**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

Form 10-QSB

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

For the Quarter Ended March 31, 2006

Commission File Number 000-31233

## **Green Dolphin Systems Corporation**

(Name of Small Business in its Charter)

Delaware 88-0432539

(State of Incorporation or organization) IRS Employer Identification No.

3702 Neal Drive, Suite 102, Knoxville, TN 37918

(Address of principal executive offices) (Zip code)

Issuer's Telephone Number: (865) 922-6947

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

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 requirements for the past 90 days.
   **Yes [X]              No [ ]**

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
exchange Act)      **Yes [ ]              No [X]**

As of  March 31, 2006 the number of shares outstanding of the registrant's only class of common
stock was 30,173,700

**Part I**

**Item 1.**Financial Statements

**Green Dolphin Systems Corporation**

INDEX TO FINANCIAL STATEMENTS

|CONTENTS                                                                                                       |      
|-------------------------------------------------------------------------------------------------------------- | -----
|Consolidated Balance Sheet at March 31, 2006 (unaudited)                                                       | 3    
|Consolidated Statements of Operations for the three months ended March
31, 2006 and March 31, 2005 (unaudited) | 4 - 5
|Consolidated Statements of Cash Flows for the three months ended March
31, 2006 (unaudited) and 2005 (audited) | 6 - 7
|Notes to Consolidated Financial Statements                                                                     | 8 -11

**Green Dolphin Systems Corporation** Consolidated Balance Sheet

|                                                                                                      | (unaudited)
|----------------------------------------------------------------------------------------------------- | -----------
|ASSETS                                                                                                |            
|Current Assets                                                                                        |            
|Cash                                                                                                  | 0          
|Accounts receivable, net                                                                              | 0          
|Inventory                                                                                             | 0          
|Prepaid expenses                                                                                      | 0          
|Total Current Assets:                                                                                 | 0          
|Property and equipment, net                                                                           | 0          
|Other Assets                                                                                          |            
|Trademarks and copyrights, net                                                                        | 0          
|Total Assets:                                                                                         | 0          
|LIABILITIES AND SHAREHOLDERS'
DEFICIT                                                                 |            
|Current Liabilities                                                                                   |            
|Accounts payable                                                                                      | 0          
|Accrued expenses                                                                                      | 0          
|Total Current Liabilities                                                                             | 0          
|Other Liabilities                                                                                     |            
|Due to related companies                                                                              | 0          
|Total Liabilities:                                                                                    | 0          
|Shareholders' deficit Common stock (0.001
par value; 100,000,000 shares authorized;
30,173,700 shares | 30,174     
|Additional paid in capital                                                                            | 843,882    
|Accumulated deficit                                                                                   | (874,056)  
|Total Shareholders' deficit                                                                           | 0          
|Total Liabilities and Shareholders' Deficit:                                                          | 0          

**Green Dolphin Systems Corporation**

Consolidated Statements of Operations

|                                                             | (unaudited)Three months endedMarch 31
|------------------------------------------------------------ | -------------------------------------
|                                                             | 2006                                 
|Sales                                                        |                                      
|Related party                                                | __                                   
|Other                                                        | 0                                    
|Total Sales:                                                 | 0                                    
|Cost of Sales                                                | 0                                    
|Gross margin                                                 | 0                                    
|Expenses                                                     |                                      
|General and administrative expenses                          | 0                                    
|Compensation for Officers and Directors                      | __                                   
|Loss before gain on disposal of operations                   | __                                   
|Gain on disposal of  operations                              | 192,477                              
|Gain on loss of control of subsidiary                        | 133,762                              
|Net income                                                   | 326,239                              
|Weighted average common shares outstanding
basic and diluted | 30,173,700                           
|Net loss per common share basic and diluted                  | (0.01)                               
|Security Deposits on the cash flow                           | 133,762                              
|Intangible Assets                                            | 168,331                              
|Property & Equipment                                         | 472                                  
|Accounts Payable                                             | (23,781)                             
|Accrued Expenses                                             | (2,242)                              
|Due to related Companies                                     | (416,948)                            
|Gain on disposal of operation                                | 192,477                              
|Gain on Loss of Control of subsidiary:                       |                                      
|Cash and cash equivalents                                    | (8,968)                              
|Account Receivable                                           | 20,158                               
|Account Payable                                              | (43,805)                             
|Line of credit                                               | (53,968)                             
|Due to related companies                                     | (47,179)                             



