Eugene Science 10QSB/A 2007 Q1 Quarterly report (small business) (amended)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB/A

(Amendment No. 1)

x	QUARTERLY REPORT UNDER SECTION 13 OR 15( d ) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD E E NDED MARCH 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 as specified in its charter)

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

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

(Address of principal executive offices)

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

C heck 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 r egistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

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

The number of outstanding shares of the issuer’s common stock as of May 18, 2007 was 40,315,705.

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

EXPLANATORY NOTE

This Amendment No. 1 to the Quarterly Report on Form 10-QSB of Eugene Science, Inc. (“we,” “our,” “us,” or the “Company”) for the quarterly period ended March 31, 2007, which was originally filed with the Securities and Exchange Commission on May 21, 2007, is being filed solely (i) to revise and add disclosures to the financial statements and notes to the financial statements in Item 1, (ii) to revise the disclosures in Item 2 to reflect revisions made and disclosures added to the financial statements and (iii) to revise the responses to Item 3. This Amendment No. 1 does not reflect events occurring after May 21, 2007, the date of the filing of our original Form 10-QSB, or modify or update those disclosures that may have been affected by subsequent events.

PART I—FINANCIAL INFORMATION

ITEM 1 . FINANCIAL STATEMENTS

EUGENE SCIENCE, INC.

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

MARCH 31, 2007 AND 2006

F-1

EUGENE SCIENCE, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

MARCH 31, 2007 AND 2006

CONTENTS		PAGE

FINANCIAL STATEMENTS

Consolidated Balance Sheets		F-3

Consolidated Statements of Operations and Comprehensive Loss		F-5

Consolidated Statements of Stockholders’ Deficit		F-6

Consolidated Statements of Cash Flows		F-7

Notes to Consolidated Financial Statements		F-8 - 19

F-2

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2007 and 2006

	2007		2006

ASSETS

Current assets:
Cash and cash equivalents (Note 2)	$	19,915	$	13,551
Restricted cash (Note 3)		9,177		10,283
Accounts receivable (Notes 2 and 17)		69,738		45,544
Inventories (Note 2)		15,175		111,365
Due from related parties (Note 4)		—		1,179,189
Receivable from unsettled contract (Note 6)		771,149		—
Prepaid expenses and other current assets (Note 7)		108,829		108,734

Total current assets		993,983		1,468,666

Property and equipment (Note 5)		1,130,434		9,499,945

Other assets:
Investments (Note 8)		405		441,381
Intangible assets (Note 2)		176,059		183,271
Deposits		85,434		102,825

Total other assets		261,898		727,477

Total assets	$	2,386,315	$	11,696,088

F-3

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2007 and 2006

	2007			2006

LIABILITIES AND STOCKHOLDER'S DEFICIENCY

Current liabilities:
Accounts payable and accrued expenses (Note 4)	$	7,974,479		$	9,274,128
Rental deposits (Note 9)		63,755			164,520
Loan payable, current portion (Note 10)		7,112,750			10,976,109
Due to related company		—			19,228
Due to shareholders and officers (Note 11)		706,875			518,664

Total current liabilities		15,857,859			20,952,649

Long-term liabilities:
Accrued pension payable and other liabilities (Note 12)		679,912			573,918
Deposits from customers		145,251			1,504,844
Long-term debt, net of current portion (Note 10)		22,440			41,644

Long-term liabilities		847,603			2,120,406

Total liabilities		16,705,462			23,073,055


Stockholders' deficiency:
Common stock (Note 13)		40,316			31,166
Additional paid-in-capital		16,579,251			16,418,734
Accumulated other comprehensive loss		(2,128,228	)		(2,255,671	)
Accumulated deficit		(28,810,486	)		(25,571,196	)

Total stockholders' deficiency		(14,319,147	)		(11,376,967	)

Total liabilities and stockholders' deficiency	$	2,386,315		$	11,696,088

F-4

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Loss

For The Three Months Ended March 31, 2007 and 2006

	2007			2006

Net sales (Note 15)	$	154,767		$	122,443

Cost of goods sold (Note 15)		37,740			83,500

Gross profits		117,027			38,943

Operating expenses		408,754			679,363

Operating loss		(291,727	)		(640,420	)

Other income (expenses):
Loss from sale of assets		(275	)		—
Net rental income (expense)		(7,120	)		36,964
Miscellaneous expense		(2,982	)		—
Net interest expense		(295,375	)		(486,144	)
Loss from sale of investment securities (Note 8)		(476,914	)		—
Allowance for related party loans (Note 4)		(1,356,179	)		(108,894	)

Net other expenses		(2,138,845	)		(558,074	)

Loss before income taxes		(2,430,572	)		(1,198,494	)

Income taxes (Note 14)		—			—

Net loss		(2,430,572	)		(1,198,494	)

Comprehensive income (loss):
Unrealized loss on investment		—			(107,113	)
Foreign currency translation		1,090,237			(370,692	)

