United States
                       Securities and Exchange Commission
                              Washington, DC 20549

                                   FORM 10-QSB

                  Quarterly Report Under Section 13 or 15(d) of
                       the Securities Exchange Act of 1934


For the Quarter Ended                                     Commission File Number
   June 30, 2005                                                 333-119234


                             THE FLOORING ZONE, INC.
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

                                     NEVADA
          -------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

                                   20-0019425
                      ------------------------------------
                      (I.R.S. Employer Identification No.)


                   3219 Glynn Avenue, Brunswick, Georgia 31520
                   -------------------------------------------
                    (Address of principal executive offices)

                                 (912) 264-0505
               ---------------------------------------------------
              (Registrant's telephone number, including area code)


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

Securities registered pursuant to section 12(g) of the Exchange Act: Common,
$0.001 par value

Check whether the Issuer 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 report(s), Yes [X] No [ ]

Check whether the Issuer has been subject to such filing requirements for the
past 90 days. Yes [X] No [ ]

As of August 8, 2005 we had 38,564,750 shares of our $0.001 par value, common
stock outstanding.

<PAGE>

                             THE FLOORING ZONE, INC.
                                   FORM 10-QSB
                                TABLE OF CONTENTS


PART I -- FINANCIAL INFORMATION

     Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets (Unaudited) as of
            June 30, 2005 ..................................................  3

         Condensed Consolidated Statements of Operations (Unaudited)
           for the three and six months ended June 30, 2005 and 2004........  5

         Condensed Consolidated Statements of Cash Flows (Unaudited)
           for the six months ended June 30, 2005 and 2004..................  6

         Notes to Condensed Consolidated Financial Statements (Unaudited)...  7

     Item 2.  Management's Discussion and Analysis of Financial Condition
              and Results of Operations.....................................  8

     Item 3.  Controls and Procedures....................................... 16


PART II -- OTHER INFORMATION

     Item 2.  Changes in Securities......................................... 17

     Item 6.  Exhibits and Reports on Form 8-K.............................. 17

     Signatures............................................................. 18

                                       2
<PAGE>

                          PART I FINANCIAL INFORMATION

Item 1. Financial Statements
<TABLE>
<CAPTION>
                                     The Flooring Zone, Inc.
                              Condensed Consolidated Balance Sheet
                                          June 30, 2005
                                           (Unaudited)


                                             ASSETS



Current assets:
<S>                                                                        <C>
    Cash                                                                   $            94,726
    Accounts receivable, net                                                           148,730
    Inventory                                                                          520,469
    Prepaid expense                                                                      8,120
                                                                           -------------------
          Total current assets                                                         772,045


Property & equipment, net                                                              280,697

Other assets:

     Intangible assets, net                                                              6,425
     Deposits                                                                            6,031
                                                                           -------------------

          Total other assets                                                            12,456
                                                                           -------------------

TOTAL ASSETS                                                               $         1,065,198
                                                                           ===================


                       See accompanying notes to financial statements

                                               3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                     The Flooring Zone, Inc.
                        Condensed Consolidated Balance Sheet-[continued]
                                          June 30, 2005
                                           (Unaudited)


                              LIABILITIES AND STOCKHOLDERS' DEFICIT



Current liabilities:
<S>                                                                        <C>
    Accounts payable                                                       $           549,959
    Line of credit-bank and related party                                              142,000
    Customer deposits                                                                   40,851
    Accrued liabilities                                                                 16,156
    Current portion long-term debt                                                     134,179
                                                                           -------------------

          Total current liabilities                                                    883,145

Long-term liabilities:

    Note payable-related party                                                         113,448
    Long-term debt                                                                     581,323
    Current portion long-term debt                                                    (134,179)
                                                                           -------------------

          Total long-term liabilities                                                  560,592

              Total liabilities                                                      1,443,737

Stockholders' deficit:-Note 2

    Preferred Stock, 10,000,000 shares authorized $.001 par value
       value: No shares issued and outstanding                                               -
    Common stock, 100,000,000 shares authorized $.001 par
       value; 38,539,750 shares issued and outstanding                                  38,540
    Additional paid in capital                                                         546,287
    Accumulated deficit                                                               (963,366)
                                                                           -------------------