The accompanying notes are an integral part of these financial statements.

**Green Dolphin Systems Corporation**

Consolidated Statements of Cash Flows

For the Three months ended March 31, 2006 and 2005

|                                                                                       | For the three
months ended
March 31, 2006
(unaudited) | For the three
months ended
March 31, 2005
(unaudited)
|-------------------------------------------------------------------------------------- | ----------------------------------------------------- | -----------------------------------------------------
|Net Income                                                                             | 326,239                                               |                                                      
|Gain on Disposal of operations                                                         | (192,477)                                             |                                                      
|Gain on loss of control of subsidiary                                                  | (133,762)                                             |                                                      
|Net cash flows from operating activities                                               | 0                                                     | $ 12,947                                             
|Cash flows from investing activities:                                                  |                                                       | 0                                                    
|Cash and cash equivalents in disposed
operations                                       | (34,416)                                              |                                                      
|Cash and cash equivalents overdraft from
subsidiary                                    | 8,968                                                 |                                                      
|Cash flow from investing activities                                                    | (25,448)                                              |                                                      
|Cash flows from financing activities                                                   | 0                                                     |                                                      
|Repayments to related companies                                                        | 0                                                     | (4,978)                                              
|Net cash flows from financing activities                                               | 0                                                     | (4,978)                                              
|Net change in cash                                                                     | (25,448)                                              | 7,969                                                
|Cash, beginning of period                                                              | 25,448                                                | 27,041                                               
|Cash, end of period                                                                    | __                                                    | $ 35,010                                             
|Supplemental Disclosures:                                                              |                                                       |                                                      
|Interest Paid                                                                          | 0                                                     | 0                                                    
|Income Taxes Paid                                                                      |                                                       | 0                                                    
|Non-Cash Investing and Financing Activities                                            |                                                       |                                                      
|Issuance of common stock to Officers and
Directors for services rendered               |                                                       | $ 207,000                                            
|Issuance of common stock to consultants for
services rendered                          |                                                       | $ 41,750                                             
|Disposal of operations via transfer of assets and
liabilities for forgiveness of debt: |                                                       |                                                      
|Cash and cash equivalents                                                              | 34,416                                                |                                                      
|Accounts receivable                                                                    | 8,503                                                 |                                                      
|Inventories                                                                            | 37,522                                                |                                                      
|Security deposits                                                                      | 1,250                                                 |                                                      



The accompanying notes are an integral part of these financial statements.

**Green Dolphin Systems Corporation**

Notes to Consolidated Financial Statements

1. Basis of Presentation

The accompanying unaudited financial statements of Green Dolphin Systems Corporation have
been prepared in accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Article 10 of regulation S-X.
Accordingly, they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary for fair
presentation have been included. Operating results for the periods ended March 31, 2006 are not
necessarily indicative of the results that may be expected for the fiscal year ended December 31,
2006. Adoption of this statement did not have a material impact on our results of operation or
financial condition.

For further information, refer to the audited financial statements and the footnotes thereto for the
fiscal year ended December 31, 2005 included in the Company's Annual Report on Form
10-KSB and other reports filed with 2005 the SEC.

The accompanying unaudited interim consolidated financial statements reflect all adjustments of
a normal and recurring nature which are, in the opinion of management, necessary to present
fairly the financial position, results of operations and cash flows of the company for the interim
periods presented.  The results of operations for these periods are not necessarily comparable to,
or indicative of results of any other interim period or for the fiscal year taken as a whole.