		1,090,237			(477,805	)

Comprehensive loss	$	(1,340,335	)	$	(1,676,299	)

Basic and diluted (loss) per share	$	(0.06	)	$	(0.04	)

Weighted average number of shares outstanding during the periods - basic and diluted (Note 13)		40,315,705			31,165,975

F-5

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Deficit

For The Three Months Ended March 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)		31,165,975	$	31,166	$	16,418,734	$	(1,777,866	)	$	(24,372,702	)	$	(9,700,668	)

Unrealized loss on available for sale securities		—		—		—		(107,113	)		—			(107,113	)

Foreign currency translation adjustment		—		—		—		(370,692	)		—			(370,692	)

Net loss		—		—		—		—			(1,198,494	)		(1,198,494	)

Balance, March 31, 2006		31,165,975	$	31,166	$	16,418,734	$	(2,255,671	)	$	(25,571,196	)	$	(11,376,967	)

Balance, January 1, 2007 (Note 13)		40,315,705	$	40,316	$	16,579,251	$	(3,218,465	)	$	(26,379,914	)	$	(12,978,812	)

Foreign currency translation adjustment		—		—		—		1,090,237			—			1,090,237

Net loss		—		—		—		—			(2,430,572	)		(2,430,572	)

Balance, March 31, 2007		40,315,705	$	40,316	$	16,579,251	$	(2,128,228	)	$	(28,810,486	)	$	(14,319,147	)

F-6

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For The Three Months Ended March 31, 2007 and 2006

	2007			2006
Cash flows from operating activities:
Net loss	$	(2,430,572	)	$	(1,198,494	)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		28,668			167,932
Provision for loss on uncollectable related party loans		1,356,179			108,894
Loss on investment		476,914			—
(Increase) decrease in assets:
Restricted cash		(3,359	)		(393	)
Accounts receivable		7,326			49,425
Inventory		18,924			(50,779	)
Prepaid expenses and other assets		73,080			(29,545	)
Increase (decrease) in liabilities:
Accounts payable		(176,969	)		769,437
Accrued pension payable		86,931			96,484
Rental deposits		—			6,280
Cash used in operating activities		(562,878	)		(80,759	)

Cash flows from investing activities:
Investment in securities		(133,803	)		—
Deposits		(3,000	)		—
Intangible assets		12,122			(3,942	)
Cash used in investing activities		(124,681	)		(3,942	)

Cash flows from financing activities:
Net advances from (to) shareholder and officers		(199,080	)		159,109
Net advance to related party		(105,968	)		(296,849	)
Net deposits from (to) customers		(172,247	)		57,442
Proceeds receivable from sale of assets		1,261,433			—
Loans payable		(86,036	)		164,139
Cash provided by financing activities		698,102			83,841

Foreign exchange on cash and cash equivalents		341			945
Net increase in cash and cash equivalents		10,884			85
Cash and cash equivalent - beginning of period		9,031			13,466

Cash and cash Equivalent - end of period	$	19,915		$	13,551

Supplemental Information:
Cash paid during the year for:
Interest paid	$	—		$	87,262

F-7

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2007 and 2006

Note 1 - Nature of Business and Going Concern

(a) Description of Business

Eugene Science Inc. (“the Company”) was incorporated in August 1998 under the laws of state of Delaware, and owns 89.5% of Eugene Science, Inc. in Korea (“the Korean subsidiary”) which manufactures certain cholesterol lowering food ingredients. The Company currently has no other business.

Initially registered as Orcas, Ltd, the Company has had a number of name changes; it changed the name to Ezcomm Inc. in January 2000, and again to Ezcomm Enterprises, Inc. (EEI) in July 2004, and finally to the current name in September 2005 as it acquired the control of the Korean subsidiary.

The control of the Korean subsidiary was acquired in September 2005 by a share exchange transaction. By this exchange, EEI acquired 89.5% of Eugene Science, Inc. by issuing 88.5% of its own common stock to the shareholders of the Korean company. As a result, the Korean company has become 89.5% subsidiary of EEI while the shareholders of the Korean subsidiary hold 88.5% control in EEI in the United States. Immediately following the share exchange, EEI changed its name to Eugene Science, Inc. so that both companies are known under a common name.

The Korean subsidiary, located in Kyunggi-Do, Korea, was organized in July 1997 under the laws of the Republic of Korea, and is in business of manufacturing and selling CZ^TM series cholesterol-lowering functional food ingredients, beverages and capsules, and vegetable oil products that include those ingredients.

(b) Going Concern

The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has experienced recurring losses since 2000 and has negative cash flows from operations. The Company’s net losses were $2,430,572 and $1,198,494 for the years ended March 31, 2007 and 2006, respectively, and working capital deficiency were $14,863,876 and $19,254,357, as of March 31, 2007 and 2006, respectively. These factors raise substantial doubt as to 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 overseas 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-8

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 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.