          Total stockholders' deficit                                                 (378,539)
                                                                           -------------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                $         1,065,198
                                                                           ===================


                         See accompanying notes to financial statements

                                                4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                             The Flooring Zone, Inc.
                                 Condensed Consolidated Statements of Operations
                     For the three month and six month periods ended June 30, 2005 and 2004
                                                   (Unaudited)



                                                  Three months ended June 30,           Six months ended June 30,
                                                  2005               2004               2005               2004
                                            ----------------   ----------------   ----------------   ----------------
<S>                                         <C>                <C>                <C>                <C>
Revenues:

 Sales                                      $        926,128   $        937,535   $      1,784,681   $      2,010,763
 Licensing Fees                                            0                  9              2,500              5,219
                                            ----------------   ----------------   ----------------   ----------------

Net revenues                                         926,128            937,544          1,787,181          2,015,982
 Less cost of sales                                  608,283            624,338          1,090,695          1,227,026
                                            ----------------   ----------------   ----------------   ----------------

Gross profit                                         317,845            313,206            696,486            788,956
General and administrative expenses                  294,308            307,599            642,555            698,738
                                            ----------------   ----------------   ----------------   ----------------

    Net income (loss) from operations                 23,537              5,607             53,931             90,218



Other income (expense):

  Interest expense                                   (23,039)           (14,860)           (43,765)           (31,029)
                                            ----------------   ----------------   ----------------   ----------------

       Total other income(expense)                   (23,039)           (14,860)           (43,765)           (31,029)
                                            ----------------   ----------------   ----------------   ----------------

Net income (loss) before taxes                           498             (9,253)            10,166             59,189
       Income taxes                                        -                  -                  -                  -
                                            ----------------   ----------------   ----------------   ----------------

 Net income (loss)                          $            498   $         (9,253)  $         10,166   $         59,189
                                            ================   ================   ================   ================

Income (loss) per share-basic and diluted   $           0.00   $          (0.01)  $           0.00   $           0.00
                                            ================   ================   ================   ================

Weighted average shares outstanding -
  basic and diluted                               38,522,145         38,416,034         38,475,423         38,384,436
                                            ================   ================   ================   ================


                                 See accompanying notes to financial statements

                                                          5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                             The Flooring Zone, Inc.
                                 Condensed Consolidated Statements of Cash Flows
                             For the six month periods ended June 30, 2005 and 2004
                                                   (Unaudited)


                                                                                    6/30/2005             6/30/2004
                                                                                 --------------        --------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                              <C>                   <C>
Net income                                                                       $       10,166        $       59,189

Adjustments to reconcile net income to net cash used
  in operating activities:

  Depreciation and amortization                                                          21,245                18,278
  Decrease (increase) in accounts receivable                                                (69)               (7,512)
  Decrease (increase) in inventories                                                   (217,295)             (230,346)
  Decrease (increase) in prepaid expenses                                                (8,120)                  703
  Increase (decrease) in accounts payable                                                32,400                51,185
  Increase (decrease) in accrued liabilities                                              1,592                (8,776)
  Increase (decrease) in customer deposits                                                5,039              (109,752)
                                                                                 --------------        --------------
      Net cash used in operating activities                                            (155,042)             (227,031)

CASH FLOWS FROM INVESTING ACTIVITIES

  Purchase of property and equipment                                                     (6,748)               (3,265)
  Purchase of intangible assets                                                               -                     -
                                                                                 --------------        --------------
      Net cash used in investing activities                                              (6,748)               (3,265)

CASH FLOWS FROM FINANCING ACTIVITIES

Net borrowing(payments) on line of credit-related party                                  15,000                74,144
Net borrowing(payments) on  long term debt                                              (70,676)               67,771
Proceeds from the issuance of common stock                                              222,100               107,500
                                                                                 --------------        --------------
      Net cash provided by financing activities                                         166,424               249,415
                                                                                 --------------        --------------

                         NET INCREASE IN CASH                                             4,634                19,119

CASH AT BEGINNING OF PERIOD                                                              90,092                55,014
                                                                                 --------------        --------------

CASH AT END OF PERIOD                                                            $       94,726        $       74,133
                                                                                 ==============        ==============

SUPPLEMENTAL DISCLOSURES

 Cash paid for interest                                                          $       43,765        $       31,029
 Cash paid for income taxes                                                                   -                     -



                                 See accompanying notes to financial statements

                                                          6
</TABLE>
<PAGE>

                             The Flooring Zone, Inc.
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2005


Note 1   ORGANIZATION AND INTERIM FINANCIAL STATEMENTS

         Organization-The Flooring Zone, Inc. (the "Company) is a corporation
         organized under the laws of the State of Nevada on May 5, 2003. The
         company's business operations provide for full-service retail floor
         covering products and services.

