----

| Delaware                                 | 20-5456087                                |
|-----------------------------------------------|-------------------------------------------|
| (State      of jurisdiction of Incorporation) | (I.R.S.      Employer Identification No.) |
|                                          |                                      |

| 10801      Johnston Road. Suite 210                         Charlotte,      NC                          (Address      of Principal Executive Offices) |   |  28226(Zip      Code) |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|

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| Large      accelerated filer o |   |   |   | Accelerated      filer o |
|--------------------------------|--------|--------|--------|--------------------------|

|  Non-accelerated      filer o |   | (Do      not check if a smaller reporting company) |   | Smaller      reporting company ý |
|------------------------------------|--------|----------------------------------------------------|--------|---------------------------------------|

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|                                          | Page                                                                                                                       |
|-----------------------------------------------|----------------------------------------------------------------------------------------------------------------------------|
|                                          |                                                                                                                       |
| PART      I.  FINANCIAL INFORMATION |                                                                                                                       |
|                                          |                                                                                                                       |
| Item      1.                                  | Financial      Statements (Unaudited)                                                                                      | 2 |
|                                          |                                                                                                                       |   |
|                                          | Condensed      Balance Sheet as of June 30, 2008 and December 31,    2007                                                  | 2 |
|                                          |                                                                                                                       |   |
|                                          | Condensed      Statements of Operations for the Three and Six months      Ended  June 30, 2008 and June 30, 2007 | 3 |
|                                          |                                                                                                                       |   |
|                                          | Condensed      Statements of Cash Flows for Six Months Ended June 30, 2008 and June 30,      2007                          | 4 |
|                                          |                                                                                                                       |   |
|                                          | Notes      to Condensed Financial Statements                                                                               | 5 |
|                                          |                                                                                                                       |   |
| Item      2.                                  | Management's      Discussion and Analysis of Financial Condition and Results of      Operations                            | 19 |
|                                          |                                                                                                                       |   |
| Item      3.                                  | Quantitative      and Quantitative Disclosures about Market Risk                                                           | 27 |
|                                          |                                                                                                                       |   |
| Item      4.                                  | Controls      and Procedures                                                                                               | 28 |
|                                          |                                                                                                                       |
| PART II  OTHER      INFORMATION     |                                                                                                                       |
|                                          |                                                                                                                       |
| Item      1.                                  | Legal      Proceedings                                                                                                     | 28 |
|                                          |                                                                                                                       |   |
| Item      2.                                  | Changes      in Securities                                                                                                 | 28 |
|                                          |                                                                                                                       |   |
| Item      3.                                  | Defaults      Upon Senior Securities                                                                                       | 29 |
|                                          |                                                                                                                       |   |
| Item      4.                                  | Submissions      of Matters to a Vote of Security Holders                                                                  | 29 |
|                                          |                                                                                                                       |   |
| Item      5                                   | Other      Information                                                                                                     | 29 |
|                                          |                                                                                                                       |   |
| Item      6.                                  | Exhibits      and Reports on Form 8-K                                                                                      | 29 |
|                                          |                                                                                                                       |
| Signatures                                    | 30                                                                                                                         |