(a)

Basis of Financial Statement Presentation

These financial statements have been prepared with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business.

(b)

Basis of Consolidation

The reverse-takeover transaction between the Company and Eugene Science Inc. in Korea has been recorded as the recapitalization of the Company, with the net assets of the Company brought forward at their historical basis. The intention of the management of Eugene Science Inc. in Korea was to acquire the Company as a shell company listed on a stock market. As such, accounting for the reverse-takeover as the recapitalization of the Company is deemed appropriate.

The consolidated financial statements included the accounts of Eugene Science, Inc. (formerly Ezcomm Enterprises, Inc.) in the United States, Eugene Science, Inc. in Korea and its subsidiary, Ucolebio, Inc. in Korea. Significant inter company transactions, if any, have been eliminated in consolidation

Minority interests are recorded to the extent of their equity. Losses in excess of minority interest equity capital are charged against the majority interest and will be reversed when the losses reverse.

(c)

Unit of Estimates

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

(d)

Revenue Recognition

The Company generates revenues from sales of manufactured goods and merchandise, as well as rental of the company's buildings.

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

For manufactured finished goods, the Company recognizes revenue when there is a definitive sales agreement, and upon shipment of products, when title is passed and the amount collectible can reasonably be determined.

For merchandise sales, the Company recognizes revenue upon shipment of products, when title is passed and the amount collectible can reasonably be determined.

For rental income, the Company retains substantially all of the benefits and risks of ownership of its income properties and therefore recognizes revenue upon receipt of monthly rent.

F-9

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2007 and 2006

(e)

Government Grants

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

(f)

Currency Translation

The Company's functional currency is Korean Won. Adjustments occurring in translating the currency into U.S. dollars at the balance sheet date are recorded as a component of other comprehensive income (loss).

Foreign currency transactions of the Korean operations have been translated to Korean Won at the rate prevailing at the time of the transaction. Realized foreign exchange gains and losses were taken into current period.

(g)

Cash and Cash Equivalents

Highly liquid investments with maturities of three months or less when purchased are considered cash equivalents and recorded at cost, which approximates fair value.

(h)

Allowance for Doubtful Accounts

An allowance for doubtful accounts is computed based on the Company’s historical experience and management’s analysis of possible bad debts. Accounts receivable are shown net of allowance for doubtful accounts of $66,984 and $26,503 as of March 31, 2007 and 2006, respectively.

(i)

Properties and Equipment

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

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

(j)

Intangible Assets

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

(k)

Inventories

Inventories are stated at the lower of cost or net realizable value. Net realizable value is determined by deducting selling expenses from selling price.

F-10

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2007 and 2006

The cost of inventories is determined on the first-in first-out method, except for materials-in-transit for which the specific identification method is used. The components of inventory at March 31, 2007 and 2006 were as follows:

	2007		2006

Raw materials	$	—	$	42,738
Finished goods		15,175		68,627

Total	$	15,175	$	111,365

(l)

Investments

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

(m)

Financial Instruments

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

(n)

Recent Accounting Pronouncements

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections" ("SFAS 154"), which replaces Accounting Principles Board ("APB") Opinion No. 20, "Accounting Changes", and SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements An Amendment of APB Opinion No. 28". SFAS No. 154 provides guidance on the accounting for and reporting of changes in accounting principles and error corrections. SFAS No. 154 requires retrospective application to prior period financial statements of voluntary changes in accounting principle and changes required by new accounting standards when the standard does not include specific transition provisions, unless it is impracticable to do so. SFAS No. 154 also requires certain disclosures for restatements due to correction of an error. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, and is required to be adopted by the Company as of January 1, 2006. The impact that the adoption of SFAS No. 154 will have on the Company's results of operations and financial condition will depend on the nature of future accounting changes adopted by the Company and the nature of transitional guidance provided in future accounting pronouncements.

F-11

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2007 and 2006

Note 3 - Restricted Cash

The Company had restricted cash of $9,177 and $10,283 as of March 31, 2007 and 2006 respectively, 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 $- and $1,179,189 as of March 31, 2007 and 2006, respectively. These loans are pledged by marketable securities, and bear interest at 9% and are due on demand. As of March 31, 2007, the Company determined that the collectability of these loans is remote due to the leveraged financial condition of the affiliate and increased a loss reserve by the entire loan amount.

Note 5 - Properties and Equipment

Properties and equipment consisted of the following at March 31:

	2007			2006

Land	$	—		$	4,640,855
Buildings		896,837			3,554,256
Equipment and vehicles		772,519			4,242,042
Furniture and fixtures		1,078,559			1,000,049
		2,747,915			13,437,202
Less: accumulated depreciation		(1,617,481	)		(3,937,257	)

Net property and equipment	$	1,130,434		$	9,499,945

On March 3, 2006, the Company cancelled a sales agreement entered into in January 2004 to sell the land and buildings. In return, the Company paid the purchaser approximately $2,100,000 representing return of the deposit and a cancellation fee. On the same date, the Company signed a new agreement to sell the land and building to a third party at approximately $11,700,000. The title of the property transferred on April 27, 2006. The gain realized on the sale was 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 March 31, 2007 and 2006 were $28,668 and $61,577, respectively.

