|UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549www.sec.gov
|--------------------------------------------------------------------------------



|FORM 10-QSB
|-----------

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



|For
      the Quarterly Period EndedMarch 31, 2004
      ****Commission File Number:
  000-50411
|------------------------------------------------------------------------------------------------



CARTOONACQUISITION,
INC.



|(Exact Name of Registrant asSpecified in its Charter)
|-----------------------------------------------------

Delaware
    
    20-0269287(State of Incorporation)
    
    (I.R.S. Employer Identification Number)




|Suite 90014 Franklin StreetRochester, New York 14604(Address of Principal Executive Offices)
      ( 585 ) 495-6907(Registrant's Telephone Number, including Area
      Code)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

Check
whether the registrant filed all documents and reports required to be filed by
Section12, 13 or15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. Yes___ No ___



|APPLICABLE ONLY TO CORPORATE
  ISSUERS
|--------------------------------------

State the
number of shares outstanding of each of the issuers classes of common equity,
as of the latest practicable date: Common Stock, par value $ 0.0001 per share, 1
Share

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

---



|PART I  FINANCIAL
INFORMATION
|------------------------------

Certain
statements contained in this Quarterly Report on Form 10-QSB (the "Report"),
including, without limitation, statements containing the words "anticipates",
"expects", "hopeful", and words of similar import, constitute "forward-looking"
statements. The Registrant cautions readers to not place undue reliance on these
forward-looking statements. The Registrant's actual results could differ
materially from those statements from those anticipated in these forward-looking
statements for many reasons, including certain risks associated with the
Registrant, its securities, and its prospective or future business purpose or
plan of operations, and that are described or set forth in this Report, and in
other documents the Registrant files with the Securities and Exchange Commission
(the "Commission"), which includes this Report, and all amendments
hereof.



|Item 1. Financial
Statements.
|-----------------------------

The
accompanying unaudited financial statements have been prepared in accordance
with the instructions on Form 10-QSB (applicable to non-asset-backed, small
business issuers), and, therefore, do not include all of the information and
footnotes that may be necessary for a complete presentation and evaluation of
the Registrant's financial position, results of operations, cash flows and
stockholders' deficit, in conformity with generally accepted accounting
principles. In the opinion of the Registrant's senior executive management, all
adjustments considered necessary for a fair presentation of the results of
operation and financial position of the Registrant have been included and all
such adjustments are of a normal recurring nature. The operating results for the
three months ended March 31, 2004 are not necessarily indicative of the results
that can be expected for the year ending December 31, 2004.



| | CARTOON ACQUISITION, INC.(A Development Stage Company)Index to Financial
Statements
| | -----------------------------------------------------------------------------------

PageFinancial Statements:Balance Sheets as of March 31, 2004(unaudited) and December 31, 2003
    
    F-2Statements of Operations for the threemonths ended March 31, 2004 andfor
      the period September 25, 2003(date of inception) to March 31, 2004(unaudited)
    
    F-3Statements of Cash Flows for the threemonths ended March 31, 2004 andfor
      the period September 25, 2003(date of inception) to March 31, 2004(unaudited)
    
    F-4Notes to Financial Statements
    
    F-5


---

CARTOON
      ACQUISITION, INC.(A
      Development Stage Company)Balance
      SheetsMarch
      31,
    
    
    
    December
      31,2004
    
    
    
    2003(Unaudited)AssetsCurrent
      assets:Cash and cash
      equivalents
    
    $
    
    -
    
    $
    
    -Prepaid
      expense
    
    
    
    200
    
    
    
    -Total current
      assets
    
    
    
    200
    
    
    
    -Other
      assets
    
    
    
    -
    
    
    
    -Total
      assets
    
    $
    
    200
    
    $
    
    -Liabilities and Stockholder's
      Equity(Deficiency)Current
      liabilities:Accounts payable
      and accrued expenses
    
    $
    
    -
    
    $
    
    60Total current
      liabilities
    
    
    
    -
    
    
    
    60Other
      liabilities
    
    
    
    -
    
    
    
    -Total
      liabilities
    
    
    
    -
    
    
    
    60Stockholder's
      equity (deficiency):Preferred stock,
      $.0001 par value; 20,000,000sharesauthorized, 0
      shares issued and outstanding
    
    
    
    -
    
    
    
    -Common stock,
      $.0001 par value; 100,000,000sharesauthorized, 1
      share issued and outstanding
    
    
    
    -
    
    
    
    -Additional
      paid-in capital
    
    
    
    399
    
    
    
    124Deficit
      accumulated during the developmentstage
    
    
    
    (199)
    
    
    
    (184)


---

Total
      stockholder's equity (deficiency)
    
    
    
    200
    
    
    
    (60)Total liabilities
      and stockholder's equity(deficiency)
    
    $
    
    200
    
    $
    
    -See notes to
      financial statements.