         Interim financial statements-The accompanying condensed consolidated
         financial statements are unaudited and have been prepared in accordance
         with generally accepted accounting principles for interim financial
         information. Accordingly, they do not include all of the information
         and footnotes required by accounting principles for complete financial
         statements generally accepted in the United States of America. In the
         opinion of management, the accompanying consolidated financial
         statements contain all adjustments, consisting of normal recurring
         accruals, necessary for a fair presentation of our financial position
         as of June 30, 2005. There has not been any change in the significant
         accounting policies of The Flooring Zone, Inc. for the periods
         presented. The results of operations for the three months and six
         months ended June 30, 2005 and 2004 are not necessarily indicative of
         the results for a full-year period. It is suggested that these
         unaudited condensed consolidated financial statements be read in
         conjunction with the consolidated financial statements and the notes
         thereto included in the Company's Annual Report on Form 10-KSB for the
         fiscal year ended December 31, 2004 filed with the Securities and
         Exchange Commission (the "SEC").

         Stock based compensation- The Company accounts for stock compensation
         arrangements under the intrinsic value method outlined in Accounting
         Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
         Employees, (APB Opinion No. 25) and currently intends to continue to do
         so until it adopts the provisions of Statement of Financial Accounting
         Standards (SFAS) No. 123R, Share-Based Payment, (SFAS No. 123R).
         Accordingly, no compensation cost has been recognized for stock
         compensation arrangements. If the compensation cost for the
         compensation plans had been determined consistent with SFAS No. 123R,
         net income and earnings per common share and common share equivalent
         would have changed to the pro forma amounts indicated below:

                                                     6/30/2005     6/30/2004
                                                     ---------     ---------
         Net income, as reported                      $10,166       $59,189

         Compensation cost under fair value-based
           accounting method, net of tax                    -             -
                                                      -------       -------
         Net loss, pro forma                           10,166        59,189

         Net loss per share-basic and diluted:
             As reported                              $  0.00       $  0.00
             Pro forma                                $  0.00       $  0.00

                                       7
<PAGE>

                             The Flooring Zone, Inc.
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2005
                                   (Unaudited)



Note 2   COMMON STOCK

         The Company's SB-2 Registration statement filed with the Securities and
         Exchange Commission became effective in January 2005. During the six
         months ended June 30, 2005 the Company issued 111,050 shares of its
         common stock at a price of $2.00 per share for a total of $222,100.


Note 3   INVENTORY

         Inventories are stated at lower of cost or market and consist of the
         following:


                                                         6/30/05
                                                     --------------

                   Flooring material                        520,469
                                                     --------------

                                        Total        $      520,469
                                                     ==============


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

         This discussion summarizes the significant factors affecting our
consolidated operating results, financial condition, liquidity and capital
resources during the three and six months ended June 30, 2005 and 2004. This
discussion should be read in conjunction with the financial statements and
financial statement footnotes included in this registration statement.

Forward-Looking Statements

         Certain statements of our expectations contained herein, including, but
not limited to statements regarding sales growth, new stores, increases in
comparable store sales, commodity price inflation and deflation, and capital
expenditures constitute "forward-looking statements." Such statements are based
on currently available operating, financial and competitive information and are
subject to various risks and uncertainties that could cause actual results to
differ materially from our historical experience and our present expectations.
These risks and uncertainties include but are not limited to, fluctuations in
and the overall condition of the U.S. economy, stability of costs and
availability of sourcing channels, conditions affecting new store development,
our ability to implement new technologies and processes, our ability to attract,
train, and retain highly-qualified associates, unanticipated weather conditions
and the impact of competition and regulatory and litigation matters. Undue
reliance should not be placed on such forward-looking statements, as such
statements speak only as of the date on which they are made.