Note 6 - Receivable from Unsettled Contracts

As of March 31, 2007, the Company had outstanding proceeds receivable of $771,149 from the sale of real property and machinery and equipment.

F-12

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2007 and 2006

Note 7 - Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following at March 31:

	2007		2006

Prepaid fees for certain patent registration and related legal costs under application process	$	65,583	$	-
Advance payment to vendors		43,246		54,463

Total	$	108,829	$	54,463

Note 8 - Investments

The following is a summary of investments at March 31:

	2007		2006

7.50% equity of a unlisted company	$	—	$	440,989
4.58% equity in a unlisted company		—		1
Other marketable securities		405		391

Total	$	405	$	441,381

During the three months ended March 31, 2007, the Company sold the investments in the equity securities and recognized a loss of $479,345.

Note 9 - Rental Deposits

In January 2007, the Company began to occupy an office space that was previously leased to an unrelated party and has an outstanding rental deposit of $63,755 as of March 31, 2007.

Note 10 - Loans Payable

Loans payable consisted of the following at March 31:

	2007			2006
Loan payable to Korea Trade Bank with interest at 4.5% to 18%, due on demand, guaranteed by Korea Technology Credit Guarantee Fund and chief executive officer. Principal reduced by $4,000,000 in April 2006.	$	3,458,891		$	6,114,757

Loan payable to a bank with interest at 4.5% to 18% per annum, paid off in June 30, 2006.		—			2,052,181

Note payable to Kook Min Bank with interest at 19% to 21%, due on demand, guaranteed by Korea Technology Credit Guarantee Fund and chief executive officer. This loan is in default.		1,330,097			2,056,500

Note payable to a customer with interest at 3% due on demand. The note is in default.		2,001,455			—

Note payable to Shin Han Bank with interest at 18% due on demand. The note is in default.		302,437			—

Various notes payable to related party with interest at 9% to 10%, unsecured, and due on demand.		—			429,962

Government loan, non-interest bearing, unsecured, payable on demand.		42,310			364,353

Total notes payable		7,135,190			11,017,753

Less: current portion		(7,112,750	)		(10,976,109	)

Total long-term debt	$	22,440		$	41,644

F-13

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2007 and 2006

Note 11 - Due to Shareholders and Officers

Due to shareholders and officer consisted of the following at March 31:

	2007		2006
Unsecured short term advance payable to shareholder with interest at 9% per annum, due on demand.	$	47,817	$	—

Unsecured short-term advances payable to corporate officer with interest at 9% per annum, due on demand.		659,058		518,664

Total	$	708,882	$	518,664

Note 12 - Accrued Pension Payable

The Company has an unfunded non-contributory, defined contribution pension plan that covers substantially all of its employees which is mandated by the government. The plans provide defined benefits based on years of service and final average salary. The plan provides that about 8% of each participant’s total compensation will be contributed to the plan. The Company is required to make contributions to the plan equal to the amounts accrued for pension expense. The unfunded accrued pension payables were $610,844 and $573,918 at March 31, 2007 and 2006, respectively.

Total pension expenses for the three months ended March 31, 2007 and 2006 were $26,081 and $119,240, respectively.

F-14

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2007 and 2006

Note 13 - Capital Stock

Total shares authorized:
480,000,000 shares of Common Stock, par value $0.001
20,000,000 shares of Preferred Stock, par value $0.001

Shares issued and outstanding:	Shares		Amount
Common stock
March 31, 2007		40,315,705	$	40,316

March 31, 2006		31,165,975	$	31,166

Preferred stock - none issued and outstanding		—	$	—

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

On September 30, 2005, in accordance with a Share Exchange Agreement dated September 1, 2005, the Company entered into a reverse-takeover transaction with Eugene Science, Inc. in Korea, whereby 89.5% of the outstanding shares of the Korean subsidiary were exchanged for 304,882,998 shares of the Company. As a result of the transaction, the shareholders of Eugene Science, Inc. in Korea acquired 88.5% of the Company’s voting stock. While the Company is the legal parent, Eugene Science, Inc. in Korea, as a result of the reverse-takeover, became the parent company for accounting purposes.

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

On October 12, 2005, the Company issued 3,500,000 common shares for $350,000.

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

On February 21, 2006, the company issued 1,000,000 shares of common stock for $83,000.

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

On October 1, 2006, the company issued 1,200,000 shares of common stock for various consulting services provided.

On October 1, 2006, in accordance of 2006 Stock Incentive Plan, the company issued 3,350,000 shares of common stock to employees and directors.