---

CARTOON ACQUISITION, INC.(A Development Stage Company)Statements of Operations(Unaudited)Cumulative DuringThree
    
    
    
    the DevelopmentMonths Ended
    
    
    
    Stage(September 25, 2003March 31,
    
    
    
    to2004
    
    
    
    March 31, 2004)Revenues
    
    $
    
    -
    
    $
    
    -Expenses:General and
      administrative
    
    
    
    15
    
    
    
    199Total
      expenses
    
    
    
    15
    
    
    
    199Net
      loss
    
    $
    
    (15)
    
    $
    
    (199)Net loss per
      share, basic and diluted
    
    $
    
    (15.00)Weighted average
      number of commonshares
      outstanding, basic and diluted
    
    
    
    1




|See Notes to
      Financial Statements.
|----------------------------------------

---

CARTOON ACQUISITION, INC.(A Development Stage Company)Statements of Cash Flows(Unaudited)Cumulative DuringThree
Months
    
    
    
    the DevelopmentEnded
    
    
    
    Stage(September 25, 2003March 31,
    
    
    
    to2004
    
    
    
    March 31, 2004)Cash flows from
      operating activities:Net
      loss
    
    $
    
    (15)
    
    $
    
    (199)Services rendered
      for common stock
    
    
    
    -
    
    
    
    124Changes in
      operating assets and liabilities:Prepaid
      expense
    
    
    
    (200)
    
    
    
    (200)Accounts payable
      and accrued expenses
    
    
    
    (60)
    
    
    
    -Net cash provided
      by (used in) operating activities
    
    
    
    (275)
    
    
    
    (275)Cash flows from
      investing activities
    
    
    
    -
    
    
    
    -Cash flows from
      financing activities:Company
      expenditure paid byCompany
      attorney
    
    
    
    275
    
    
    
    275Net cash provided
      by (used in)financing
      activities
    
    
    
    275
    
    
    
    275Net increase
      (decrease) in cash
    
    
    
    -
    
    
    
    -Cash and cash
      equivalents, beginning of period
    
    
    
    -
    
    
    
    -Cash and cash
      equivalents, end of period
    
    $
    
    -
    
    $
    
    -Supplemental
      disclosures of cash flow information:Interest
      paid
    
    $
    
    -
    
    $
    
    -Income taxes
      paid
    
    $
    
    -
    
    $
    
    -


---



| | See Notes to
      Financial Statements.
| | ----------------------------------------



|CARTOON ACQUISITION, INC.(A Development Stage Company)Notes to Financial StatementsFor the Three Months Ended March 31, 2004
      andFor the Period September 25, 2003 (Inception)to March 31, 2004
(Unaudited)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 1  INTERIM FINANCIAL STATEMENTS

The
unaudited financial statements as of March 31, 2004 and for the three months
ended March 31, 2004 and for the period September 25, 2003 (inception) to March
31, 2004 have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and with
instructions to Form 10-QSB. In the opinion of management, the unaudited
financial statements have been prepared on the same basis as the annual
financial statements and reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the financial position as of
March 31, 2004 and the results of operations and cash flows for the periods
ended March 31, 2004. The financial data and other information disclosed in
these notes to the interim financial statements related to these periods are
unaudited. The results for the three month period ended March 31, 2004 are not
necessarily indicative of the results to be expected for any subsequent quarter
of the entire year ending December 31, 2004. The balance sheet at December 31,
2003 has been derived from the audited financial statements at that
date.

Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted pursuant to the
Securities and Exchange Commissions rules and regulations. These unaudited
financial statements should be read in conjunction with our audited financial
statements and notes thereto for the period September 25, 2003 (inception) to
December 31, 2003 as included in our report on Form 10-KSB.



|NOTE 2  ORGANIZATION
|---------------------

Cartoon Acquisition, Inc. (the Company) was incorporated in the
State of Delaware on September 25, 2003. The Company has no products or
services; the Company is seeking a business to merge with or acquire.

On
May 4, 2004, the Company effected a reverse stock split of 1 share for each
1,240,000 shares held, thereby decreasing the number of issued and outstanding
common shares from 1,240,000 to 1. All references to shares and per share
amounts in the accompanying financial statements have been presented to
retroactively reflect this reverse split.



|NOTE 3  BASIS OF
PRESENTATION
|------------------------------

The
Company has been presented as a development stage enterprise in accordance
with Statement of Financial Accounting Standards (SFAS) No.7, Accounting and
Reporting by Development Stage Enterprises. Since inception, the Companys
activities have been limited to organizational efforts and filing a Registration
Statement on Form 10-SB with the Securities and Exchange Commission
("SEC").

F5

---



|CARTOON
      ACQUISITION, INC.(A
      Development Stage Company)Notes to
      Financial StatementsFor the
      Three Months Ended March 31, 2004 andFor the
      Period September 25, 2003 (Inception)to March 31,
      2004 (Unaudited)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

At
March 31, 2004, the Company had working capital and stockholders equity of
$200. For the period September 25, 2003 (inception) to March 31, 2004, the
Company incurred net losses of $199. Further, the Company failed to timely file
periodic reports with the SEC subsequent to its filing of its Registration
Statement on Form 10-SB on October 3, 2003. These factors create uncertainty as
to the Companys ability to continue as a going concern. The Company is making
efforts to acquire a business with assets and operations. However, there is no
assurance that the Company will be successful in accomplishing this objective.
The financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.



|NOTE 4 
      STOCKHOLDERS EQUITY
|-----------------------------------

In
September 2003, the Company issued 1 share of its common stock to its sole
officer and director for services valued at $124.

In March
2004, the Companys attorney paid a $275 expenditure on behalf of the Company.
The Company has reflected this expenditure as an increase in additional paid-in
capital.



|NOTE 5 
      INCOME TAXES
|---------------------------

No
provision for income taxes has been recorded since the Company has incurred net
losses since inception.

At March 31,
      2004, deferred tax assets consist of:Net
      operating loss carryforward
    
    $
    
    68Less
      valuation allowance
    
    
    
    (68)Net
    
    $
    
    -


Based on managements
present assessment, the Company has not yet determined it to be more likely than
not that a deferred tax asset of $68 attributable to the future utilization of
the $199 net operating loss carryforward as of March 31, 2004 will be realized.
Accordingly, the Company has provided a 100% allowance against the deferred tax
asset in the financial statements at March 31, 2004. The Company will continue
to review this valuation allowance and make adjustments as appropriate. The net
operating loss carryforward expires in years 2023 and 2024 in the amounts of
$184 and $15, respectively.

Current tax laws limit
the amount of loss available to be offset against future taxable income when a
substantial change in ownership occurs. Therefore, the amount available to
offset future taxable income may be limited.

F6

---



CARTOON
ACQUISITION, INC.

(A Development
Stage Company)

Notes to
Financial Statements For the Three Months Ended March 31, 2004

and For the
Period September 25, 2003 (Inception) to March 31, 2004
(Unaudited)



|NOTE 6 
      SUBSEQUENT EVENTS
|--------------------------------

On
May 14, 2004, the Companys sole stockholder, officer and director resigned as
officer and director and one of the Companys attorneys was elected sole officer
and director. Also, on May 14, 2004, the Companys new sole officer and director
acquired 200,000 shares of common stock from the Company for $20.

On
January 25, 2005, the Companys sole officer and director resigned as officer
and director and sold 185,000 of the 200,000 shares of Company common stock
owned by him to an unrelated third party for a promissory note in the amount of
$100,000. This promissory note does not bear interest, is due on or before
August 24, 2005, and is secured by the 185,000 shares of Company common
stock.

F7

---

Item 2. Managements Discussion and Analysis or Plan of
Operations.

