**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**









**FORM
      10-KSB**









**(Mark
      One)**




[X]ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF
      1934.




**For the fiscal year ended May 31, 2006**




**OR**




[ 
      ]TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.




**For the transition period from _________ to _________**





**Commission
      file number 333-118259**







**CAPITAL
      RESOURCE FUNDING, INC.**


**(Name
      of Small Business Issuer in Its Charter)**









**NORTH
                  CAROLINA**
              **54-2142880**(State
                  or Other Jurisdiction of
              (I.R.S.
                  EmployerIncorporation
                  or Organization)
              Identification
                  No.)**17111
                  Kenton Drive, Suite 100B, Cornelius, North
                  Carolina**
              **28031**(Address
                  of Principal Executive Office)
              (Zip
                  Code)




**(704)
      564-1676**


(Issuer’s
      Telephone Number, Including Area Code)




Securities
      registered under Section 12(b) of the Exchange Act: None




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




Common
      Stock, par value $.00000005 per share


(Title
      of
      Class)









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





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





Issuer’s
      revenues for its most recent fiscal year were $20,673.





The
      aggregate market value of the issuer’s Common Stock held by non-affiliates
      (1,090,000 shares) was approximately $272,500, based on the price stated in
      our
      Post-Effective Amendment No. 1 to Form SB-2/A Registration Statement for the
      Common Stock on July 14, 2006.





As
      of
      July 14, 2006, there were outstanding 11,790,000 shares of the issuer’s Common
      Stock, par value $.00000005.





Transitional
      Small Business Disclosure Format (check one):  Yes
      [  ] No [X]









*Table
          of Contents*




**CAUTIONARY
      STATEMENT REGARDING FORWARD LOOKING INFORMATION**




The
      discussion contained in this 10-KSB under the Securities Exchange Act of 1934,
      as amended, (the “Exchange Act”) contains forward-looking statements that
      involve risks and uncertainties. The issuer’s actual results could differ
      significantly from those discussed herein. These include statements about our
      expectations, beliefs, intentions or strategies for the future, which we
      indicate by words or phrases such as “anticipate,” “expect,” “intend,” “plan,”
“will,” “we believe,” “the Company believes,” “management believes” and similar
      language, including those set forth in the discussion under “Description of
      Business,” including the “Risk Factors” described in that section, and
“Management’s Discussion and Analysis or Plan of Operation” as well as those
      discussed elsewhere in this Form 10-KSB. We base our forward-looking statements
      on information currently available to us, and we assume no obligation to update
      them. Statements contained in this Form 10-KSB that are not historical facts
      are
      forward-looking statements that are subject to the “safe harbor” created by the
      Private Securities Litigation Reform Act of 1995.




2


**TABLE
                  OF CONTENTS**Part
                  IItem
              
              Page1.
              Description
                  of Business
              32.
              Description
                  of Property
              63.
              Legal
                  Proceedings
              64.
              Submission
                  of Matters to a Vote of Security Holders
              6Part
                  II5.
              Market
                  for Common Equity and Related Stockholder Matters and Small Business
                  Issuer Purchases of Equity Securities
              66.
              Management’s
                  Discussion and Analysis or Plan of Operation
              87.
              Financial
                  Statements
              88.
              Changes
                  in and Disagreements with Accountants on Accounting and
                  Financial Disclosure
              188A.
              Disclosure
                  Controls and Procedures
              18Part
                  III9.
              Directors
                  and Executive Officers of the Registrant
              1910.
              Executive
                  Compensation
              2211.
              Security
                  Ownership of Certain Beneficial Owners and Management and
                  Related Stockholder Matters
              2212.
              Certain
                  Relationships and Related Transactions
              2413.
              Exhibits
                  and Reports on Form 8-K
              2414.
              Principal
                  Accountant Fees and Services
              24OtherIndex
                  to Exhibits
              25Signature
                  Page
              26






3
 *Table
          of Contents*


PART
        I







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





**History**





We
      were
      incorporated in North Carolina on February 2, 2004 to engage in the business
      of
      commercial finance brokerage and consulting. We are currently engaged and plan
      to continue in the commercial finance brokerage and consulting
      business.





**Description
      of Business**





We
      have
      acted and intend to continue to act as a broker for commercial finance
      transactions. The different types of commercial financing that we intend to
      broker are: Commercial Mortgages, Asset-Based Lines of Credit, Commercial
      Leasing, Accounts Receivable Financing (also known as “Factoring”) and Purchase
      Order Financing. To date, we have successfully brokered several financing
      transactions, consisting of various mortgage transactions, monthly broker fees
      and broker fees in connection with a commercial lease transaction.





Set
      forth
      below is a brief description of several types of commercial financing that
      we
      intend to broker. We have had success in brokering a commercial mortgage, a
      commercial lease and an accounts receivable financing package.





In
      brokering a commercial mortgage, we would typically act as an agent to secure
      a
      loan for a client to purchase a building in which to operate a business such
      as
      an import/export company. We would help the client arrange the loan with a
      bank,
      for example, and at closing we would be paid a broker’s commission from the
      funding source that typically amounts to 1% of the loan amount.





In
      brokering asset-based lines of credit, we would typically act as an agent to
      secure a loan from a bank, for example, for a manufacturing company that would
      be secured with inventory and/or accounts receivable. After the closing, we
      would be paid a commission by the funding source that typically amounts to
      .5%
      to 1% of the loan amount.





In
      brokering commercial leases, we would typically act as an agent to acquire
      a
      commercial lease of certain business equipment, such as several dump trucks
      for
      a construction company. Once each commercial lease transaction is closed, we
      would typically be paid a brokering commission from the funding source that
      averages .5% to1% of the loan amount.





In
      brokering accounts receivable/factoring financing, we would typically act as
      an
      agent to acquire loans that speed up the collection of cash flow for our
      clients. The typical fee for this type of financing is generally between 1
      to 8%
      of each invoice financed. The typical funding contract for a hypothetical
      accounts receivable financing or factoring transaction will have a minimum
      one
      year term. Thus, we anticipate each transaction of this type to pay monthly
      commissions for at least one year, if and when we have secured the brokerage
      assignment.





In
      brokering purchase order financing, we would typically act as an agent to
      acquire financing on a purchase order-by-purchase order basis in order to
      provide a client with funding to fill each order. Once each purchase order
      financing transaction is closed and funded, we would be paid a brokering
      commission from the funding source which would be .5% to 1% of each purchase
      order funded.





In
      performing all of these brokering services, we have and propose to represent
      our
      clients in all aspects of assisting with the assessment of funding needs and
      qualifications, and identifying and making presentations to the most suitable
      funding sources.




4
 *Table
          of Contents*





**Marketing**





We
      will
      continue to aggressively market our services in the United States. We are
      accomplishing this goal on numerous fronts and utilize an advertising agency
      in
      Charlotte, North Carolina to assist us.




**Going
      Concern Issues**





As
      shown
      in our financial statements, we suffered recurring losses from operations to
      date. We experienced a loss of ($26,968) during fiscal 2006, had a net deficit
      of ($30,089) and a net working capital deficit of $(33,856) as of May 31, 2006.
      Although these measurements show improvement, these factors raise substantial
      doubt about our ability to continue as a going concern. Our independent auditor
      has observed that we are in the
      development stage, have suffered losses, have a net capital deficiency and
      have
      yet to generate an internal cash flow, which lead it to conclude that there
      is
      substantial doubt about the our ability to continue as a going concern. Our
      ability to continue as a going concern will depend on many factors. There can
      be
      no assurance that we will raise additional equity capital in order to improve
      liquidity and sustain operations.