Stock Compensation Plan

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

F-15

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2007 and 2006

	2007

Dividend yield		0.00	%
Expected volatility		80	%
Risk-free interest rate		4.3	%
Expected life of the option term (in years)		10
Forfeiture rate		7.0	%

Dividend Yield - The Company has not declared or paid dividends in the past and has no plan for dividend payments in the future.

Expected Volatility - Volatility is a measure of the amount by which a financial variable such as a share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company uses the historical volatility since its expected volatility because the current business strategy, which is not expected to change materially, is fundamentally consistent with past strategy. The volatility has averaged at 276%.

Risk-Free Interest Rate - This is the U.S. Treasury rate for the week of each stock option grant during the quarter having a term that most closely resembles the expected life of the stock option.

Expected Life of the Stock Option Term - This is the period of time that the stock options granted are expected to remain unexercised. Stock options granted during the fiscal year have a maximum term of ten years. The Company estimates the expected life of the stock option term using a lattice model with inputs regarding estimated exercise behavior that are consistent with actual past behavior for similar stock options.

Forfeiture Rate - This is the estimated percentage of the stock options granted and expected to be forfeited or canceled on an annual basis before becoming fully vested. The Company estimates the forfeiture rate based on past turnover data ranging anywhere from one to three years with further consideration given to the class of employees to whom the options were granted.

In February 2006, the Board of Directors of the Company adopted 2006 Stock Incentive Plan (the “2006 Plan”). Under this Plan, employees and directors of the Company and affiliated company may receive options to purchase common stock. A maximum of 4,000,000 shares have been authorized to be granted under the 2006 Plan.

In May 2006, the Plan granted 3,600,000 stock options for common stock having a $0.01 nominal par value each and exercise price of $0.50 to $1.36. In October 2006, 3,350,000 stock options were exercised, 250,000 options were canceled and no option is outstanding as of December 31, 2006.

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 March 31, 2007 and for disclosure requirements set forth above under Statement 123, during the period ended March 31, 2007, the Company recognized no additional stock-based compensation for options vested.

F-16

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2007 and 2006

Stock Options of the Korean Subsidiary

The following weighted-average assumptions were used in the valuation model for the stock option of the subsidiary:

	Period ended March 31,
	2007			2006

Dividend yield		0.0	%		0.00	%
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.

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.

F-17

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2007 and 2006

The following table summarizes the stock option activity during the periods ended March 31:

	2007				2006
	Shares		Weighted-Average Excise Price		Shares		Weighted-Average Excise Price

Outstanding, beginning of period		1,456,246	$	1.88		1,456,246	$	1.12
Granted		—		—		—		—
Exercised		—		—		—		—
Cancelled		—		—		—		—
Outstanding, end of period		1,456,246	$	1.88		1,456,246	$	1.88

Weighted average remaining contractual life of common stock options		3 years				4 years

Note 14 - Income Taxes

The Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for Income Taxes". This Standard prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates. The effects of future changes in tax laws or rates are not anticipated. Corporate income tax rates applicable to the Company in 2007 and 2006 were 16.5% of the first 100 million Korean Won ($84,000) of taxable income and 29.7% on the excess. For the United States operation, the corporate tax rate is approximately 34%. Tax losses from the Korean subsidiary can be carried forward for five years. The U.S. tax losses can be carried forward for fifteen years. The company has accumulated approximately $20,561,000 of taxable losses, which can be used to offset future taxable income. The utilization of the losses expires in years 2007 through 2010.

Under SFAS No. 109 income taxes are recognized for the following: a) amount of tax payable for the current year, and b) deferred tax liabilities and assets for future tax consequences of events that have been recognized differently in the financial statements than for tax purposes.

The Company has deferred income tax assets arising from research and development expenses. For accounting purposes, these amounts are expenses when incurred. Under Korean tax laws, these amounts are deferred and amortized on a straight-line basis over 5 years.

The Company has deferred income tax assets as follows:

	2007			2006
Deferred income tax assets:
Research and development expenses amortized over 5 years for tax purposes	$	150,722		$	207,040
Other timing differences		2,876			10,397
Net operating loss carryforwards		3,392,570			2,633,129
		3,546,168			2,850,566
Valuation allowance for deferred income tax assets		(3,546,168	)		(2,850,566	)

	$	—		$	—

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

F-18

EUGENE SCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2007 and 2006

Note 15 - Business Segment Information

Sales and cost of goods sold of the Company’s segments for the periods ended March 31, 2007 and 2006 were as follows:

	2007		2006
Sales:
Manufacturing	$	57,941	$	102,458
Merchandise		96,826		19,985
	$	154,767	$	122,443

Cost of Sales:
Manufacturing	$	18,638	$	67,564
Merchandise		19,102		15,936
	$	37,740	$	83,500

Note 16 - Major Customers

In 2007, the Company had two major customers which accounted for 96% of the total revenue, of which one single customer accounted for 60%. In 2006, sales to three major customers accounted for 85% of the total revenue.