----

|                                                                |   | (Unaudited)   |       |   | (Audited)     |   |
|---------------------------------------------------------------------|--------|---------------|------------|--------|---------------|--------|
|                                                                |   | June          |       |   | December      |   |
|                                                                |   | 30,      2008 |       |   | 31,      2007 |   |
| CURRENT      ASSETS:                                                |   |          |       |   |          |   |   |   |
|   Cash                                                    |   | $             | 1,688,006  |   |          | $      | 3,499,044 |   |
|   Retained      interest in purchased accounts receivable |   |          | 2,543,471  |   |          |   | 1,502,215 |   |
|   Earned      but uncollected fee income                  |   |          | 47,573     |   |          |   | 25,742 |   |
|   Prepaid      expenses and other                         |   |          | 57,247     |   |          |   | 65,016 |   |
|     Total      current assets                   |   |          | 4,336,297  |   |          |   | 5,092,017 |   |
|                                                                |   |          |       |   |          |   |   |   |
| PROPERTY      AND EQUIPMENT, net                                    |   |          | 86,388     |   |          |   | 89,044 |   |
|                                                                |   |          |       |   |          |   |   |   |
| SECURITY      DEPOSITS                                              |   |          | 20,216     |   |          |   | 20,216 |   |
|                                                                |   |          |       |   |          |   |   |   |
|                                                                |   | $             | 4,442,901  |   |          | $      | 5,201,277 |   |
|                                                                |   |          |       |   |          |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                           |
|                                                                |   |          |       |   |          |   |   |   |
| CURRENT      LIABILITIES:                                           |   |          |       |   |          |   |   |   |
|   Accounts      payable                                   |   |          | 49,092     |   |          |   | 68,728 |   |
|   Accrued      payroll and related taxes                  |   |          | 96,084     |   |          |   | 101,248 |   |
|   Accrued      expenses                                   |   |          | 32,706     |   |          |   | 73,201 |   |
|   Collected      but unearned fee income                  |   |          | 34,663     |   |          |   | 30,748 |   |
|   Preferred      dividends payable                        |   |          | 257,624    |   |          |   | 405,995 |   |
|     Total      current liabilities              |   |          | 470,169    |   |          |   | 679,920 |   |
|                                                                |   |          |       |   |          |   |   |   |
| COMMITMENTS      AND CONTINGENCIES                                  |   |          |       |   |          |   |   |   |
|                                                                |   |          |       |   |          |   |   |   |
| PREFERRED      STOCK, net of issuance costs                         |   |          | 4,874,712  |   |          |   | 5,503,117 |   |
|   of      $1,209,383                                      |   |          |       |   |          |   |   |   |
| COMMON      STOCK                                                   |   |          | 12,941     |   |          |   | 11,821 |   |
| ADDITIONAL      PAID IN CAPITAL                                     |   |          | 1,650,723  |   |          |   | 536,199 |   |
| ACCUMULATED      DEFICIT                                            |   |          | (2,565,644 | )      |          |   | (1,529,780 | ) |
|                                                                |   |          | 3,972,732  |   |          |   | 4,521,357 |   |
|                                                                |   |          |       |   |          |   |   |   |
|                                                                |   | $             | 4,442,901  |   |          | $      | 5,201,277 |   |

----

|                                                |   | (Unaudited)For      the quarters ending June 30, |       |   | (Unaudited)For the six months      ending June 30, |   |
|-----------------------------------------------------|--------|--------------------------------------------------|------------|--------|----------------------------------------------------|--------|
|                                                |   | 2008                                             |       |   | 2007                                               |   |   | 2008 |   |   | 2007 |   |
| FINANCE      REVENUES                               |   | $                                                | 273,516    |   |                                               | $      | 75,638 |   |   | $ | 485,177 |   |   | $ | 175,744 |   |
| INTEREST      EXPENSE - financial institution       |   |                                             | -          |   |                                               |   | (17,195 | ) |   |   | - |   |   |   | (21,365 | ) |
| INTEREST      INCOME                                |   |                                             | 10,902     |   |                                               |   | 68,584 |   |   |   | 34,519 |   |   |   | 97,529 |   |
|                                                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| NET      FINANCE REVENUES                           |   |                                             | 284,418    |   |                                               |   | 127,027 |   |   |   | 519,696 |   |   |   | 251,908 |   |
| PROVISION      FOR CREDIT LOSSES                    |   |                                             | 11,140     |   |                                               |   | - |   |   |   | 5,044 |   |   |   | - |   |
|                                                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| FINANCE      REVENUES, NET OF INTEREST EXPENSE      |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |
|  AND      CREDIT LOSSES                        |   |                                             | 273,278    |   |                                               |   | 127,027 |   |   |   | 514,652 |   |   |   | 251,908 |   |
|                                                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      EXPENSES                             |   |                                             | 557,650    |   |                                               |   | 289,668 |   |   |   | 1,221,905 |   |   |   | 559,456 |   |
|                                                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME (LOSS) BEFORE INCOME TAXES          |   |                                             | (284,372   | )      |                                               |   | (162,641 | ) |   |   | (707,253 | ) |   |   | (307,548 | ) |
|                                                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      TAX (PROVISION) BENEFIT:                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
|   Current                                 |   |                                             | -          |   |                                               |   | - |   |   |   | - |   |   |   | - |   |
|   Deferred                                |   |                                             | -          |   |                                               |   | 2,000 |   |   |   | - |   |   |   | 17,000 |   |
|                                                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
|   Total                                   |   |                                             | 0          |   |                                               |   | 2,000 |   |   |   | 0 |   |   |   | 17,000 |   |
|                                                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME (LOSS)                              |   |                                             | (284,372   | )      |                                               |   | (160,641 | ) |   |   | (707,253 | ) |   |   | (290,548 | ) |
|                                                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| DEEMED      DIVIDEND ON CONVERTIBLE PREFERRED STOCK |   |                                             | (124,777   | )      |                                               |   | (132,860 | ) |   |   | (261,181 | ) |   |   | (134,320 | ) |
|                                                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME (LOSS) ATTRIBUTABLE TO COMMON       |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
|   SHAREHOLDER                             |   | $                                                | (409,149   | )      |                                               | $      | (293,501 | ) |   | $ | (968,434 | ) |   | $ | (424,868 | ) |
|                                                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME (LOSS) ATTRIBUTABLE TO COMMON       |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
|   SHAREHOLDER,      per share             |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
|   Basic                                   |   | $                                                | (0.03      | )      |                                               | $      | (0.02 | ) |   | $ | (0.08 | ) |   | $ | (0.04 | ) |
|                                                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
|   Dilutive                                |   | $                                                | (0.03      | )      |                                               | $      | (0.02 | ) |   | $ | (0.08 | ) |   | $ | (0.04 | ) |
|                                                |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF SHARES OUTSTANDING  |   |                                             |       |   |                                               |   |   |   |   |   |   |   |   |
|   Basic      and dilutive                 |   |                                             | 12,883,803 |   |                                               |   | 11,820,555 |   |   |   | 12,500,507 |   |   |   | 10,450,389 |   |