**Competition**





We
      face
      and will face intense competition from companies engaged in similar businesses.
      We compete and anticipating competing with numerous companies that broker
      commercial finance products both over the Internet and via traditional forms
      of
      business. Direct competition to us can be any individual or group of individuals
      or company that brokers commercial finance products, and there are
      thousands of entities that could be considered competitors in the United States.
      Hence, there is no way to accurately quantify or detail our market competition
      with greater specificity.  However, many of our competitors have
      significantly greater customer bases, operating histories, financial, technical,
      personnel and other resources than we do, and may have established reputations
      for success in the commercial finance industry. There can be no assurance that
      we will be able to compete effectively in the highly competitive commercial
      finance industry, which may adversely affect our business prospects.





There
      are
      few barriers to entry in the commercial finance brokering business. There are
      brokers, finders, agents, lawyers, consultants and a variety of other
      professionals all trying to put funding sources together with prospective
      clients in order to make a commission. With the advent of modern computers
      and
      internet communication, this business has become national in scope, and it
      is
      not unusual to find a broker from Miami, Florida putting together a financing
      package for a manufacturer in Pittsburgh, PA with a finance company located
      in
      Los Angeles, CA. We intend to participate in all of these markets, and seek
      commission based income wherever it can be derived.





There
      are
      examples of successful commercial finance brokerage firms within our industry,
      and we hope to achieve success with a business plan that shares many
      similarities, but is tailored to our size and resources. We meet from time
      to
      time with our competition and share ideas and opportunities. For example, there
      are large professional associations of commercial finance brokers and funding
      companies that meet on a regular basis in the major metropolitan areas. For
      example, the Commercial Finance Association, which is a nationwide organization
      with chapters in all of the major metropolitan areas, meets quarterly to discuss
      topics of interest and exchange leads. We are a member of this organization’s
      Charlotte, NC chapter. In addition, we are a member of the National Funding
      Association, based in Charlotte, NC, with other chapters in Atlanta, GA and
      Chicago, IL. Our Chairman, Mr. Koran, serves on the advisory board of the
      Charlotte, NC chapter of the NFA. Further, we are a member of the Turnaround
      Management Association, with chapters in all major metropolitan
      areas.




**Government
      Regulation**





No
      government approvals are required to conduct our principal operations, and
      we
      are not aware of any probable governmental regulation of our business sectors
      in
      the near future.




**Employees**





We
      have
      one (1) employee who is our Chief Executive Officer and President. We will
      retain additional employees, on an as needed basis. We do not currently
      anticipate experiencing any difficulty in recruiting and retaining employees.
      [In addition, we have entered into consulting arrangements with independent
      contractors who provide services to our company when needed].




5
 *Table
          of Contents*





**Item
      2.****Description
      of Property**





Our
      executive offices are currently located at 17111 Kenton Drive, Suite 100B,
      Cornelius, NC 28031. Our telephone number is (704) 564-1676.





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





None.





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





No
      matter
      was submitted during the fourth quarter of the fiscal year covered by this
      report to a vote of security holders, through the solicitation of proxies or
      otherwise.






**PART
      II**







**Item
                5.**
            **Market
                for Common Equity and Related and Stockholder.**





**Market
      For Common Stock**





Our
      Common Stock is not yet quoted on the OTC Electronic Bulletin Board, a service
      maintained by The NASDAQ Stock Market, Inc. as we are awaiting our ticker symbol
      from such organization. Accordingly, presentation herein of the range high
      and
      low bid information for our Common Stock for each quarter of the years ended
      May
      31, 2005 and 2006 is not applicable.




As
      of
      July 14, 2006, there were approximately 40 stockholders of record of our Common
      Stock. Our registrar and transfer agent is Island Capital Management, LLC d/b/a
      Island Stock Transfer, Inc., located at 100 Second Avenue South, Suite 300N,
      St.
      Petersburg, Florida 33701. Their telephone number is (727) 289-0010, and their
      facsimile number is (727) 289-0069.





**Limited
      Market for Common Stock**





There
      is
      currently no established trading market for our shares of Common Stock, and
      there can be no assurance that a substantial trading market will ever develop
      or
      be maintained. Any market price for our shares of Common Stock is likely to
      be
      very volatile, and numerous factors beyond our control may have a significant
      adverse effect. In addition, the stock markets generally have experienced,
      and
      continue to experience, extreme price and volume fluctuations which have
      affected the market price of many small capital companies and which have often
      been unrelated to the operating performance of these companies. These broad
      market fluctuations, as well as general economic and political conditions,
      may
      also adversely affect the market price of our Common Stock. Further, there
      is no
      correlation between the present limited offering price of our Common Stock
      and
      our revenues, book value, assets or other established criteria of value. The
      present offering price of our Common Stock per our Registration Statement should
      not be considered indicative of our actual value or our Common
      Stock.





Shares
      of
      our common stock may currently trade in a private trading market inasmuch as
      certain of our shares of common stock are registered under the Securities Act
      of
      1933, as amended, pursuant to an effective registration statement. However,
      management is not aware of the existence of any such trades, or the price or
      terms thereof.




**Dividends**





We
      have
      not paid any cash dividends to date and does not anticipate or contemplate
      paying cash dividends in the foreseeable future until earnings would generate
      funds in excess of those required to provide for our growth needs. We currently intend to retain any future earnings to fund the development and
      growth of our business.




**Recent
      Sales of Unregistered Securities**





During
      the fourth quarter of fiscal 2006, we issued no securities.




6
 *Table
          of Contents*





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





**Introduction
      and Plan of Operation**





We
      have
      acted and intend to continue to act as a broker for commercial finance
      transactions. The different types of commercial financing that we intend to
      broker are: Commercial Mortgages, Asset-Based Lines of Credit, Commercial
      Leasing, Accounts Receivable Financing (also known as “Factoring”) and Purchase
      Order Financing. To date, we have successfully brokered several financing
      transactions, consisting of various mortgage transactions, monthly broker fees
      and broker fees in connection with a commercial lease transaction.





**Liquidity**





To
      date
      Capital Resource Funding, Inc. is a going concern.  Capital
      raises through the sale of shares supported our existence thus far. However,
      our
      current working capital has improved from ($57,978) at May 31, 2005 to $(33,856)
      at May 31, 2006 and stockholder’s deficit from $(57,978) to $(30,089) for the
      same periods. The primary reason for improvement in fiscal 2006 was due to
      a
      raise of cash through the sale of our common shares during fiscal
      2006.





**LIQUIDITY
                ANALYSIS**May
                31, 2006
            
            May
                31, 2005Current
                Assets
            
            $
            30,698
            
            $
            2,040Working
                Capital
            
            
            (33,856
            )
            
            (57,978
            )Stockholders’
                Deficit
            
            
            (30,089
            )
            
            (57,978
            )Total
                Debt
            
            $
            62,778
            
            $
            59,435





Balance
      sheet improvements have been achieved through common stock offerings.





**Financial
      Results of Operations, Condition of Company and Significant
      Factors**





Capital
      Resource Funding, Inc. continues to pursue marketing relations for our services.
      Revenue increased for fiscal 2006 and net loss decreased for fiscal 2006.





Overall
      results of operations were a net loss of $26,968 in fiscal 2006 as compared
      to a
      net loss in fiscal 2005 of $260,511. The decrease in net loss of $233,543 is
      attributed to the following categories:





Decrease
      in consulting fees paid with common stock $
      236,335


Increase
      in
      S,G&A $
      (14,868)


Increase
      in interest expense and increase in
      sales $ 
      12,076


$
      233,543





In
      fiscal
      2005 there were more expenses incurred on consulting for Capital Resource
      Funding, Inc.’s growth. As a result, in fiscal 2005, consulting expenses were up
      substantially. The majority of the other expenses were stable from year to
      year.