Note 17 - Related Party Transactions

Significant transactions with companies related or affiliates by common control for the periods ended and as of March 31, 2007 and 2006 are summarized as follows:

	Sales		Net rental/ Interest income		Purchases		Accounts Receivable		Prepaid Assets		Accounts Payable		Rental Deposit

Company related by common control
2007	$	49,085	$	—	$	—	$	—	$	—	$	247,417	$	63,755
2006	$	6,067	$	93,056	$	15,890	$	—	$	74,019	$	301,302	$	102,825

Companies affiliated by common control
2007	$	201	$	1,582	$	—	$	4,542	$	—	$	73,179	$	—
2006	$	655	$	461	$	20,800	$	679	$	—	$	107,888	$	—

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-19

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION .

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

Overview

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

Going Concern

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

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

Results of Operations

Revenue

Comparison of the Three Months Ended March 31, 2007 and 2006

Our total revenue increased 26%, or $32,324, to $154,767 for the three months ended March 31, 2007 as compared to $122,443 for the three months ended March 31, 2006. The increase in total revenue for the three months ended March 31, 2007 was primarily attributable to an increase in sales of our cooking oil products to Amway Korea.

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

Comparison of the Three Months Ended March 31, 2006 and 2005

Our total revenue decreased 240%, or $293,789, to $122,443 for the three months ended March 31, 2006 as compared to $416,232 for the three months ended March 31, 2005. The decrease in total revenue for the three months ended March 31, 2006 was primarily attributable to poor progress in our sales and delays in the launch of our products.

Cost of Sales

Comparison of the Three Months Ended March 31, 2007 and 2006

Cost of sales decreased 55%, or $45,760, to $37,740 for the three months ended March 31, 2007 as compared to $83,500 for the three months ended March 31, 2006. The decrease in cost of sales was primarily attributable to sales of products produced during prior fiscal years. Our gross margin for the three months ended March 31, 2007 was approximately 75% of our revenue as compared to a gross margin of approximately 32% of our revenue for the three months ended March 31, 2006. The change in our gross margin for the three months ended March 31, 2007 was primarily attributable to an increase in sales of our cooking oil products to Amway Korea.

Comparison of the Three Months Ended March 31, 2006 and 2005

Cost of sales decreased 346%, or $289,083, to $83,500 for the three months ended March 31, 2006 as compared to $372,593 for the three months ended March 31, 2005. Our gross margin for the three months ended March 31, 2006 was approximately 32% of our revenue as compared to a gross margin of approximately 10% of our revenue for the three months ended March 31, 2005. The change in our gross margin for the three months ended March 31, 2006 was primarily attributable to increased sales of our CholZero capsules.

Operating Expenses

Comparison of the Three Months Ended March 31, 2007 and 2006

Our operating expenses decreased 40%, or $270,609, to $408,754 for the three months ended March 31, 2007 as compared to $679,363 for the three months ended March 31, 2006. Our operating expenses decreased for the three months ended March 31, 2007 due primarily to a reduction in depreciation and retirement allowances and the sale of equipment and property.

Comparison of the Three Months Ended March 31, 2006 and 2005

Our operating expenses decreased 5%, or $31,407, to $679,363 for the three months ended March 31, 2006 as compared to $710,770 for the three months ended March 31, 2005. Our operating expenses decreased for the three months ended March 31, 2006 due to decreases in our research and development and travel expenses.

Other Income (Expense)

Comparison of the Three Months Ended March 31, 2007 and 2006

Other income (expense) primarily represents an allowance for related party loans, loss from sale of investment securities and interest expense. Other expense increased 283%, or $1,580,771, to $2,138,845 for the three months ended March 31, 2007 as compared to other expense of $558,074 for the three months ended March 31, 2006. The increase in other expense for the three months ended March 31, 2007 was primarily attributable to an increase in the loss reserve for loans to a related party resulting from a determination that the collectability of these loans is remote due to the leveraged financial condition of the related party and to a loss from the sale of investment securities. All of our bank loans were in default as of March 31, 2007. The interest rate on such loans ranges from 15% to 18%. We are currently in negotiations with our lenders to settle our outstanding debts, and we intend to enter into settlement agreements with such lenders during the second quarter of our 2007 fiscal year.

Comparison of the Three Months Ended March 31, 2006 and 2005

Other expense increased 100%, or $279,056, to $558,074 for the three months ended March 31, 2007 as compared to other expense of $279,018 for the three months ended March 31, 2006. The increase in other expense for the three months ended March 31, 2007 was primarily attributable to an increase in interest due on loans in default.