Some of
the statements made in Part I, Item 2 of this Report may be deemed to be
"forward-looking" statements, as that term is defined in Section 27A of the
Securities Act of 1933 (15 U.S.C. 77z-2) and in Section 21E of the Securities
Exchange Act of 1934 (15 U.S.C. 78u-5), which are referred to as "statutory safe
harbor" provisions. Forward-looking statements are not historical facts; rather,
forward-looking statements are based upon the opinions and estimates of the
Company's management at the time such statements are made. Every forward-looking
statement is subject to inherent risks and uncertainties that could cause the
actual results to differ materially from the plans, projections, or expectations
expressed or implied by such statement at the time the statement was made. The
Company cautions the public not to place undue influence on these
forward-looking statements, which speak only as of the date they were made and
may not have been updated in further filings, schedules, or reports required to
be filed with the Commission, or with any other body government.

Certain
statements contained in this section of this Report may infer an impression of
optimism about the Company's beliefs and expectations, expressed through words
such as "expects", "anticipates", "intends", "plans", "believes", "seeks",
"estimates", "contemplates", "prospective", "attempt", "proposed", and similar
expressions or terms identify forward looking statements.

The
Company was formed to identify and effect a business combination with a
qualified entity. A combination will normally take the form of a merger,
stock-for-stock exchange, or stock-for-assets exchange (the "business
combination"). Historically, in most instances the target company will wish to
structure the business combination to be within the definition of a tax-free
reorganization under Section 351 or Section 368 of the Internal Revenue Code of
1986, as amended. No assurances can be given that the Company will be successful
in locating or negotiating with any target business.

The
Company has not restricted its search for any specific kind of businesses, and
it may acquire a business which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its business life.
It is impossible to predict the status of any business in which the Company may
become engaged, in that such business may need to seek additional capital, may
desire to have its shares publicly traded, or may seek other perceived
advantages which the Company may offer.

In
implementing a structure for a particular business acquisition, the Company may
become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity.

It is
anticipated that any securities issued in any such business combination would be
issued in reliance upon exemption from registration under applicable Federal and
state securities laws. In some circumstances, however, as a negotiated element
of its transaction, the Company may agree to register all or a part of such
securities as part of the business combination or at specified times
thereafter.

Negotiations with a target company will likely focus on the
percentage of the Company which the target company shareholders would acquire in
exchange for their shareholdings. Although the terms of such agreements cannot
be predicted, generally such agreements will require certain representations and
warranties of the parties thereto, will specify certain events of default, will
detail the terms of closing and the conditions which must be satisfied by the
parties prior to and after such closing and will include miscellaneous other
terms. Any merger or acquisition effected by the Company can be expected to have
a significant dilutive effect on the percentage of shares held by the Company's
shareholders at such time.

---

Moreover, any acquisition by a qualified business combination, or
otherwise, would require the Company to enter into one or more material
agreements, and, more likely that not, would impose significant fiscal and
performance obligations on the Company, all of which would be required to be
reported by the Company to the Commission.



|Item 3. Controls and
Procedures.
|--------------------------------

Some of
the statements made in Part I, Item 3 of this Report may be deemed to be
"forward-looking" statements, as that term is defined in Section 27A of the
Securities Act of 1933 (15 U.S.C. 77z-2) and in Section 21E of the Securities
Exchange Act of 1934 (15 U.S.C. 78u-5), which are referred to as "statutory safe
harbor" provisions. Forward-looking statements are not historical facts; rather,
forward-looking statements are based upon the opinions and estimates of the
Company's management at the time such statements are made. Every forward-looking
statement is subject to inherent risks and uncertainties that could cause the
actual results to differ materially from the plans, projections, or expectations
expressed or implied by such statement at the time the statement was made. The
Company cautions the public not to place undue influence on these
forward-looking statements, which speak only as of the date they were made and
may not have been updated in further filings, schedules, or reports required to
be filed with the Commission, or with any other body government.

Certain
statements contained in this section of this Report may infer an impression of
optimism about the Company's beliefs and expectations, expressed through words
such as "expects", "anticipates", "intends", "plans", "believes", "seeks",
"estimates", "contemplates", "prospective", "attempt", "proposed", and similar
expressions or terms identify forward looking statements.