7
 *Table
          of Contents*


**Item
        7.****Financial
        Statements**
  ***CONTENTS*****INDEPENDENT
                    REGISTERED PUBLIC ACCOUNTING FIRM**
                **9****BALANCE
                    SHEET**
                **10****STATEMENTS
                    OF OPERATIONS**
                **11****STATEMENTS
                    OF CASH FLOWS**
                **12****STATEMENT
                    OF STOCKHOLDERS’ DEFICIT**
                **13****NOTES
                    TO FINANCIAL STATEMENTS**
                **14-17**
  
 8
 *Table
            of Contents*
  **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
  
  To
        the
        Board of Directors and
  Stockholders
        of Capital Resource Funding, Inc. (FKA Capital Business Funding,
        Inc.)
  We
        have
        audited the accompanying balance sheets of Capital Resource Funding, Inc.
        (FKA
        Capital Business Funding, Inc.) (A Development Stage Company) as of May 31,
        2006, and the related statements of income, stockholders’ equity and
        comprehensive income, and cash flows for the years ended May 31, 2006 and
        2005.
        These financial statements are the responsibility of the company’s management.
        Our responsibility is to express an opinion on these financial statements
        based
        on our audits.
  We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements. An audit also includes assessing the accounting principles used
        and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audits provide a
        reasonable basis for our opinion.
  In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of Capital Resource Funding, Inc.
        (FKA
        Capital Business Funding, Inc.) (A Development Stage Company) as of May 31,
        2006, and the results of its operations and its cash flows for the years
        ended
        May 31, 2006 and 2005 in conformity with accounting principles generally
        accepted in the United States of America.
  The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern. As discussed in Note F to the financial statements,
        the Company is in the development stage, has suffered losses, has a net capital
        deficiency and has yet to generate an internal cash flow. These factors raise
        substantial doubt about the Company’s ability to continue as a going concern.
        Management’s plans in regard to these matters are also described in Note E. The
        financial statements do not include any adjustments that might result from
        the
        outcome of this uncertainty.
  /s/
                  Traci J. Anderson, CPATraci J. Anderson, CPAHuntersville,
                  North CarolinaJuly
                  28, 2006


9
 *Table
          of Contents*




**Capital
                  Resource Funding, Inc.****(FKA
                  Capital Business Funding, Inc.)****(A
                  Development Stage Company)**BALANCE
                  SHEETAS
                  OF MAY 31, 2006**ASSETS**CURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              30,698TOTAL
                  CURRENT ASSETS
              
              
              30,698FIXED
                  ASSETSComputer
                  equipment
              
              
              4,035Accumulated
                  depreciation
              
              
              (268
              )TOTAL
                  FIXED ASSETS
              
              
              3,767TOTAL
                  ASSETS
              
              $
              34,465**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**CURRENT
                  LIABILITIESAccrued
                  Interest
              
              $
              1,776Notes
                  Payable
              
              
              62,77864,554STOCKHOLDERS'
                  DEFICITConvertible
                  Preferred Stock ($.00000005 par value, 100,000,000shares
                  authorized; none issued and outstanding at May 31, 2006)
              
              
              -Common
                  Stock ($.00000005 par value, 100,000,000 shares
                  authorized;11,090,000
                  issued and outstanding at May 31, 2006)
              
              
              1Additional
                  Paid in Capital
              
              
              257,188Deficit
                  Accumulated During the Development Stage
              
              
              (287,278
              )TOTAL
                  STOCKHOLDERS' DEFICIT
              
              
              (30,089
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              34,465




10
 *Table
          of Contents*


**Capital
                  Resource Funding, Inc.****(FKA
                  Capital Business Funding, Inc.)****(A
                  Development Stage Company)**STATEMENTS
                  OF OPERATIONSFOR
                  THE YEARS ENDED MAY 31, 2006 AND 2005Year
                  Ended 5/31/06
              
              Year
                  Ended 5/31/05
              
              Cumulative
                  Totals Since InceptionREVENUES:Commissions
                  Earned
              
              $
              20,673
              
              $
              7,934
              
              $
              32,864TOTAL
                  REVENUE
              
              $
              20,673
              
              $
              7,934
              
              $
              32,864EXPENSES:Operating
                  ExpensesSelling,
                  general, and administrative
              
              $
              45,512
              
              $
              30,644
              
              $
              80,212Consulting
                  Fees
              
              
              -
              
              
              236,335
              
              
              236,335TOTAL
                  EXPENSES
              
              
              45,512
              
              
              266,979
              
              
              316,547OPERATING
                  (LOSS)
              
              
              (24,839
              )
              
              (259,045
              )
              
              (283,683
              )Interest
                  Expense
              
              
              2,129
              
              
              1,466
              
              
              3,5952,129
              
              
              1,466
              
              
              3,595NET
                  (LOSS)
              
              $
              (26,968
              )
              $
              (260,511
              )
              $
              (287,278
              )Net
                  (loss) per share-basic
                  and fully diluted
              
              $
              *
              
              $
              (0.02
              )
              $
              (0.06
              )Weighted
                  average shares outstanding
              
              
              10,892,677
              
              
              10,790,000
              
              
              4,436,000*
                  less than $.01 per share.




11
 *Table
          of Contents*
 **Capital
                    Resources Funding, Inc.****(FKA
                    Capital Business Funding, Inc.)****(A
                    Development Stage Company)**STATEMENTS
                    OF CASH FLOWSFOR
                    THE YEARS ENDED MAY 31, 2006 AND 2005Year
                    Ended 5/31/06
                
                Year
                    Ended 5/31/05
                
                Cumulative
                    Total Since InceptionCASH
                    FLOWS FROM OPERATING ACTIVITIES:Net
                    (loss)
                
                $
                (26,968
                )
                $
                (260,511
                )
                $
                (287,278
                )Adjustments
                    to reconcile net (loss) to net cash used in operations:Non-cash
                    itemsCommon
                    stock issued for services rendered
                
                
                4,257
                
                
                -
                
                
                4,257Depreciation
                
                
                268
                
                
                -
                
                
                268Consulting
                    fees
                
                
                -
                
                
                236,335
                
                
                236,335Other
                
                
                -
                
                
                991
                
                
                790Accrued
                    interest
                
                
                1,193
                
                
                944
                
                
                2,137NET
                    CASH (USED IN) OPERATING ACTIVITIES
                
                
                (21,250
                )
                
                (22,241
                )
                
                (43,491
                )CASH
                    FLOWS FROM INVESTING ACTIVITIES:Purchases
                    of computer equipment
                
                
                (4,035
                )
                
                -
                
                
                (4,035
                )NET
                    CASH (USED IN) INVESTING ACTIVITIES
                
                
                (4,035
                )
                
                -
                
                
                (4,035
                )CASH
                    FLOWS FROM FINANCING ACTIVITIES:Proceeds
                    from issuances of common stock
                
                
                50,600
                
                
                100
                
                
                50,700Proceeds
                    from notes payable to bank
                
                
                4,508
                
                
                20,239
                
                
                24,747Repayments
                    of notes payable to bank
                
                
                (1,165
                )
                
                -
                
                
                (1,165
                )Contributions
                    of capital
                
                
                -
                
                
                3,942
                
                
                3,942NET
                    CASH PROVIDED BY FINANCING ACTIVITIES
                
                
                53,943
                
                
                24,281
                
                
                78,224NET
                    INCREASE IN CASH AND CASH EQUIVALENTS
                
                
                28,658
                
                
                2,040
                
                
                30,698CASH
                    AND CASH EQUIVALENTS:BEGINNING
                    OF THE YEAR
                
                
                2,040
                
                
                -
                
                
                -END
                    OF THE YEAR
                
                
                30,698
                
                
                2,040
                
                
                30,698
  12
 *Table
            of Contents*
 **Capital
                    Resource Funding, Inc.****(FKA
                    Capital Business Funding, Inc.)****(A
                    Development Stage Company)**STATEMENT
                    OF STOCKHOLDERS' DEFICITFOR
                    THE YEARS ENDED MAY 31, 2006 AND 2005Deficit
                    Accumulated During the Development Stage
                
                Common
                    Stock
                
                Commons
                    Shares
                
                Additional
                    Paid in Capital
                
                TotalBalances,
                    May 31, 2004
                
                $
                -
                
                $
                1
                
                
                10,000,000
                
                $
                98
                
                $
                99Issuance
                    of common stock to Greentree Financial Group, Inc. for consulting
                    services
                    rendered
                