----

|                                                                                  |   | Preferred |       |   | Common |   |   | Additional           |   |   | Accumulated |   |
|---------------------------------------------------------------------------------------|--------|-----------|------------|--------|--------|--------|--------|----------------------|--------|--------|-------------|--------|
|                                                                                  |   | Stock     |       |   | Stock  |   |   | Paid      in Capital |   |   | Deficit     |   |
|                                                                                  |   |      |       |   |   |   |   |                 |   |   |        |   |
| Balance,      December 31, 2007 (audited)                                             |   | $         | 5,503,117  |   |   | $      | 11,821 |                 |   | $      | 536,199     |   |   | $ | (1,529,780 | ) |
|                                                                                  |   |      |       |   |   |   |   |                 |   |   |        |   |   |   |   |   |
| To      record the issuance of 94,865 preferred shares in connection with      the    |   |      |       |   |   |   |   |                 |   |   |        |   |   |
| payment      of the accrued preferred dividend liability as of December 31,      2007 |   |      | 473,425    |   |   |   | -      |                 |   |   | -           |   |   |   | - |   |
|                                                                                  |   |      |       |   |   |   |   |                 |   |   |        |   |   |   |   |   |
| To      record conversion of 220,366 preferred shares, plus accrued      and          |   |      |       |   |   |   |   |                 |   |   |        |   |   |
| declared      dividends, to 1,119,823 common shares                                   |   |      | (1,101,830 | )      |   |   | 1,120  |                 |   |   | 1,104,267   |   |   |   | (3,558 | ) |
|                                                                                  |   |      |       |   |   |   |   |                 |   |   |        |   |   |   |   |   |
| Provision      for compensation expense related to issued stock options               |   |      | -          |   |   |   | -      |                 |   |   | 10,257      |   |   |   | - |   |
|                                                                                  |   |      |       |   |   |   |   |                 |   |   |        |   |   |   |   |   |
| Preferred      stock dividends                                                        |   |      | -          |   |   |   | -      |                 |   |   | -           |   |   |   | (325,053 | ) |
|                                                                                  |   |      |       |   |   |   |   |                 |   |   |        |   |   |   |   |   |
| Net      loss for the six months ended June 30, 2008                                  |   |      | -          |   |   |   | -      |                 |   |   | -           |   |   |   | (707,253 | ) |
|                                                                                  |   |      |       |   |   |   |   |                 |   |   |        |   |   |   |   |   |
|                                                                                  |   |      |       |   |   |   |   |                 |   |   |        |   |   |   |   |   |
| Balance,      June 30, 2008 (unaudited)                                               |   | $         | 4,874,712  |   |   | $      | 12,941 |                 |   | $      | 1,650,723   |   |   | $ | (2,565,644 | ) |