                                       8
<PAGE>

General

         The Flooring Zone, Inc. is a Nevada corporation organized on May 5,
2003, to operate full service retail floorcovering stores. We have a
wholly-owned subsidairy, The Flooring Zone of Georgia, Inc. The Georgia
corporation was formed in 2000, by the founders of The Flooring Zone, Inc., and
was established to develop our business concept in the retail floorcovering
industry. Through our subsidiary we operate a total of three retail stores. We
have stores in Brunswick and St. Mary's, Georgia and one in Yulee, Florida. We
also maintain administrative offices and warehouse facilities in Brunswick,
Georgia. We are currently conducting a registered offering to raise capital to
expand our operations and store locations in the southeastern United States.

Results of Operations

         For the six months ended June 30, 2005 and 2004

         While we enjoyed net income during the first six months of 2005, our
revenues and net income during that period, however, were lower compared to the
same six month period 2004.

         Revenues

         We generate revenue primarily from the sale of flooring products. We
sell flooring products to two groups - retail customers and contractors. Retail
customers generally pay higher prices for products than contractors. Typically,
about 70% of our product sales are to retail customers and 30% of our product
sales are to contractors.

         Despite average retail product prices being approximately 10% higher,
during the six months ended June 30, 2005 compared to the same six month period
of 2004, we realized a decrease in net revenue of 11% to $1,787,181. This
decrease in revenue in the first six months of 2005 was primarily the result of
an unusually successful first fiscal quarter of 2004, when we provided flooring
products for a large condominium complex and a local hospital. While overall
revenue decreased 11%, we believe that, exclusive of the condominium project and
the hospital, our revenue from product sales in the first six months of 2005 was
consistent with revenues from the first six months of 2004.

         As noted above, our revenues are affected by consumer confidence. Based
on sales during the first six months, we believe consumer confidence in the
communities where we operate continues to be strong. We anticipate revenues at
our current stores to remain constant or even slightly higher during the
remainder of 2005. We anticipate that our planned expansion into more and larger
markets will increase product sales and revenue from operations. We believe the
revenues we can earn from one store in the larger markets we are targeting will
be equivalent to the revenue we earn in the three stores we currently have.

         Gross Profit

         Our gross profit is directly affected by our costs of sales. Cost of
sales includes all direct costs of floor coverings, materials used in
installation and installation labor. As with revenues, our cost of sales and
gross profit are directly affected by changes in the percentage of products sold
to retail customers versus contractors. As discussed above, the prices we can
charge contractors are lower than the prices we can charge retail customers,

                                       9
<PAGE>

therefore, our profit margin on product sales to retail customers is greater.
Moreover, we typically also realize profit from the sale of materials used in
installation and from the costs charged for installation labor to retail
customers. Conversely, contractors typically use their own subcontractors to
install the floor covering products they purchase. These subcontractors provide
the materials used in installation and the installation labor.

         Gross profit during the first six months of 2005, was $696,486, 12%
lower than the $788,956 gross profits realized during the first six months of
2004. During the first six month of 2005, we realized an 11% decrease in net
revenue. We also realized an 11% decrease in cost of sales during that period.
Cost of sales as a percentage of net revenues, however, remained constant during
the 2005 and 2004 periods. Until such time as we are able to expand our
operations into additional markets, we anticipate gross profit to remain
consistent with the prior year results or to increase modestly.

         General and Administrative Expenses

         Comparison of the six months ended June 30, 2005 and 2004

         General and administrative expenses for the six months ended June 30,
2005, decreased $56,183, or 8% to $642,555 compared to the six months ended June
30, 2004, and as a percentage of sales revenue remained almost flat during the
six months ended June 30, 2005 and 2004. During the six months ended June 30,
2005 and 2004, general and administrative costs consisted of:

                                                    Six Months Ended
                                            June 30, 2005      June 30, 2004
                                            -------------      -------------

Salaries & benefits costs                    $   250,146        $    311,078
Advertising & display costs                       49,436              46,941
Occupancy costs & utilities                      150,992             148,837
Legal & accounting costs                          35,808              32,471
Other                                            156,173             159,411
                                             -----------        ------------
                                             $   642,555        $    698,738
                                             ===========        ============

         The 20% reduction in salaries and benefits costs in the six months
ended June 30, 2005 compared to 2004 is largely the result of a reduction in our
work force as we have made a concerted effort to consolidate certain job
functions. We do not anticipate significant increases in staffing needs until we
have raised sufficient capital to expand our operations.