                
                -
                
                
                -
                
                
                490,000
                
                
                122,500
                
                
                122,500Other
                
                
                -
                
                
                -
                
                
                -
                
                
                491
                
                
                491Issuance
                    of common stock to officer and director for services
                    rendered
                
                
                -
                
                
                -
                
                
                100,000
                
                
                25,100
                
                
                25,100Issuance
                    of common stock to officer and director for services
                    rendered
                
                
                -
                
                
                -
                
                
                100,000
                
                
                25,100
                
                
                25,100Issuance
                    of common stock to officer and director for services
                    rendered
                
                
                -
                
                
                -
                
                
                100,000
                
                
                25,100
                
                
                25,100Contribution
                    of capital from officer
                
                
                -
                
                
                -
                
                
                -
                
                
                3,942
                
                
                3,942Net
                    loss for the period
                
                
                (260,310
                )
                
                -
                
                
                -
                
                
                -
                
                
                (260,310
                )Balances,
                    May 31, 2005
                
                $
                (260,310
                )
                $
                1
                
                
                10,790,000
                
                $
                202,331
                
                $
                (57,978
                )Issuance
                    of common stock to consultant for services rendered
                
                
                -
                
                
                -
                
                
                17,029
                
                
                4,257
                
                
                4,257Issuance
                    of common stock to investor for cash received under Regulation
                    D
                    exemption
                
                
                -
                
                
                -
                
                
                268,571
                
                
                47,000
                
                
                47,000Issuance
                    of common stock to offshore investors for cash received under
                    Regulation S
                    exemption
                
                
                -
                
                
                -
                
                
                14,400
                
                
                3,600
                
                
                3,600Net
                    loss for the period
                
                
                (26,968
                )
                
                -
                
                
                -
                
                
                -
                
                
                (26,968
                )Balances,
                    May 31, 2006
                
                $
                (287,278
                )
                $
                1
                
                
                11,090,000
                
                $
                257,188
                
                $
                (30,089
                )
  13
 *Table
            of Contents*
 **CAPITAL
            RESOURCE FUNDING, INC.**
 **(FKA
            CAPITAL BUSINESS FUNDING, INC.)**
 NOTES
            TO
            THE FINANCIAL STATEMENTS
 FOR
            THE
            YEAR ENDED MAY 31, 2006
 
  NOTE
          A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Background - The
          Company was organized under the laws of the State of North Carolina on
          February
          2, 2004 as a corporation. The Company operates as a commercial finance
          brokerage
          and consulting firm.
 
 Basis
          of Presentation - The
          financial statements included herein include the accounts of Capital Resource
          Funding, Inc. prepared under the accrual basis of accounting.
 
 Management’s
          Use of Estimates —The
          preparation of financial statements in conformity with accounting principles
          generally accepted in the United States of America requires management
          to make
          estimates and assumptions that affect the reported amounts of assets and
          liabilities and disclosures of contingent assets and liabilities at the
          date of
          financial statements and the reported amounts of revenues and expenses
          during
          the reporting period. Actual results could differ from those estimates.
          The
          financial statements above reflect all of the costs of doing
          business.
 
 Revenue
          Recognition —The
          Company’s revenue is derived primarily from brokering income which range from
          one time origination fees to on-going monthly commissions paid for the
          life of
          the financing. Revenue is recognized as earned when each loan deal is finalized.
          For purposes of on-going monthly commissions paid for the life of the financing,
          revenue is recognized as earned based on the total of the gross monthly
          financing fees generated.
 
 Comprehensive
          Income (Loss) —The
          Company adopted Financial Accounting Standards Board Statement of Financial
          Accounting Standards (SFAS) No. 130, *“Reporting
          Comprehensive Income”* ,
          which
          establishes standards for the reporting and display of comprehensive income
          and
          its components in the financial statements. There were no items of comprehensive
          income (loss) applicable to the Company during the period covered in the
          financial statements.
 
 Net
          Income per Common Share —Statement
          of Financial Accounting Standard (SFAS) No. 128 requires dual presentation
          of
          basic and diluted earnings per share (EPS) with a reconciliation of the
          numerator and denominator of the EPS computations. Basic earnings per share
          amounts are based on the weighted average shares of common stock outstanding.
          If
          applicable, diluted earnings per share would assume the conversion, exercise
          or
          issuance of all potential common stock instruments such as options, warrants
          and
          convertible securities, unless the effect is to reduce a loss or increase
          earnings per share. Accordingly, this presentation has been adopted for
          the
          period presented. There were no adjustments required to net income for
          the
          period presented in the computation of diluted earnings per share.
 
 Income
          Taxes - Income
          taxes are provided for the tax effects of transactions reported in the
          financial
          statements and consist of deferred taxes related primarily to differences
          between the basis of certain assets and liabilities for financial and tax
          reporting and net operating loss carry forwards. Deferred taxes represent
          the
          future tax return consequences of those differences, which will either
          be
          taxable or deductible when the assets and liabilities are recovered or
          settled.
 
 The
          income tax benefit consists of taxes currently refundable due to net operating
          loss carry back provisions for federal and state governments. Deferred
          tax
          assets are reduced by a valuation allowance when, in the opinion of management,
          it is more likely than not that some portion or the entire deferred tax
          asset
          will not be realized. Deferred tax assets and liabilities are adjusted
          for the
          effect of changes in tax laws and rates on the date of enactment.
 
 Fair
          Value of Financial Instruments —The
          carrying amounts reported in the balance sheet for cash, fixed assets,
          accounts
          payable and notes payable approximate fair value based on the short-term
          maturity of these instruments.
  14
 *Table
              of Contents*
 **CAPITAL
            RESOURCE FUNDING, INC.**
 **(FKA
            CAPITAL BUSINESS FUNDING, INC.)**
 NOTES
            TO
            THE FINANCIAL STATEMENTS
 FOR
            THE
            YEAR ENDED MAY 31, 2006
  NOTE
          A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
 
 Impairment
          of Long-Lived Assets —The
          Company evaluates the recoverability of its fixed assets and other assets
          in
          accordance with Statement of Financial Accounting Standards No. 144,
“ *Accounting
          for the Impairment or Disposal of Long-Lived Assets” (“SFAS
          144’).* SFAS 144
          requires recognition of impairment of long-lived assets in the event the
          net
          book value of such assets exceeds its expected cash flows, it is considered
          to
          be impaired and is written down to fair value, which is determined based
          on
          either discounted future cash flows or appraised values. The Company adopted
          the
          statement on inception. No impairments of these types of assets were recognized
          during the years ended May 31, 2006 and 2005 based upon a management review
          of
          such assets.
 
 Stock-Based
          Compensation —The
          Company accounts for stock-based compensation using the fair value method
          of
          Financial Accounting Standard No. 123. Common shares issued for services
          rendered by a third party (both employees and non-employees) are recorded
          at the
          fair value of the shares issued or services rendered, whichever is more
          readily
          determinable.
 
 Recent
          Accounting Pronouncements —
In
          December 2004, the FASB issued SFAS No. 123(R), "Accounting for Stock-Based
          Compensation". SFAS 123(R) establishes standards for the accounting for
          transactions in which an entity exchanges its equity instruments for goods
          or
          services. This Statement focuses primarily on accounting for transactions
          in
          which an entity obtains employee services in share-based payment transactions.
          SGAS 123(R) requires that the fair value of such equity instruments be
          recognized as expense in the historical financial statements as services
          are
          performed. Prior to SFAS 123(R), only certain pro-forma disclosures of
          fair
          value were required. SFAS 123(R) shall be effective for the Company as
          of the
          beginning of the first interim or annual reporting period that begins after
          December 15, 2005. The adoption of this new accounting pronouncement is
          expected
          to have a material impact on the financial statements of the Company commencing
          with the third quarter of the year ending September 30, 2006. Small business
          issuers need not comply with the new standard until fiscal periods beginning
          after December 15, 2005. We already disclose expense of employee stock
          options
          for annual and quarterly periods on fair value calculation according to
          SFAS
          No.123.
 