The
Company (or the "Registrant") has one class of securities registered under the
Securities Exchange Act of 1934 (the "Exchange Act"); namely, the Company's
common stock, par value $0.0001 per share. The Company is not an "asset-backed"
issuer, as that term is defined in 17 CFR 229.1101. Also, the Company does not
have any securities registered, nor any offering pending or contemplated, under
the Securities Act of 1933 or the Investment Company Act of 1940 with the
Commission.

Prior to
the actual filing date hereof, the Registrant did fail to timely file all of its
reports to the Commission, which were required to be filed by the Registrant
pursuant to section 13(a) or section 15(d) of the Exchange Act. The Registrant
attributes its delinquency in that regard to (a) extreme limitations on its
fiscal capabilities due to its lack of development and engagement in an ongoing
business enterprise (and, further in that extent, because the Registrant was
incapable of securing capital or credit accommodations to permit it to conduct
its operations), (b) unpredictability with regard to its senior executive
management's capability to have performed its duties on a full-time or part-time
basis in order to properly have administered its affairs (to include the
Company's incapability to hire and retain qualified support and technical
personnel), and (c) the Registrant's inability to effectively (without undue
effort and/or unreasonable expense) gather, assemble, prepare, and disseminate
the required information.

On or
about January 25, 2005, with the principal objective of aggressively pursuing
the Company's development, Randolph S. Hudson purchased approximately 92.5% of
the Registrant's common voting equity securities from James W. Margulies under a
private securities transaction. Although Mr. Hudson's administration of the
Company has been plagued by many of the same obstacles and circumstances as were
experienced by the Company's prior management and shareholders (surrounding the
Company's delinquent reporting and tardy development), it was and remains Mr.
Hudson's principal objectives to (a) timely remedy the Registrant's delinquent
filings with the Commission and (b) immediately undertake his aggressive pursuit
to develop the Company.

---

In
addition to the Company's dilemmas, from the date the Company was required to
file its initial reports, the Federal legislature has adopted, revised, or
amended certain Federal securities laws, which the Commission is actively
enforcing in order to prevent acts of frauds that were demonstrated by some of
this nation's largest companies, which, in turn, caused great harm and financial
loss the investing public. Some of these laws contained in the Code of Federal
Regulations, include the Sarbanes-Oxley Act of 2002, Regulation S-X (which
governs accounting issues applicable to reporting companies), the strict rules
applicable to the Public Company Accounting Oversight Board (the "PCAOB", which
governs the Company's non-certifying and certifying accountants), and a host of
other changes to those laws and to the U. S. Code applicable to securities and
commodities markets. All of the government's actions, and, of primary concern -
all of the more stringent and more actively policies of the Commission, have
created significant new reporting impositions on public companies to improve
financial accounting, corporate reporting, and personal accountability by a
public company's senior executive officers.

Consequently, prior to Mr. Hudson's purchase of that certain
percentage of the Company's stock (as was briefly described hereinabove, and
which was previously reported by Mr. Hudson on this Schedule 13D filing), and,
for the other reasons set forth hereinabove, the Company did not have adequate,
or had minimal, disclosure controls and procedures in place. Historically, in
times past, a Company's system of "checks and balances" would have been
routinely handles by its certifying accountant; however, because the Company was
not actively engaged in its operations, and for the other reasons mentioned
hereinabove, the Company's then certifying accountant was neither reviewing nor
preparing the Company's statements of financial conditions.

Fortunately, because the Company has been dormant, in the opinion
of the Company's present Chief Executive Officer (who is also the Company's
Chief Financial Officer) the Company's lack or exercise of disclosure controls
and procedures did not cause any material effect on any information, which was
either prepared then or that is being prepared and submitted on this
date.

In
conclusion of the aforesaid statements, prior to January 25, 2005, in respect of
the controls and procedures promulgated by 17 CFR 240.13a -15 and 17 CFR 240.15d
-15:

|1. | The
      Company did not have adequate internal control over financial reporting
      (as defined in 17 CFR 240.13a-15); and                                                                                                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | In
      the absence of full-time senior executive management, the Company was
      unable to effectively evaluate the effectiveness by its senior executive
      management of its controls and procedures for what was to have been its
      quarterly report for this period, on the date this report was originally
      due to have been filed.
|  

Presently
(the date on which this Report was actually filed), the Company's Chief
Executive Officer, Randolph S. Hudson, has established full disclosure controls
and procedures. Some of these remedies include the purchase of professional
internal accounting software that operates with multiple systems of entry that
"check and cross-check" entries and the engagement of a PCAOB-qualified
accountant to perform non-certified compilations, prior to delivering his
results to the Company's PCAOB-qualified certifying accountant.