----

|                                                                                         |   | (Unaudited) |       |   | (Unaudited) |   |
|----------------------------------------------------------------------------------------------|--------|-------------|------------|--------|-------------|--------|
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                   |   | 2008        |       |   | 2007        |   |
|   Net      loss:                                                                   |   | $           | (707,253   | )      |        | $      | (290,548 | ) |
|   Adjustments      to reconcile net loss to net cash                               |   |        |       |   |        |   |   |   |
|     used      in operating activities:                                   |   |        |       |   |        |   |   |   |
|     Depreciation      and amortization                                   |   |        | 20,653     |   |        |   | 4,295 |   |
|     Compensation      expense related to issuance of stock options       |   |        | 10,257     |   |        |   | 49,686 |   |
| Allowance      for uncollectible accounts                                                    |   |        | 5.044      |   |        |   | - |   |
|     Benefit      for deferred income      taxes                     |   |        | -          |   |        |   | (17,000 | ) |
|     Increase      in retained interest in purchased                      |   |        |       |   |        |   |   |   |
|        accounts      receivable                           |   |        | (1,046,300 | )      |        |   | (453,536 | ) |
|     Increase      in earned but uncollected                              |   |        | (21,831    | )      |        |   | - |   |
|     Decrease      in prepaid expenses and other                          |   |        | 7,769      |   |        |   | 2,001 |   |
|     Increase      in security deposits                                   |   |        | -          |   |        |   | (18,965 | ) |
|     Decrease      in accounts payable                                    |   |        | (19,636    | )      |        |   | (1,137 | ) |
|     Decrease      in due to related company                              |   |        | -          |   |        |   | (18,704 | ) |
|     (Decrease)      increase in accrued payroll and related taxes        |   |        | (5,164     | )      |        |   | 40,932 |   |
|     Increase      in collected but not earned                            |   |        | 3,915      |   |        |   | - |   |
|     (Decrease)      increase in accrued expenses                         |   |        | (40,495    | )      |        |   | 5,300 |   |
|       Net      cash (used in) provided by operating activities |   |        | (1,793,041 | )      |        |   | (697,676 | ) |
|                                                                                         |   |        |       |   |        |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                   |   |        |       |   |        |   |   |   |
|   Purchases      of property and equipment                                         |   |        | (17,997    | )      |        |   | (31,198 | ) |
|                                                                                         |   |        |       |   |        |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                                   |   |        |       |   |        |   |   |   |
|   Payments      to financial institution, net                                      |   |        | -          |   |        |   | (81,088 | ) |
|   Proceeds      from sale of preferred stock                                       |   |        | -          |   |        |   | 6,712,500 |   |
|   Payments      made related to sale of preferred stock                            |   |        | -          |   |        |   | (1,206,483 | ) |
|       Net      cash provided by (used in) financing activities |   |        | 0          |   |        |   | 5,424,929 |   |
|                                                                                         |   |        |       |   |        |   |   |   |
| INCREASE      (DECREASE) IN CASH                                                             |   |        | (1,811,038 | )      |        |   | 4,696,055 |   |
|                                                                                         |   |        |       |   |        |   |   |   |
| CASH,      beginning of period                                                               |   |        | 3,499,044  |   |        |   | 55,771 |   |
|                                                                                         |   |        |       |   |        |   |   |   |
| CASH,      end of period                                                                     |   | $           | 1,688,006  |   |        | $      | 4,751,826 |   |

----

|   | The      consolidated financial statements include the accounts of Anchor Funding      Services, Inc. (formerly BTHC XI, Inc.) and its wholly owned subsidiary,      Anchor Funding Services, LLC (“the Company”).  In April of 2007,      BTHC XI, Inc. changed its name to Anchor Funding Services,      Inc.  All significant intercompany balances and transactions      have been eliminated inconsolidation. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Anchor      Funding Services, Inc. is a Delaware corporation.  Anchor      Funding Services, Inc. has no operations; substantially all operations of      the Company are the responsibility of Anchor Funding Services,      LLC. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Anchor      Funding Services, LLC is a North Carolina limited liability      company.    Anchor Funding Services, LLC was formed      for the purpose of providing factoring and back office services to      businesses located throughout the United States of  America. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On      January 31, 2007, BTHC XI, Inc acquired Anchor Funding Services, LLC by      exchanging shares in BTHC XI, Inc. for all the outstanding membership      units of Anchor Funding Services, LLC (See Note      8).   Anchor Funding Services, LLC is considered the      surviving entity therefore these financial statements include the accounts      of BTHC XI, Inc. and Anchor Funding Services, LLC since January 1,      2007. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Estimates – The      preparation of financial statements in conformity with accounting      principles generally accepted in the United States of America requires      management to make estimates that affect the reported amounts of assets      and liabilities and disclosure of contingent assets and liabilities at the      date of the financial statements and the reported amounts of revenues and      expenses during the reporting period.  Actual results could      differ from those estimates. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Revenue Recognition –      The Company charges fees to its customers in one of two ways as      follows: |
|--------|----------------------------------------------------------------------------------------------------------------|