 In
          November 2004, the FASB issued SFAS No. 151, “Inventory Costs” (SFAS 151). This
          Statement amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to
          clarify the accounting for abnormal amounts of idle facility expense, freight,
          handling costs, and wasted material (spoilage). SFAS 151 requires that
          those
          items be recognized as current-period charges. In addition, this Statement
          requires that allocation of fixed production overheads to the costs of
          conversion be based on the normal capacity of the production facilities.
          The
          provisions of SFAS 151 are effective for inventory costs incurred in fiscal
          years beginning after June 15, 2005.
 
 In
          December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-monetary
          Assets -
          an amendment of APB Opinion No.29" ("SFAS 153"). SFAS 153 replaces the
          exception
          from fair value measurement in APB Opinion No. 29 for non-monetary exchanges
          of
          similar productive assets with a general exception from fair value measurement
          for exchanges of non-monetary assets that do not have commercial substance.
          A
          non-monetary exchange has commercial substance if the future cash flows
          of the
          entity are expected to change significantly as a result of the exchange.
          SFAS
          153 is effective for all interim periods beginning after June 15, 2005.
          The
          adoption of SFAS 153 did not have a material impact on the Company's financial
          statements or results of operations.
 
 15
 *Table
              of Contents*
 **CAPITAL
            RESOURCE FUNDING, INC.**
 **(FKA
            CAPITAL BUSINESS FUNDING, INC.)**
 NOTES
            TO
            THE FINANCIAL STATEMENTS
 FOR
            THE
            YEAR ENDED MAY 31, 2006
 NOTE
          A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
  Recent
          Accounting Pronouncements (cont)
 
 In
          May
          2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections
          -
          a replacement of APB Opinion No. 20 and FASB Statement No. 3" ("SFAS 154").
          SFAS
          154 changes the requirements for the accounting for and reporting of a
          change in
          accounting principle. These requirements apply to all voluntary changes
          and
          changes required by an accounting pronouncement in the unusual instance
          that the
          pronouncement does not include specific transition provisions. SFAS 154
          is
          effective for fiscal years beginning after December 15, 2005. The Company
          does
          not expect the adoption of SFAS 154 to have a material effect on the Company’s
          financial statements.
 
 In
          February 2006, the FASB issued SFAS Statement No. 155, “Accounting for Certain
          Hybrid Financial Instruments—an amendment of FASB Statements No. 133 and 140”
("SFAS 155"). This Statement amends FASB Statements No. 133, Accounting
          for
          Derivative Instruments and Hedging Activities, and No. 140, Accounting
          for
          Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.
          This Statement resolves issues addressed in Statement 133 Implementation
          Issue
          No. D1, “Application of Statement 133 to Beneficial Interests in Securitized
          Financial Assets.” This Statement permits fair value re-measurement for any
          hybrid financial instrument that contains an embedded derivative that otherwise
          would require bifurcation, clarifies which interest-only strips and
          principal-only strips are not subject to the requirements of Statement
          133,
          establishes a requirement to evaluate interests in securitized financial
          assets
          to identify interests that are freestanding derivatives or that are hybrid
          financial instruments that contain an embedded derivative requiring bifurcation,
          clarifies that concentrations of credit risk in the form of subordination
          are
          not embedded derivatives and amends Statement 140 to eliminate the prohibition
          on a qualifying special-purpose entity from holding a derivative financial
          instrument that pertains to a beneficial interest other than another derivative
          financial instrument. SFAS 155 is effective for all financial instruments
          acquired or issued for the Company for fiscal year begins after September
          15,
          2006. The adoption of this standard is not expected to have a material
          effect on
          the Company’s results of operations or financial position.
 
 NOTE
          B—NOTES PAYABLE
 
 Notes
          payable at May 31, 2006 consists of the following:
 
 The
          Company has a $15,000 unsecured line of credit from The First Citizens
          Bank
& Trust Company (“The Bank”). The annual percentage rate (“APR”) is based on
          the Bank’s prime rate plus 1% with a maximum APR of 8%. As of the date of the
          note, the APR was 9%. The maturity date of the note was originally May
          4, 2005
          but was extended to May 4, 2007. As of May 31, 2006, the Company drew against
          this line of credit and owes $14,943 against this line of credit.
 
 The
          Company has a $10,000 unsecured line of credit from Bank of America (“BofA”).
          The annual percentage rate (“APR”) is based on BofA’s prime rate plus 2%. As of
          the date of the note, the APR was 9%. The line of credit is due on demand
          with
          interest only payments and has no maturity date. As of May 31, 2006, the
          Company
          drew against this line of credit and owes $9,000 against this line of credit.
 
 In
          connection with financial advisory agreement with Greentree Financial Group,
          Inc., the Company owes $38,835 in principal. The six-month, non-assumable
          promissory note between the Company and Greentree Financial Group, Inc.
          was
          drafted and signed on June 24, 2004. The note matured on December 24, 2004
          and
          carries interest of 6% per annum. This loan is presently due on
          demand.
  16
 *Table
              of Contents*
 **CAPITAL
            RESOURCE FUNDING, INC.**
 **(FKA
            CAPITAL BUSINESS FUNDING, INC.)**
 NOTES
            TO
            THE FINANCIAL STATEMENTS
 FOR
            THE
            YEAR ENDED MAY 31, 2006
 NOTE
          C— COMMON STOCK
 
 Included
          in the accompanying audited financial statements at May 31, 2006 are common
          shares issued to consulting service providers which have been delivered
          for
          services rendered and incurred as of May 31, 2005. Specifically, 490,000
          common
          shares were paid to Greentree Financial Group, Inc. as of May 31, 2005.
          The
          common shares, valued at $.25 per share, were issued to Greentree on October
          31,
          2004 (see note D).
 
 NOTE
          D
          - VALUATION OF COMMON STOCK
 
 The
          Company valued the common shares to be issued to each of its employees
          and
          non-employees during the period presented using the fair amount valuation
          of 25
          cents per share. This amount reasonably approximated the fair value of
          services
          rendered by such parties. For instance, the 490,000 and 300,000 shares
          issued to
          Greentree Financial Group, Inc. and the Company’s three officers, respectively,
          for their services rendered to us were valued at 25 cents per share, or
          $122,500
          and $75,000, and recorded as a non-cash expense to our books covering the
          period
          of time the services related to. The Company feels these valuations are
          based
          upon the most objective, verifiable evidence available for these non-monetary
          exchanges and arms-length transactions. For example, we researched what
          firms
          providing services comparable to those offered by Greentree charged, and
          the
          Company found that Greentree’s services were less expensive. Hence, the Company
          believes that the objective evidence supports a fair value of $122,500
          for the
          stock portion of Greentree’s services and the number of shares that were issued
          to them. The Company’s valuations used to determine the fair value of the common
          stock were retrospective in nature, and the valuation specialists who made
          these
          determinations were related parties, including David Koran, its president,
          and
          Greentree, both of whom own substantial positions in our common stock.
 
 Specifically,
          the 300,000 shares issued to the Company’s three officers were recorded as
          compensation expense in the second quarter of its fiscal year ending May
          31,
          2005 in the amount of $75,000.
 
 NOTE
          E
          GOING CONCERN
 
 As
          shown
          in the accompanying audited financial statements, the Company has suffered
          recurring losses from operations to date. It experienced losses of $287,278
          since inceptions and has a negative working capital. These factors raise
          substantial doubt about the Company’s ability to continue as a going
          concern.
 
 Management’s
          plans in regard to this matter are to raise equity capital and seek strategic
          relationships and alliances in order to increase sales in an effort to
          generate
          positive cash flow. Additionally, the Company must continue to rely upon
          equity
          infusions from investors in order to improve liquidity and sustain operations.
          The financial statements do not include any adjustments that might result
          from
          the outcome of this uncertainty.
 