         During the six months ended June 30, 2005 we increased our advertising
and display costs by 5% compared to the same period of 2004. This increase in
advertising is largely attributable to our efforts to increase product sales and
our efforts to inform investors of our ongoing public offering. We anticipate
advertising costs to remain fairly consistent with those incurred during the
first six months of 2005 until we expand to new markets.

                                       10
<PAGE>

         Occupancy costs and utilities during the six months ended June 30, 2005
compared to the same period of 2004, remained relatively flat, increasing by
less than 1.4%. We expect these costs to remain constant until we expand our
operations.

         Legal and accounting costs increased 10.3% to $35,808 during the six
month period ended June 30, 2005 compared to the six month period ended June 30,
2004. We anticipate legal and accounting costs to continue at levels consistent
with or higher than the amounts incurred in the first six months of 2005 as we
begin to incur legal and accounting costs in connection with our ongoing public
reporting obligations.

         Other costs remained relatively constant decreasing only 2% during the
six months ended June 30, 2005 compared to June 30, 2004. We anticipate other
expenses to remain fairly flat until we expand and add additional Company owned
stores to our network.

         Net Income

         Our net income in the six months ended June 30, 2005 was $10,166
compared to $59,189 in during the first six months of 2004. This 83% decrease in
net income during the first six months of 2005 is primarily the result of
decreased sales volume compared to the first six months of 2004 as the Company
completed a number of unusually large jobs during the first six months of 2004.

         Comparison of the three months ended June 30, 2005 and 2004.

         During the three months ended June 30, 2005, we realized net income
compared to a net loss during the three months ended June 30,2004.

         Revenues

         Despite average retail product prices being approximately 10% higher,
in the three months ended June 30, 2005 compared to the same three month period
of 2004, net revenue remained relatively constant decreasing only 1%. This
decrease in revenue in the first fiscal quarter 2005 was primarily the result of
an unusually successful second fiscal quarter of 2004, when we provided flooring
products for a large condominium complex and a hospital, combined with the fact
that we shifted our spring private sales event from March to April in 2005.
While overall revenue decreased 20%, we believe that, exclusive of the
condominium project and the hospital and the timing of our spring private sale,
our revenue from product sales in the second quarter 2005 was consistent with
revenues from the second quarter of 2004.

                                       11
<PAGE>

         Gross Profit

         Gross profit during the second fiscal quarter of 2005, was $317,845,
essentially unchanged from the $313,206 gross profit realized during the second
fiscal quarter of 2004, as net revenue and cost of sales each decreased by 1%
during the second fiscal quarter of 2005. Until such time as we are able to
expand our operations into additional markets, we anticipate gross profits to
remain consistent with the prior year results or to increase modestly.

         General and Administrative Expenses

         For the three months ended June 30, 2005 and 2004

         General and administrative expenses for the three months ended June 30,
2005, decreased $13,291, or 4% to $294,308 compared to the three months ended
June 30, 2004. As a percentage of sales revenue general and administrative
expenses decrease to 32% during the quarter ended June 30, 2005, compared to 33%
during the quarter ended March 31, 2004. During the three months ended June 30,
2005 and 2004, general and administrative costs consisted of:

                                                   Three Months Ended
                                            June 30, 2005      June 30, 2004
                                            -------------      -------------

Salaries & benefits costs                    $   120,265        $    145,150
Advertising & display costs                       28,086              15,478
Occupancy costs & utilities                       73,872              72,799
Legal & accounting costs                           8,308               7,518
Other                                             63,777              66,654
                                             -----------        ------------
                                             $   294,308        $    307,599
                                             ===========        ============

         The 17% reduction in salaries and benefits costs in the quarter ended
June 30, 2005 compared to the quarter ended June 30, 2004 is largely the result
of a reduction in our administrative work force as we have made a concerted
effort to control costs through the consolidation of certain job functions. We
do not anticipate significant increases in staffing needs until we have raised
sufficient capital to expand our operations.