2. Disposal of Operations

In January 2006, in an effort to address the debt of the Company and to restructure, the Board
agreed to sell the Company's chemical operations and assets to Penta Deltex Ltd. (a related party)
in exchange for the forgiveness of the balance owed by the Company to Penta Deltex Ltd. of
$153,683.

In January 2006, an agreement was reached between the Company and Green Dolphin Systems
Canada (a related party) ("GDS Canada") and Nicholas Plessas, stockholder, whereby GDS
Canada and Mr. Plessas would forgive the balance owed by the Company to GDS Canada and
Mr. Plessas of $263,717. Consequently, Green Dolphin Corp's control of GDS Canada no longer
exists therefore Green Dolphin Corp has no subsidiaries or revenue generating operations as of
January 2006.

**Green Dolphin Systems Corporation**

Notes to Consolidated Financial Statements

3. Recently Issued Accounting Standards

In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment" ("SFAS 123R").
SFAS 123R revises FASB Statement No. 123 "Accounting for Stock-Based Compensation" and
supersedes APB Opinion No. 25 "Accounting for Stock Issued to Employees". SFAS 123R
requires all public and non-public companies to measure and recognize compensation expense
for all stock-based payments for services received at the grant-date fair value, with the cost
recognized over the vesting period (or the requisite service period). SFAS 123R is effective for
small business issuers for fiscal years beginning after December 15, 2005. As such, the Company
is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2006.Adoption of this statement did not have a material impact on our results of operations or
financial condition.

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. As such, the Company is required to adopt these provisions at the beginning of the
fiscal year ended December 31, 2006. Adoption of this statement did not have a material impact
on our results of operations or financial condition.

**Green Dolphin Systems Corporation**

**Item 2.**MANAGEMENT'S DISCUSSION AND ANALYSIS OR

PLAN OF OPERATION

**Results of Operation:**

As disclosed in the Company's annual report on FORM 10-KSB for the year ended December 31,
2005 and also duly reported on February 1, 2006 with the FORM 8-K, the company completed
the sale of its assets on January 10, 2006. As a result of this sale, the company was not
conducting any business as of January 11, 2006

The Company plans to acquire a new business which may provide more value to the Company's
stockholders.

**Item 3.**CONTROLS & PROCEDURES

There have been no changes in our internal control over financial reporting as defined in Rule
13a-15(f) of the Exchange Act that occurred during the period ended March 31, 2006, that has
materially affected, or is reasonably likely to affect, our internal control over financial reporting.
We intend to continually review and evaluate the design and effectiveness of our disclosure
controls and procedures and to improve our controls and procedures over time and to correct any
deficiencies that we may discover in the future.

**PART II  OTHER INFORMATION**

**Item 1.**Legal Proceedings

As of the date of this report, we are not a party to any pending legal proceeding and are not aware
of any threatened legal proceeding.

**Item 2**. Unregistered sales of Equity Securities and Use of Proceeds

As of March 31, 2006 there were zero issuance of shares or sale of shares registered to the
Company.

**Item 3.**Defaults upon Senior Securities

There have been no material defaults in the payments of principal, interest, a sinking or purchase
fund installment, or any other material default not cured within thirty days during the period
covered by this report.

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

No matter has been submitted to a vote of security holders through solicitation or proxies during
the period covered by this report.

**Item 5.**Other Information

None.

**Item 6.**Exhibits:

The exhibits required by Item 601 of Regulation S-B, as described in the following index of
exhibits, are incorporated by reference or filed with this report as follows:

Exhibit No. Description of Exhibit

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002

31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002

32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002

**SIGNATURES**

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

Green Dolphin Systems Corporation

/s/ William Kefalas

Date: July 31, 2006

William Kefalas

President and CEO