 NOTE
          F
          - DEVELOPMENT STAGE COMPANY
 
 The
          Company is in the development stage as of May 31, 2006 and to date has
          had no
          significant operations. Recovery of the Company’s assets is dependent on future
          events, the outcome of which is indeterminable. In addition, successful
          completion of the Company’s development program and its transition, ultimately,
          to attaining profitable operations is dependent upon obtaining adequate
          financing to fulfill its development activities and achieving a level of
          sales
          adequate to support the Company’s cost structure.
  17
 *Table
              of Contents*


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





None





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





**Quarterly
      Evaluation of Controls**





As
      of the
      end of the period covered by this annual report on Form 10-KSB, we evaluated
      the
      effectiveness of the design and operation of (i) our disclosure controls and
      procedures (“Disclosure Controls”), and (ii) our internal control over financial
      reporting (“Internal Controls”). This evaluation (“Evaluation”) was performed by
      our President and Chief Executive Officer, David R. Koran (“CEO”) and by Laura
      Koran, our Chief Financial Officer (“CFO”). In this section, we present the
      conclusions of our CEO and CFO based on and as of the date of the Evaluation
      (i)
      with respect to the effectiveness of our Disclosure Controls and (ii) with
      respect to any change in our Internal Controls that occurred during the most
      recent fiscal quarter that has materially affected, or is reasonably likely
      to
      materially affect our Internal Controls.




**CEO
      and CFO Certifications**





Attached
      to this annual report, as Exhibits 31.1 and 31.2, are certain certifications
      of
      the CEO and CFO, which are required in accordance with the Exchange Act and
      the
      Commission’s rules implementing such section (the “Rule 13a-14(a)/15d-14(a)
      Certifications”). This section of the annual report contains the information
      concerning the Evaluation referred to in the Rule 13a-14(a)/15d-14(a)
      Certifications. This information should be read in conjunction with the Rule
      13a-14(a)/15d-14(a) Certifications for a more complete understanding of the
      topic presented.





**Disclosure
      Controls and Internal Controls**





Disclosure
      Controls are procedures designed with the objective of ensuring that information
      required to be disclosed in our reports filed with the Securities and Exchange
      Commission under the Securities Exchange Act, such as this annual report, is
      recorded, processed, summarized and reported within the time period specified
      in
      the Commission’s rules and forms. Disclosure Controls are also designed with the
      objective of ensuring that material information relating to us is made known
      to
      the CEO and the CFO by others, particularly during the period in which the
      applicable report is being prepared. Internal Controls, on the other hand,
      are
      procedures which are designed with the objective of providing reasonable
      assurance that (i) our transactions are properly authorized, (ii) our assets
      are
      safeguarded against unauthorized or improper use, and (iii) our transactions
      are
      properly recorded and reported, all to permit the preparation of complete and
      accurate financial statements in conformity with accounting principals generally
      accepted in the United States.





**Limitations
      on the Effectiveness of Controls**





Our
      management does not expect that our Disclosure Controls or our Internal Controls
      will prevent all error and all fraud. A control system, no matter how well
      developed and operated, can provide only reasonable, but not absolute assurance
      that the objectives of the control system are met. Further, the design of the
      control system must reflect the fact that there are resource constraints, and
      the benefits of controls must be considered relative to their costs. Because
      of
      the inherent limitations in all control systems, no evaluation of controls
      can
      provide absolute assurance that all control issues and instances of fraud,
      if
      any, within us have been detected. These inherent limitations include the
      realities that judgments in decision-making can be faulty, and that breakdowns
      can occur because of simple error or mistake. Additionally, controls can be
      circumvented by the individual acts of some persons, by collusion of two or
      more
      people, or by management override of the control. The design of a system of
      controls also is based in part upon certain assumptions about the likelihood
      of
      future events, and there can be no assurance that any design will succeed in
      achieving its stated objectives under all potential future conditions. Over
      time, control may become inadequate because of changes in conditions, or because
      the degree of compliance with the policies or procedures may deteriorate.
      Because of the inherent limitations in a cost-effective control system,
      misstatements due to error or fraud may occur and not be detected.




18
 *Table
          of Contents*





**Scope
      of the Evaluation**





The
      CEO
      and CFO’s evaluation of our Disclosure Controls and Internal Controls included a
      review of the controls’ (i) objectives, (ii) design, (iii) implementation, and
      (iv) the effect of the controls on the information generated for use in this
      annual report. In the course of the Evaluation, the CEO and CFO sought to
      identify data errors, control problems, acts of fraud, and they sought to
      confirm that appropriate corrective action, including process improvements,
      was
      being undertaken. This type of evaluation is done on a quarterly basis so that
      the conclusions concerning the effectiveness of our controls can be reported
      in
      our quarterly reports on Form 10-QSB and annual reports on Form 10-KSB. The
      overall goals of these various evaluation activities are to monitor our
      Disclosure Controls and our Internal Controls, and to make modifications if
      and
      as necessary. Our external auditors also review Internal Controls in connection
      with their audit and review activities. Our intent in this regard is that the
      Disclosure Controls and the Internal Controls will be maintained as dynamic
      systems that change (including improvements and corrections) as conditions
      warrant.





Among
      other matters, we sought in our Evaluation to determine whether there were
      any
      significant deficiencies or material weaknesses in our Internal Controls, which
      are reasonably likely to adversely affect our ability to record, process,
      summarize and report financial information, or whether we had identified any
      acts of fraud, whether or not material, involving management or other employees
      who have a significant role in our Internal Controls. This information was
      important for both the Evaluation, generally, and because the Rule
      13a-14(a)/15d-14(a) Certifications, Item 5, require that the CEO and CFO
      disclose that information to our Board (audit committee), and to our independent
      auditors, and to report on related matters in this section of the annual report.
      In the professional auditing literature, “significant deficiencies” are referred
      to as “reportable conditions”. These are control issues that could have
      significant adverse affect on the ability to record, process, summarize and
      report financial data in the financial statements. A “material weakness” is
      defined in the auditing literature as a particularly serious reportable
      condition where the internal control does not reduce, to a relatively low level,
      the risk that misstatement cause by error or fraud may occur in amounts that
      would be material in relation to the financial statements and not be detected
      within a timely period by employee in the normal course of performing their
      assigned functions. We also sought to deal with other controls matters in the
      Evaluation, and in each case, if a problem was identified; we considered what
      revisions, improvements and/or corrections to make in accordance with our
      ongoing procedures.





**Conclusions**





Based
      upon the Evaluation, our CEO and CFO have concluded that, subject to the
      limitations noted above, our Disclosure Controls are effective to ensure that
      material information relating to us is made known to management, including
      the
      CEO and CFO, particularly during the period when our periodic reports are being
      prepared, and that our Internal Controls are effective to provide reasonable
      assurance that our financial statements are fairly presented inconformity with
      accounting principals generally accepted in the United States. Additionally,
      there has been no change in our Internal Controls that occurred during our
      most
      recent fiscal quarter that has materially affected, or is reasonably likely
      to
      affect, our Internal Controls.





**Item
      8 B Other Information**





**None**








**PART
      III**





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





**Identification
      of Directors and Executive Officers**





The
      following table sets forth the names and ages of our directors and executive
      officers and of the positions and offices held with us, and the period during
      which each served in such positions and offices. Each director and executive
      officer serves for a term of one (1) year and until his successor is duly
      elected and qualified.





**DIRECTORS
      AND OFFICERS**


**Name**
              **Age**
              **Position**
              **Period
                  In Office**Richard
                  Koran
              67
              Director
              February
                  2004 - PresentDavid
                  R. Koran
              38
              Director
              February
                  2004 - PresentChief
                  Executive Officer,and
                  PresidentLaura
                  Koran
              36
              Chief
                  Financial Officer,
              February
                  2004 - PresentSecretary
                  and DirectorSteve
                  Moore
              36
              Vice
                  President
              February
                  2004 - PresentAnd
                  Director







The
      following is a summary of the business experience and other biographical
      information with respect to each of our officers and directors listed in the
      above-referenced table.