| 1)   | Fixed      Transaction Fee. Fixed transaction fees are a fixed percentage of      the purchased invoice.  This percentage does not change from the      date the purchased invoice is funded until the date the purchased invoice      is collected. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2)   | Variable      Transaction Fee.  Variable transaction fees are variable      based on the length of time the purchased invoice is      outstanding.   As specified in its contract with the      client, the Company charges variable increasing percentages of the      purchased invoice as time elapses from the purchase date to the collection      date. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For      both Fixed and Variable Transaction fees, the Company recognizes revenue      by using one of two methods depending on the type of      customer.  For new customers the Company recognizes revenue      using the cost recovery method.  For established customers the      Company recognizes revenue using the accrual  method. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Under      the cost recovery method, all revenue is recognized upon collection of the      entire amount of purchased accountsreceivable. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Company considers new customers to be accounts whose initial funding has      been within the last three months or less.  Management believes      it needs three months of history to reasonably estimate a customer’s      collection period and accrued revenues.  If three months of      history has a limited number of transactions, the cost recovery method      will continue to be used until a reasonable revenue estimate can be made      based on additional history.  Once the Company obtains      sufficient historical experience, it will begin using the accrual method      to recognize revenue. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For      established customers the Company uses the accrual method of      accounting.  The Company applies this method by multiplying the      historical yield, for each customer, times the amount advanced on each      purchased invoice outstanding for that customer, times the portion of a      year that the advance is outstanding.  The customers’ historical      yield is based on the Company’s last six months of experience with the      customer along with the Company’s experience in the customer’s industry,      if applicable. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      amounts recorded as revenue under the accrual method described above are      estimates.  As purchased invoices are collected, the Company      records the appropriate adjustments to record the actual revenue earned on      each purchased invoice. These adjustments from the estimated revenue to      the actual revenue have not beenmaterial. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Retained Interest in Purchased      Accounts Receivable – Retained interest in purchased accounts      receivable represents the gross amount of invoices purchased from      factoring customers less amounts maintained in a reserve account and      collected but unearned fee income, plus earned but uncollected fee      income.  The Company purchases a customer’s accounts receivable      and advances them a percentage of the invoice total.  The      difference between the purchase price and amount advanced is maintained in      a reserve account.  The reserve account is used to offset any      potential losses the Company may have related to the purchased accounts      receivable. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Property and Equipment –      Property and equipment, consisting primarily of furniture and fixtures,      computers and software, are stated at cost.  Depreciation is      provided over the estimated useful lives of the depreciable assets using      the straight-line method. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Advertising Costs – The      Company charges advertising costs to expense as incurred.  Total      advertising costs were as follows: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|  For      the six months ending June 30, |
|-----------------------------------------------|
|                                          |   |   |   |   |
| 2008                                          |   |   | 2007 |   |
|                                          |   |   |   |   |
| $                                             | 230,600 |   |   | $ | 87,000 |   |
|                                          |   |   |   |   |   |   |
|  For      the quarters ending June 30,   |
|                                          |   |   |   |   |   |   |
| 2008                                          |   |   | 2007 |   |
|                                          |   |   |   |   |   |   |
| $                                             | 79,200 |   |   | $ | 55,200 |   |