         During the three months ended June 30, 2005 we increased our
advertising and display costs by 81% compared to the same period of 2004 in an
effort to increase sales and in connection with our public offering. We
anticipate advertising costs to remain fairly consistent with those incurred
during the second quarter 2005 until we expand to new markets.

         Occupancy costs and utilities during the second quarter 2005 compared
to the same quarter 2004, remained relatively flat, increasing by less than
1.5%. We expect these costs to remain constant until we expand our operations.

         Legal and accounting costs increased 10.5% during the three months
ended June 30, 2005 compared to the three months ended June 30, 2004. We
anticipate legal and accounting costs to continue at levels consistent with or
higher than the second quarter 2005 as we begin to incur legal and accounting
costs in connection with our ongoing public reporting obligations.

         Other costs were relatively unchanged during the quarters ended June
30, 2005 and 2004 decreasing 4.3% in the second quarter of the current year.. We
anticipate other expenses to remain relatively constant until we expand and add
additional Company owned stores to our network.

                                       12
<PAGE>

         Net Income

         Our net income in the second quarter 2005 was $498 compared to a net
loss of $9,253 in the second quarter 2004. This change from a net loss to net
income during the first quarter 2005 is primarily the result of decreased cost
of sales and general and administrative expenses, only being partially offset by
slightly lower sales volume and increased interest expense compared to the first
quarter 2004.

         Liquidity and Capital Resources

         Our capital resources have consisted of revenues from operations, funds
raised through the sale of our common stock and debt. On January 31, 2005 our
SB-2 registration statement was declared effective by the Securities and
Exchange Commission and we commenced selling shares of our common stock at $2.00
per share. As of August 8, 2005, we have raised $272,100. We anticipate our
capital resources in the upcoming twelve months will likewise consist primarily
of revenues from operations, funds raised in financing activities and debt.

         During the first six months of 2005 and 2004 cash was primarily used to
fund operations. See below for additional discussion and analysis of cash flow.

                                                       Six Months Ended
                                               June 30, 2005    June 30, 2004
                                               -------------    -------------

Net cash used in operating activities           $   (155,042)    $   (227,031)
Net cash used in investing activities           $     (6,748)    $     (3,265)
Net cash provided by financing activities       $    166,424     $    249,415
                                                ------------     ------------
NET INCREASE (DECREASE) IN CASH                 $      4,624     $     19,119
                                                ============     ============

         As discussed herein, during the six months ended June 30, 2005 compared
to the six months ended June 30, 2004 product sales decreased leading to a
reduction in net income of $49,023 to $10,166. During the first six months of
2005 inventory has increased $217,295. As we have increased our marketing to try
and increase sales. Accounts payable have also increased by $32,400 as we have
had less income from operations to resolve accounts payable. Net cash used in
operating activities during the six months ended June 30, 2005, was 32% lower
than net cash used in operating activities during the six months ended June 31,
2004. This decrease in cash used in operating activities during the six months
ended quarter 2005, was largely the result of significantly higher customer
deposits.

         We used $6,748 net cash in investing activities to acquire equipment
during the first six months of 2005, compared to $3,265 during the first six
months of 2004.

         Net cash provided from financing activities was $166,424 during the six
months ended June 30, 2005 compared to $249,415 during the six months ended June
30, 2004, a 33% decrease. During the six months ended June 30, 2005 we repaid
$70,676 in long term debt compared to borrowing $67,771 during the first six

                                       13
<PAGE>

months of 2004. Also during the first quarter 2005, we raised $222,100 from the
sale of our common stock in a public offering compared to funds raised in
private sales of our common stock totaling $107,500 during the six months ended
June 30, 2004.

         At June 30, 2005 and 2004, we had cash on hand of $94,726 and $74,133,
respectively.