19
 *Table
          of Contents*





David
      R.
      Koran has been our Chief Executive Officer, President and Director since
      inception in February 2004.





Mr.
      Koran’s experience in the commercial finance and otherwise over the last five
      years has consisted of the following:





From
      2004
      to Present, Mr. Koran has been the president of Capital Resource Funding, a
      commercial finance brokerage company, which provides commercial finance
      brokerage services within the entire United States. We were incorporated in
      North Carolina on February 2, 2004. We have no employees, other than Mr. Koran, since
      our
      inception. Currently Mr. Koran is working 25 hours per week in the employ of
      Capital Resource Funding.





From
      January 2004 to Present, Mr. Koran has been operating as an employee with
      Benefactor Funding Corp. as a Director of Marketing. Benefactor Funding Corp.
      is
      a commercial factor offering funding programs to small to mid-sized businesses
      ranging from 500,000 to 3 million. Mr. Koran will remain in this employment
      until it is financially feasible to draw a comparable salary from
      us.





From
      January 2002 to December 31, 2003, Mr. Koran worked as a Business Development
      Officer for J D Factors, LLC. Mr. Koran was successful in developing a new
      3
      state territory into a profitable region in the first 4 months of operation.
      J D
      Factors specializes in factoring services for micro and small businesses.





From
      July
      2001 to January 2002, Mr. Koran worked as a Commercial Loan Officer responsible
      for managing a 5 million dollar micro business loan portfolio and producing
      new
      loan volume monthly. Mr. Koran gained valuable experience in commercial
      underwriting, loan work outs, and risk management.





From
      December 1999 to July 2001, Mr. Koran worked as a Business Relationship Manager
      for First Union Corp. In this role, Mr. Koran managed a small business portfolio
      of over 500 banking relationships.





Mr.
      Koran’s experience in the commercial banking industry helped develop his
      business plan for CRF. Mr. Koran identified a service need within the banking
      industry to help facilitate small business lending needs that was unmet by
      the
      conventional loan products. This industry experience helped to mold the business
      plan of CRF.





Mr.
      Koran
      is a member of the following business organizations: Commercial Finance
      Association, www.cfa.org ;
      Turnaround Management Association, www.turnaround.org ;
      National Funding Association, www.nationalfunding.org ,
      and he
      is an Advisory Board member of the Charlotte, NC Chapter.





David
      Koran lives in Cornelius, North Carolina.





Steven
      Moore has been our Chief Operating Officer and Director since October 1, 2004.
      Mr. Moore’s experience over the last five years has consisted of the
      following:





From
      June
      1992 to January 2000, Mr. Moore was a Planning Manager with the Sara Lee Branded
      Apparel Division of the Sara Lee Corporation.





From
      February 2000 to February 2002, Mr. Moore as a Buyer for Kmart Corporation,
      having the responsibility for buying merchandise to be sold in 2100 retail
      stores. He supervised five employees.





From
      March 2002 to September 2004, Mr. Moore was a Director of Sales Planning for
      the
      Sara Lee Branded Apparel Division of the Sara Lee Corporation. He managed a
      team
      of 24 people in the area of sales forecasting. His team was responsible for
      providing retail information to their manufacturing planning teams.





Steven
      Moore lives in Lewisville, North Carolina.




20
 *Table
          of Contents*





Richard
      Koran has been our Vice President and Director since October 1, 2004. Mr.
      Koran’s experience over the last five years has consisted of the
      following:





From
      1997
      to September 2004, Mr. Koran was Production Administrator at Standard Register
      Corp. in Valley View, Ohio. At Standard Register, he oversaw the production
      operation of demand print, prepress and press production. He was responsible
      for
      all of the quality control functions. He managed 20 associates and supervisors,
      scheduled jobs for internal and all outsourcing of the three shift
      operations.





Richard
      Koran is the father of David Koran and lives in Avon, Ohio.





Laura
      Koran has been our Chief Financial Officer, Secretary and Director since October
      1, 2004. Ms. Koran’s experience over the last five years has consisted of the
      following:





From
      January 1993 to May 2000, Ms. Koran was an MRO Buyer, Buyer, Senior MRO Buyer,
      Purchasing Agent and Purchasing Manager at the Sara Lee
      Corporation.





From
      May
      2000 to March 2003, Ms. Koran was a Purchasing Manager and VMI Program Manager
      at Solectron, Inc.





From
      May
      2002 to August 2004, Ms. Koran was a Loan Officer and Independent Contractor
      with her own mortgage loan origination company.





Ms.
      Koran
      is married to David Koran.





**Audit
      Committee Financial Expert**





We
      do not
      have a separately designated standing audit committee. Pursuant to Section
      3(a)(58)(B) of the Exchange Act, the entire Board of Directors acts as an audit
      committee for the purpose of overseeing the accounting and financial reporting
      processes, and audits of our financial statements. The Commission recently
      adopted new regulations relating to audit committee composition and functions,
      including disclosure requirements relating to the presence of an “audit
      committee financial expert” serving on its audit committee. In connection with
      these new requirements, our Board of Directors examined the Commission’s
      definition of “audit committee financial expert” and concluded that we do not
      currently have a person that qualifies as such  an
      expert. Presently, there are only four (4) directors serving on our Board,
      and
      we are not in a position at this time to attract, retain and compensate
      additional directors in order to acquire a director who qualifies as an “audit
      committee financial expert”, but we intend to retain an additional director who
      will qualify as such an expert, as soon as reasonably practicable. While neither
      of our current directors meets the qualifications of an “audit committee
      financial expert”, each of our directors, by virtue of his past employment
      experience, has considerable knowledge of financial statements, finance, and
      accounting, and has significant employment experience involving financial
      oversight responsibilities. Accordingly, we believe that our current directors
      capably fulfill the duties and responsibilities of an audit committee in the
      absence of such an expert.





**Code
      of Ethics**





We
      have
      adopted a code of ethics that applies to our principal chief executive officer,
      principal financial officer, principal accounting officer or controller, or
      persons performing similar functions (the “Code of Ethics”). The Code of Ethics
      is designed to deter wrongdoing, and to promote the following:





·
            Honest
                and ethical conduct, including the ethical handling of actual or
                apparent
                conflicts of interest between personal and professional
                relationships.




·
            Full,
                fair, accurate, timely and understandable disclosure in reports and
                documents that a small business issuer files with, or submits to,
                the
                Commission and in other public communications made by the small business
                issuer.




·
            Compliance
                with applicable governmental laws, rules and
                regulations.




·
            The
                prompt internal reporting of violations of the code to an appropriate
                person or persons identified in the
                code.




·
            Accountability
                for adherence to the code.




21
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**Section
      16(a) Beneficial Ownership Reporting Compliance**





Under
      Section 16(a) of the Exchange Act, all executive officers, directors, and each
      person who is the beneficial owner of more than 10% of the common stock of
      a
      company that files reports pursuant to Section 12 of the Exchange Act, are
      required to report the ownership of such common stock, options, and stock
      appreciation rights (other than certain cash-only rights) and any changes in
      that ownership with the Commission. Specific due dates for these reports have
      been established, and we are required to report, in this Form 10-KSB, any
      failure to comply therewith during the fiscal year ended May 31, 2006. We
      believe that all of these filing requirements were satisfied by its executive
      officers, directors and by the beneficial owners of more than 10% of our Common
      Stock.




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





The
      following table sets forth all compensation awarded to, earned by, or paid
      to
      our Chief Executive Officer, Mr. David R. Koran, since fiscal 2005.