Liquidity and Capital Resources

Comparison of the Three Months Ended March 31, 2007 and 2006

As of March 31, 2007, we had cash and cash equivalents of approximately $19,915 and negative working capital of approximately $14,863,876. As of March 31, 2006, we had cash and cash equivalents of approximately $13,551 and negative working capital of approximately $19,483,983. The increase in our cash and working capital during the three months ended March 31, 2007 was primarily attributable to our partial repayment of outstanding loans from the Industrial Bank of Korea, or IBK, and Wando Fisheries Co. Ltd.

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 three months ended March 31, 2007, we had a net increase in cash and cash equivalents of approximately $10,884 as compared with a net increase in cash and cash equivalents of approximately $85 for the three months ended March 31, 2006.

Cash Used In Operating Activities

Cash used in operating activities increased $482,119 to $562,878 for the three months ended March 31, 2007 as compared to $80,759 for the three months ended March 31, 2006. The increase in cash used in operating activities for the three months ended March 31, 2007 was primarily attributable to an increase in the provision for loss on uncollectible loans to a related party and a loss sustained on the sale of investment securities as well as a decrease in accounts payable.

Cash Used In Investing Activities

Cash used in investing activities increased $120,739 to $124,681 for the three months ended March 31, 2007 as compared to $3,942 for the three months ended March 31, 2006. The increase in cash used in investing activities for the three months ended March 31, 2007 was primarily attributable to a loss sustained on the sale of investment securities.

Cash Provided by Financing Activities

Cash provided by financing activities increased $614,261 to $698,102 for the three months ended March 31, 2007 as compared to $83,841 for the three months ended March 31, 2006. The increase in cash provided by financing activities for the three months ended March 31, 2007 was primarily attributable to proceeds receivable from the sale of property and equipment.

Comparison of the Three Months Ended March 31, 2006 and 2005

As of March 31, 2006, we had cash and cash equivalents of approximately $13,551 and negative working capital of approximately $19,483,983. As of March 31, 2005, we had cash and cash equivalents of approximately $36,681 and negative working capital of approximately $12,515,851. The decrease in our cash and working capital during the three months ended March 31, 2006 was due primarily to poor progress in our sales activities and an accompanying decrease in our total sales.

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 three months ended March 31, 2006, we had a net increase in cash and cash equivalents of approximately $85, as compared with a net increase in cash and cash equivalents of approximately $36,681 for the three months ended March 31, 2005.

Cash Used In Operating Activities

Cash used in operating activities decreased $50,750 to $80,759 for the three months ended March 31, 2006 as compared to $131,509 for the three months ended March 31, 2005. The decrease in cash used in financing activities for the three months ended March 31, 2006 resulted primarily from an increase in accounts payable, due to a related decrease in accounts receivable from our related companies, and an aggravation of our cash flow.

Cash Used in Investing Activities

Cash used in investing activities increased $3,942 to $3,942 for the three months ended March 31, 2006 as compared to zero dollars for the three months ended March 31, 2006. The increase in cash used in investing activities for the three months ended March 31, 2007 was primarily attributable to an increase in intangible assets.

Cash Provided By Financing Activities

Cash provided by financing activities decreased $64,091 to $83,841 for the three months ended March 31, 2006 as compared to $147,932 for the three months ended March 31, 2005. The decrease in cash provided by financing activities for the three months ended March 31, 2006 was primarily attributable to a decrease in advances from a related party and an issuance of common stock in the quarter ended March 31, 2005 which did not occur in the quarter ended March 31, 2006.

Bank Loans

Since 1999, we have borrowed an aggregate principal amount of $3,889,259 from 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. During the second half of the 2006 fiscal year, we did not pay IBK any accrued and unpaid interest owed under these loans. At March 31, 2007, the accrued and unpaid interest owed by us to IBK under these loans was approximately $1,136,526.

In December 2004, we obtained a short-term loan from the National Agricultural Cooperative Federation, or the NACF, in the principal amount of $1,946,105. This loan has an interest rate of 4.6% per annum and was due on December 22, 2005. This loan is guaranteed by KOTEC. At March 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 $1,367,529.

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 March 31, 2007, the aggregate principal balance and accrued and unpaid interest on such loan was approximately $423,720. 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 March 31, 2007, the aggregate principal balance and accrued and unpaid interest on such loans was approximately $2,019,572.

Notes

On October 9, 2004, we issued KOTEC a note in connection with its payout as guarantor of a convertible debenture issued by us. The note bears interest at a rate of 21% per annum, is guaranteed by Mr. Noh, our president, chief executive officer, chairman of the board and principal stockholder, and is due and payable on demand. To date, KOTEC has made no demands for payment of this note. At March 31, 2007, the outstanding balance of this note was $3,225,517.

In October 2003, we issued a note in the principal amount of $47,772, bearing interest at a rate of 9% per annum, to Jae Ho Lee, the president of UcoleBio Corp., an entity in which Eugene Science Korea, our subsidiary, has a 73% ownership interest. The note is due and payable on demand and, to date, Mr. Lee has made no demands to us for payment of this note. The outstanding balance of this note was $51,256 at March 31, 2007.