Summary of Material Contractual Commitments

         The following table lists our significant commitments as of June 30,
2005.
<TABLE>
<CAPTION>
                                                           Payments Due by Fiscal Year
                                                 -------------------------------------------------------
Contractual Commitments              Total         2005        2006        2007     2008      Thereafter
                                  ----------     --------    --------   --------  --------    ----------
<S>                               <C>            <C>         <C>        <C>       <C>           <C>
Note Payable-Related Party           113,448       18,403      47,414     47,631        --            --
Notes Payable                        557,478       62,214      44,373     47,344    50,515       353,032
Capital Leases                        23,846        5,339      10,473      8,034        --            --
Operating Leases                     753,323       97,133     199,534    149,388   152,170       155,098
                                  ----------     --------    --------   --------  --------      --------

         TOTAL                    $1,448,095     $183,089    $301,794   $252,397  $202,685      $508,130
                                  ==========     ========    ========   ========  ========      ========
</TABLE>

Off-Balance Sheet Financing Arrangements

         As of June 30, 2005 and 2004, we had no off-balance sheet financing
arrangements.

Critical Accounting Policies

         Revenue Recognition

         We recognize revenues in accordance with the Securities and Exchange
Commission, Staff Accounting Bulletin (SAB) number 104, "Revenue Recognition in
Financial Statements." SAB 104 clarifies application of U. S. generally accepted
accounting principles to revenue transactions. Accordingly, revenue is
recognized when an order has been received, the price is fixed and determinable,
the order is shipped and installed, collection is reasonably assured and we have
no significant obligations remaining. Licensing fees are royalties paid to us
for licensing the use of the name The Flooring Zone. The royalties range from
1-2% of the licensee's commercial sales volume.

         We record accounts receivable for sales which have been delivered but
for which money has not been collected. An allowance for doubtful accounts is
provided for accounts deemed potentially uncollectible based on analysis and
aging of accounts. For customer purchases or deposits paid in advance, we record
a liability until products are shipped or installed.

                                       14
<PAGE>

         Merchandise Inventory

         We record inventory at the lower of cost or market, cost being
determined on a first-in, first-out method. We do not believe our merchandise
inventories are subject to significant risk of obsolescence in the near-term,
and we have the ability to adjust purchasing practices based on anticipated
sales trends and general economic conditions.

         Vendor Funds

         We receive funds from vendors in the normal course of business for
purchase-volume-related rebates. Our accounting treatment for these
vendor-provided funds is consistent with Emerging Issues Task Force (EITF) 02-16
"Accounting by a Customer (Including a Reseller) for Certain Consideration
Received From a Vendor." Under EITF 02-16, purchase volume rebates should be
treated as a reduction of inventory cost, unless they represent a reimbursement
of specific, incremental and identifiable costs incurred by the customer to sell
the vendor's product. The purchase volume rebates that we receive do not meet
the specific, incremental and identifiable criteria in EITF 02-16. Therefore,
they are treated as a reduction in the cost of inventory and we recognize these
funds as a reduction of cost of sales when the inventory is sold.

Recently Issued Accounting Pronouncements

         In December 2004, the FASB issued SFAS No. 123R, Share-based Payment.
This standard is a revision of SFAS No. 123, Accounting for Stock-Based
Compensation, and supersedes Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and its related implementation
guidance. SFAS No. 123R requires the measurement of the cost of employees
services received in exchange for an award of the entity's equity instruments
based on the grant-date fair value of the award. The cost will be recognized
over the period during which an employee is required to provide service in
exchange for the award. No compensation cost is recognized for equity
instruments for which employees do not render service. The Company will adopt
SFAS No. 123R on December 15, 2005, which will require stock-based compensation
expense to be recognized against earnings for the portion of outstanding
unvested awards, based on the grant date fair value of those awards calculated
using a Black-Scholes pricing model under SFAS 123 for pro forma disclosure. The
Company is currently evaluating to what extent the entity's equity instruments
will be used in the future for employees services and the transition provisions
of this standard; therefore, the impact to the Company's financial statements of
the adoption of SFAS No. 123R cannot be predicted with certainty.

         In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an
amendment of ARB No. 43, Chapter 4, Inventory Pricing, to clarify that for
abnormal amounts of idle facility expense, freight, handling costs, and wasted
material (spoilage), should be expensed as incurred and not included in
overhead. In addition, this Statement requires the allocation of fixed
production overheads to the costs of conversion be based on the normal capacity
of the production facilities. The provisions in SFAS No. 151 are effective for
inventory costs incurred during fiscal years beginning after June 15, 2005. The
Company is currently assessing the impact of SFAS no. 151 on its consolidated
financial statements.