**SUMMARY
                COMPENSATION TABLE**Annual
                Compensation
            
            Long-Term
                Compensation AwardsName
                and Principal Position
            
            Year
            
            Salary
            
            Other
            
            RestrictedStock
                Award
            
            Securities
                UnderlyingOptions(#)David
                R. Koran(1)
            
            
            2006
            
            $
            -0-
            
            $
            -0-
            
            $
            0
            
            
            02005
            
            $
            -0-
            
            $
            -0-
            
            $
            0
            
            
            0


____________





**Stock
      Option Awards**





There
      were no options granted to anyone during fiscal 2006.





**Aggregated
      Option Exercises and Fiscal Year End Option Values**





There
      were no options exercised by anyone during fiscal 2006.





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





**Securities
      Authorized for Issuance Under Equity Compensation Plans**





The
      following table provides certain information regarding our equity compensation
      plans and other equity compensation arrangements as of May 31,
      2006.





**EQUITY
      COMPENSATION PLAN INFORMATION**





Plan
            Number
                of Securities To Be Issue Upon Exerciseof
                Outstanding Options
            Weighted-Average
                Exercise Price ofOutstanding
                Options
            Number
                of Securities Remaining Availablefor
                Future IssuanceEQUITY
                COMPENSATION PLANS APPROVED BY STOCKHOLDERS:None
            0
            $
                0
            0EQUITY
                COMPENSATION PLANS NOT APPROVED BY SECURITY HOLDERS:None
            0
            $
                0
            0





There
      was
      no equity compensation authorized and issued without prior stockholder approval
      to our employees and non-employees in exchange for consideration in the form
      of
      goods or services during the fiscal year ended May 31, 2006.




22
 *Table
          of Contents*





**Beneficial
      Ownership of Our Common Stock**





The
      following table sets forth certain information regarding the beneficial
      ownership of our Common Stock as of
      July
      14, 2006 (i) each person known to us to be the beneficial owner of more than
      5%
      of our Common Stock, (ii) each of our directors and executive officers, and
      (iii) all directors and executive officers as a group. As of July 14, 2006,
      there were 11,090,000 shares of Common Stock issued and
      outstanding.





Name
                and Address of Beneficial Owner(1)
            Amount
                and Nature
              of
                BeneficialOwnership(2)(3)
            Percentage
              of
                Class(4)David
                R. Koran
              2212
                Lantern Way Circle
              Cornelius,
                NC 28031
            10,000,000
            84.2%Laura
                Koran
              2212
                Lantern Way Circle
              Cornelius,
                NC 28031
            350,000
            3.0%Richard
                Koran
              2212
                Lantern Way Circle
              Mooresville,
                NC
            275,000
            2.3%Steve
                Moore
              7205
                Styers Crossing Lane
              Clemmons,
                NC 27102
            75,000
            0.6%Officers
                and directors as a group (4 persons)
            10,700,000
            90.1%


___________________




(1)  Unless
      otherwise indicated, the address of the persons named in the table is 17111
      Kenton Drive, Suite 100B, Cornelius, N.C. 28031.




(2)  As
      used
      herein, a person is deemed to be the “beneficial owner” of a security if he or
      she has or shares voting or investment power with respect to such security,
      or
      has the right to acquire such ownership within sixty (60) days. As used herein,
      “voting power” includes the power to vote or to direct the voting of shares, and
“investment power” includes the power to dispose or to direct the disposition of
      shares, irrespective of any economic interest therein.




(3)  Except
      as
      otherwise indicated by footnote, the persons named in the table have sole voting
      and investment power with respect to all Common Stock beneficially owned by
      them.




(4)  Percentage
      ownership for a given individual or group is calculated on the basis of (i)
      the
      amount of outstanding shares owned as of July 14, 2006 *plus* ,
      (ii)
      the number of shares that such individual or group has the right to acquire
      within sixty (60) days pursuant to options, warrants, conversion privileges
      or
      other rights, if applicable.




23
 *Table
          of Contents*




**Item
      12. Certain Relationships and Related Transactions**




NONE





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





(a) Exhibits .
      The
      exhibit list required by Item 13 of Form 10-KSB is provided in the “ Index
      to Exhibits ”
located
      herein, immediately following Item 15.





(b)
            Reports
                on Form 8-K Filed in Last Quarter of Fiscal Year 2006.





NONE





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





**Fees
      Billed For Audit and Non-Audit Services**




The
      following
      table represents the aggregate fees billed for professional audit services
      rendered to us, Traci J. Anderson, CPA, our current independent auditor,
      (“Anderson”) for the audit of our annual financial statements for the years
      ended May 31, 2006 and 2005, and all fees billed for other services rendered
      by
      Anderson during those periods.





Year
                Ended May 31,
            
            2006
            
            2005Audit
                Fees(1)
            
            $
            2,500(2
            )
            $
            2,500(3
            )Audit-Related
                Fees(4)
            
            
            --
            
            
            --Tax
                Fees(5)
            
            
            --
            
            
            --All
                Other Fees(6)
            
            
            --
            
            
            --Total
                Accounting Fees and Services
            
            $
            2,500
            
            $
            2,500


___________




(1)  *Audit
      Fees* .
      These
      are fees for professional services for the audit of our annual financial
      statements, and for the review of the financial statements included in our
      filings on Form 10-QSB, and for services that are normally provided in
      connection with statutory and regulatory filings or engagements.




(2)  The
      amounts shown for Anderson in fiscal 2006 relate to (i) the audit of our annual
      financial statements for the fiscal year ended May 31, 2006, and (ii) the review
      of the financial statements included in our filings on Form 10-QSB for the
      first, second and third quarters of fiscal 2006.




(3)  The
      amounts shown for Anderson in fiscal 2005 relate to (i) the audit of our annual
      financial statements for the fiscal year ended May 31, 2005, and (ii) the review
      of the financial statements included in our filings on Form 10-QSB for the
      first, second and third quarters of 2005.




(4)   *Audit-Related
      Fees* .
      These
      are fees for the assurance and related services reasonably related to the
      performance of the audit or the review of our financial statements.




(5)  *Tax
      Fees* .
      These
      are fees for professional services with respect to tax compliance, tax advice,
      and tax planning.




(6)  *All
      Other Fees* .
      These
      are fees for permissible work that does not fall within any of the other fee
      categories, i.e., Audit Fees, Audit-Related Fees, or Tax Fees.





**Pre-Approval
      Policy For Audit and Non-Audit Services**





We do
      not
      have a standing audit committee, and the full Board performs all functions
      of an
      audit committee, including the pre-approval of all audit and non-audit services
      before us engages an accountant. All of the services rendered to us by Anderson during
      fiscal 2006 were pre-approved by our Board of Directors.





24
 *Table
          of Contents*


**INDEX
      TO EXHIBITS**





ExhibitNumber
            Description3.1
            Articles
                of Incorporation of Capital Resource Funding, Inc. **3.2
            Bylaws
                of Capital Resource Funding, Inc. **4.2
            Specimen
                of Common Stock Certificate **14.1
            Code
                of Ethics *31.1
            Rule
                13a-14(a)/15d-14(a) Certifications of Laura Koran,
                Chief Financial Officer *31.2
            Rule
                13a-14(a)/15d-14(a) Certifications of David R.
                Koran, CEO and President *32.1
            Section
                1350 Certifications of Laura Koran, Chief
                Financial Officer *32.2
            Section
                1350 Certifications of David R. Koran, Chief
                Executive Officers and President
                *


__________


*  Filed
      herewith.


**  Contained
      in our Registration Statement, Form SB-2, as filed with the Commission on August
      16, 2004.





25
 *Table
          of Contents*




**SIGNATURES**





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





Date:
      July 14, 2006





CAPITAL
                RESOURCE FUNDING, INC.By:
            /s/
                David R. KoranDavid
                R. Koran, Chief Executive Officer





By:
            /s/
                Laura KoranLaura
                Koran, Chief Financial Officer
              and
                Treasurer








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





Signature
            Title
            Date/s/
                David R. Koran
            Director
            July
                14, 2006David
                R. Koran/s/
                Laura Koran
            Director
            July
                14, 2006Laura
                Koran








26