With
specific regard to internal control over financial reporting by the Registrant
and by the Registrant's senior executive officers pursuant to the sub-sections
enumerated in 17 CFR 228.308: (a) The Company has at all times maintained
adequate financial and non-financial records, which fairly and accurately
reflect the dispositions of the assets of the Company, (b) the Company has at
all times been able to provide more than reasonable assurances that any such
financial statements were capable of being prepared under generally accepted
accounting principles and that the receipts and expenditure of the

---

Company were being made only in accordance with the authorizations
of the senior executive management and by the Company's Board of Directors, and
(c) the Company has at all times been able to provide reasonable assurances
regarding the prevention or timely detection of any unauthorized acquisition,
use, or disposition of the Company's assets, any of which could have caused a
material effect on the Company's financial statements.



|PART II -- OTHER
INFORMATION
|----------------------------



|Item 1. Legal
Proceedings
|-------------------------



|Item 2. Changes in
Securities
|-----------------------------



|Item 3. Defaults upon Senior
  Securities
|-----------------------------------------

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

The
information required by this Item 4 of Part II of this Report is not
applicable.



|Item 5. Other
Information
|-------------------------

Some of
the statements made in Item 8.01 of this Report may be deemed to be
"forward-looking statements", as that term is defined in Section 27A of the
Securities Act of 1933 (15 U.S.C. 77z-2) and in Section 21E of the Securities
Exchange Act of 1934 (15 U.S.C. 78u-5), which are referred to as "statutory safe
harbor" provisions. Forward-looking statements are not historical facts; rather,
forward-looking statements are based upon the opinions and estimates of the
Registrant's management at the time such statements are made. Every
forward-looking statement is subject to inherent risks and uncertainties that
could cause the actual results to differ materially from the plans, projections,
or expectations expressed or implied by such statement at the time the statement
was made. The Registrant cautions the public not to place undue influence on
these forward-looking statements, which speak only as of the date they were made
and may not have been updated in further filings, schedules, or reports required
to be filed with the Commission, or with any other body government.

Certain
statements contained in this section of this Report may infer an impression of
optimism about the Registrant's beliefs and expectations, expressed through
words such as "expects", "anticipates", "intends", "plans", "believes", "seeks",
"estimates", "contemplates", "prospective", "attempt", "proposed", and similar
expressions or terms identify forward looking statements.

A.
NOTIFICATION OF PROSPECTIVE RISK TO SHAREHOLDERS OF THE REGISTRANT.

Due to
certain administrative impediments that were encountered by the Registrant to
prepare and to have timely filed this Report with the Commission (chiefly, that
of a temporary financial hardship endured by the Registrant), the Registrant
does hereby notify its shareholders: Depending on the

---

Commission's view of the Registrant's late filing hereof, the
Commission may notify the Registrant of its disapproval and may notice the
Registrant, or, may impose a fine or other penalty against the Registrant or
against the Registrant's Chief Executive Officer for said late
filing.

The
imposition of any fine or penalty would cause a material adverse effect on the
Registrant's current and future financial condition; and, any formal censure
would impede the Registrant's contemplated and orderly future organization and
development.



|Item 6. Exhibits and Reports On Form
  8-K
|------------------------------------------

|(a) | Exhibits                                                                        
|--- | --------------------------------------------------------------------------------
|   
|    | There are no reports required to be filed with this
      Report.               
|   
|(b) | Reports on Form 8-K                                                             
|   
|    | There were no reports on Form 8-K filed by the Company during
      the quarter.
|   



|SIGNATURES
|----------

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.



|By Order of the Board of Directors:CARTOON ACQUISITION, INC.
|------------------------------------------------------------





| | RANDOLPH S. HUDSONChief Executive
      OfficerChief Financial
      Officer
| | ----------------------------------------------------------------------------

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