In February 2002, we issued a note in the principal amount of $100,000, bearing interest at a rate of 8% per annum, to Kyungioils Co., Ltd. The note is due and payable on demand and, to date, no demands have been made to us for payment of this note. The outstanding balance of this note was $20,522 at March 31, 2007.

Government Loans

On March 2, 2003, we received a non-interest bearing, unsecured loan from the Korean government in the principal amount of $61,779. Pursuant to its terms, the loan was to be repaid in three annual installments of $20,593, beginning February 26, 2004. The loan matured in its entirety in February 2006. At March 31, 2007, we were $59,624 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 March 31, 2007, we were $42,310 in arrears under this loan arrangement.

Critical Accounting Policies

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

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

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

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

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

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

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

CASH AND EQUIVALENTS. Highly liquid investments with maturities of three months or less when purchased are considered cash equivalents and recorded at cost, which approximates fair value.

ALLOWANCE FOR DOUBTFUL ACCOUNTS. An allowance for doubtful accounts is computed based on our historical experience and our management’s analysis of possible bad debts. Accounts receivable are shown net of allowance for doubtful accounts of $66,984 and $26,503 as of March 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			20-40 years

Machinery			10 years

Vehicles			5 years

Furniture and equipment			3-5 years

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

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

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

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

Recent Accounting Pronouncements

In May 2005, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards, "Accounting Changes and Error Corrections," or SFAS 154, which replaces Accounting Principles Board, or APB, Opinion No. 20, "Accounting Changes", and Statement of Financial Accounting Standards No. 3, "Reporting Accounting Changes in Interim Financial Statements An Amendment of APB Opinion No. 28." SFAS No. 154 provides guidance on the accounting for and reporting of changes in accounting principles and error corrections. SFAS No. 154 requires retrospective application to prior period financial statements of voluntary changes in accounting principle and changes required by new accounting standards when the standard does not include specific transition provisions, unless it is impracticable to do so. SFAS No. 154 also requires certain disclosures for restatements due to correction of an error. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 and was required to be adopted by us as of January 1, 2006. The impact that the adoption of SFAS No. 154 will have on our results of operations and financial condition will depend on the nature of future accounting changes adopted by us and the nature of transitional guidance provided in future accounting pronouncements.

Risk Factors

The following risks could affect our business, financial results and results of operations. These risk factors should be considered in connection with evaluating the forward-looking statements contained in this Quarterly Report on Form 10-QSB because these factors could cause actual results and conditions to differ materially from those projected in the forward-looking statements .

Risks Related to Our Company

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

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

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 three months ended March 31, 2007, sales to two major customers accounted for 98% of our total revenue. We may fail to capture a share of the market for such products. Because we are dependent on a limited number of customers, any decrease or elimination of such customers’ purchases could materially harm our business.

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

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

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

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

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

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

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

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

We may experience difficulty in entering international markets .

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

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

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

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

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

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

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

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

·	expected changes in regulatory requirements and tariffs;

·	difficulties and costs associated with staffing and managing foreign operations, including 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 Securities and Exchange Commission .

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

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

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

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

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

Risks Related to Our Industry

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

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

·	initiating investigations;

·	issuing warning letters and cease and desist orders;

·	requiring corrective labeling or advertising;

·	requiring consumer redress, such as requiring that we offer to repurchase products previously sold to consumers;

·	seeking injunctive relief or product seizures; and

·	imposing civil penalties or commencing criminal prosecution.

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

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

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

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

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

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

Risks Related to Our Common Stock

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

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

Our common stock price is highly volatile .

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

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

actual or anticipated fluctuations in our quarterly operating results;

announcements of technological innovations;

conditions or trends in our industry; and

changes in the market valuations of other comparable companies.

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

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

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

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

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

We do not foresee paying dividends in the near future .

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

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

As of March 31, 2007, our executive officers and directors and their affiliates owned approximately 34.99% of our outstanding voting shares. As a result, our executive officers and directors are able to exert considerable influence over the outcome of any matters submitted to a vote of the holders of our common stock, including the election of our board of directors. The voting power of these stockholders could also discourage others from seeking to acquire control of us through the purchase of our common stock, which might depress the price of our common stock.

Item 3. Controls and Procedures

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

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

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

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

PART II-OTHER INFORMATION

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

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

Exhibit Number		Description
31.1		Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.

31.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.

32.1		Certification of Principal Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.

32.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.

SIGNATURES

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


	EUGENE SCIENCE, INC.

Date: October 26, 2007	By:	/s/ SEUNG KWON NOH
		Seung Kwon Noh President, Chief Executive Officer and Director
		(Principal Executive Officer)

Exhibit Index

Exhibit Number		Description
31.1		Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.

31.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.

32.1		Certification of Principal Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.

32.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.

Eugene Science (EUSI) Inactive 10QSB/A2007 Q1 Quarterly report (small business) (amended)