form 10-KSB filed with the Commission on April
                17,
                2007).10.19
            
            Form
                of Note and Warrant Purchase Agreement, dated as of July 2, 2007,
                by and
                between Eugene Science, Inc. and the investor named therein (incorporated
                by reference to Exhibit 10.1 to Amendment No. 1 to our Current Report
                on
                Form 8-K filed with the Commission on November 16,
                2007).10.20
            
            Form
                of Secured Senior Promissory Note issued pursuant to the Note and
                Warrant
                Purchase Agreement dated as of July 2, 2007 (incorporated by reference
                to
                Exhibit 10.2 to Amendment No. 1 to our Current Report on Form 8-K
                filed
                with the Commission on November 16, 2007).10.21
            
            Form
                of Common Stock Purchase Warrant issued pursuant to the Note and
                Warrant
                Purchase Agreement dated as of July 2, 2007 (incorporated by reference
                to
                Exhibit 10.3 to Amendment No. 1 to our Current Report on Form 8-K
                filed
                with the Commission on November 16, 2007).10.22
            
            Form
                of Note and Warrant Purchase Agreement, dated as of August 24, 2007,
                by
                and between Eugene Science, Inc. and the investors named therein
                (incorporated by reference to Exhibit 10.1 to our Current Report
                on Form
                8-K filed with the Commission on August 30, 2007).10.23
            
            Form
                of Secured Senior Promissory Note issued pursuant to the Note and
                Warrant
                Purchase Agreement dated as of August 24, 2007 (incorporated by reference
                to Exhibit 10.2 to our Current Report on Form 8-K filed with the
                Commission on August 30, 2007).10.24
            
            Form
                of Common Stock Purchase Warrant issued pursuant to the Note and
                Warrant
                Purchase Agreement dated as of August 24, 2007 (incorporated by reference
                to Exhibit 10.3 to our Current Report on Form 8-K filed with the
                Commission on August 30, 2007).14.1
            
            Code
                of Conduct and Ethics (incorporated by reference to Exhibit 14.1
                to our
                Annual Report on Form 10-KSB filed with the Commission on April 17,
                2006).21.1
            
            List
                of Subsidiaries.24.1
            
            Power
                of Attorney (included on signature page hereto).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.*
            These
                exhibits are identified as management contracts or compensatory plans
                or
                arrangements pursuant to Item 13 of Form
                10-KSB.