                                       15
<PAGE>

         In December 2004, the FASB issued Staff Position No. FAS 109-1,
Application of FASB Statement No. 109, Accounting for Income Taxes, to the tax
Deduction on Qualified Production Activities Provided by the American Jobs
Creation Act of 2004 (the "Act") that provides a tax deduction on qualified
production activities. Accordingly FASB indicated that this deduction should be
accounted for as a special deduction in accordance with FASB Statement No. 109.
The Company will comply with the provisions of FSP 109-1 effective January 1,
2005, and does not believe that the adoption of this FASB Staff Position will
have a material impact on the Company's financial statements.

         Item 3. Controls and Procedures

         Our principal executive officers and our principal financial officer
(the "Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e). Such officers have concluded (based upon their evaluations of
these controls and procedures as of the end of the period covered by this
report) that the Company's disclosure controls and procedures are effective to
ensure that information required to be disclosed by it in this report is
accumulated and communicated to management, including the Certifying Officers as
appropriate, to allow timely decisions regarding required disclosure.

         The Certifying Officers have also indicated that there were no
significant changes in the Company's internal controls over financial reporting
or other factors that could significantly affect such controls subsequent to the
date of their evaluation, and there were no significant deficiencies and
material weaknesses.

         Management, including the Certifying Officers, does not expect that the
Company's disclosure controls or its internal controls will prevent all error
and all fraud. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. In addition, the design of a 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 a company 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 any systems of controls is
also 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 goals under all potential future conditions. Because of these
inherent limitations in a cost-effective control system, misstatements due to
error or fraud may occur and may not be detected.

                                       16
<PAGE>

                           PART II - OTHER INFORMATION

Item 2.  Changes in Securities

         No instruments defining the rights of the holders of any class of
registered securities have been materially modified, limited or qualified during
the quarter ended June 30, 2005.

         During the quarter, we sold no shares that were not registered under
the Securities Act of 1933.

         We are currently undertaking a public offering of a maximum of
10,000,000 shares of our common stock at a price of $2.00 per share, for an
aggregate offering of up to $20,000,000. This public offering was registered
with the Securities and Exchange Commission pursuant to an SB-2 registration
statement. Our SB-2 registration statement was declared effective by the
Securities and Exchange Commission on January 31, 2005 and we commenced our
public offering at that time. The commission file number assigned to this
registration statement is 333-119234.

         As of August 8, 2005, we had sold 136,050 common shares raising
$272,100.

         Currently the offering is self underwritten and is being sold by our
officers and directors, so no underwriting discounts and commissions, finders'
fees or expenses have been paid.

         In accordance with the use of proceeds set forth in the registration
statement, as of June 30, 2005, approximately $198,850 has been used to reduce
outstanding debt obligations of the Company. Of the $198,850, approximately
$29,000 was paid to reduce amounts owed on a line of credit extended to us by
Michael Carroll and a note payable to Michael Carroll. Mr. Carroll is an officer
and director of the Company.

Item 6.  Exhibits and Reports on Form 8-K

         (A) Reports on Form 8-K

                None.

                                       17
<PAGE>

         (B) Exhibits. The following exhibits are included as part of this
report:

                Exhibit 31.1        Certification of Principal Executive Officer
                                    Pursuant to Section 302 of the
                                    Sarbanes-Oxley Act of 2002
                Exhibit 31.2        Certification of Principal Financial Officer
                                    Pursuant to Section 302 of the
                                    Sarbanes-Oxley Act of 2002
                Exhibit 32.1        Certification of Principal Executive Officer
                                    Pursuant to Section 906 of the
                                    Sarbanes-Oxley Act of 2002
                Exhibit 32.2        Certification of Principal Executive Officer
                                    Pursuant to Section 906 of the
                                    Sarbanes-Oxley Act of 2002

                                   SIGNATURES

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

                                        THE FLOORING ZONE, INC.


August 15, 2005                           /s/ Jimmy Lee
                                        ----------------------------------------
                                        Jimmy Lee, Chief Executive Officer



August 15, 2005                            /s/ Michael Carroll
                                        ----------------------------------------
                                        Michael Carroll, Chief Financial Officer

                                       18