|   | Earnings per Share – The      Company computes earnings per share in accordance with SFAS No. 128      “Earnings Per Share.”  Basic earnings per share is computed by      dividing the earnings for the period by the weighted average number of      common shares outstanding during the period.  Dilutive earnings      per share includes the potential impact of dilutive securities, such as      convertible preferred stock, stock options and stock      warrants.  The dilutive effect of stock options and warrants is      computed using the treasury stock method, which assumes the repurchase of      common shares at the average marketprice. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Stock Based Compensation until      December 31, 2005 - In December 2004,      the Financial Accounting Standards Board (“FASB”) issued Statement of      Financial Accounting Standard (“SFAS”) No. 123(R), “Accounting for      Stock-Based Compensation.” SFAS No. 123(R) establishes standards for the      accounting for transactions in which an entity exchanges its equity      instruments for goods or services. This statement focuses primarily on      accounting for transactions in which an entity obtains employee services      in share-based payment transactions. SFAS No. 123(R) requires that the      fair value of such equity instruments be recognized as an expense in the      historical financial statements as services are performed. Prior to SFAS      No. 123(R), only certain pro forma disclosures of fair value were      required. The provisions of this statement were effective for the first      interim reporting period that began after December 15, 2005. The Company      adopted the provisions of SFAS No.123(R) in the first quarter of fiscal      2006. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Fair Value of Financial      Instruments – The carrying value of cash equivalents, retained      interest in purchased accounts receivable, accounts payable and      accrued liabilities approximates their fair  value. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Cash and cash equivalents      – Cash and cash equivalents consist primarily of highly liquid cash      investment funds with original maturities of three months or less when      acquired. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Income Taxes – Effective      January 31, 2007, the Company became a “C” corporation for income tax      purposes.  In a “C” corporation income taxes are provided for      the tax effects of transactions reported in the financial statements plus      deferred income taxes related to the differences between financial      statement and taxable income. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Compensation      costs related to the issuance of stockoptions |
|--------------------|-----------------------------------------------------------------|

| ·   | Use      of the reserve method of accounting for bad  debts |
|--------------------|-------------------------------------------------------------|

| ·   | Differences      in bases of property and equipment between financial and income tax      reporting |
|--------------------|-----------------------------------------------------------------------------------------------------|

| ·   | Net      operating loss carryforwards. |
|--------------------|----------------------------------------|

----

----

|   | Retained      interest in purchased accounts receivable consists of the      following: |
|--------|-----------------------------------------------------------------------------------------|

|                                           |   | June      30, 2008 |      |   | December      31, 2007 |   |
|------------------------------------------------|--------|--------------------|-----------|--------|------------------------|--------|
| Purchased      accounts receivable outstanding |   | $                  | 2,983,160 |   |                   | $      | 1,841,539 |   |
| Reserve      account                           |   |               | (403,937  | )      |                   |   | (308,616 | ) |
| Allowance      for uncollectible accounts      |   |               | (35,752   | )      |                   |   | (30,708 | ) |
|                                           |   |               |      |   |                   |   |   |   |
|                                           |   | $                  | 2,543,471 |   |                   | $      | 1,502,215 |   |

|   | Retained      interest in purchased accounts receivable consists of United States      companies in the followingindustries: |
|--------|------------------------------------------------------------------------------------------------------------------------------|

|           |   | June      30, 2008 |      |   | December      31, 2007 |   |
|----------------|--------|--------------------|-----------|--------|------------------------|--------|
| Staffing       |   | $                  | 578,162   |   |                   | $      | 656,020 |   |
| Transportation |   |               | 1,226,337 |   |                   |   | 218,264 |   |
| Publishing     |   |               | 3,364     |   |                   |   | 6,000 |   |
| Construction   |   |               | 9,294     |   |                   |   | 8,291 |   |
| Service        |   |               | 627,259   |   |                   |   | 498,614 |   |
| Other          |   |               | 134,807   |   |                   |   | 145,734 |   |
|           |   |               |      |   |                   |   |   |   |
|           |   | $                  | 2,579,223 |   |                   | $      | 1,532,923 |   |

|   | Total      accounts receivable purchased were asfollows: |
|--------|----------------------------------------------------------|

|  For      the six months ending June 30,     |
|---------------------------------------------------|
|                                              |   |   |   |   |
| 2008                                              |   |   | 2007 |   |
|                                              |   |   |   |   |
| $                                                 | 13,596,000 |   |   | $ | 4,370,000 |   |
|                                              |   |   |   |   |   |   |
|   For      the quarters ending June 30, |
|                                              |   |   |   |   |   |   |
| 2008                                              |   |   | 2007 |   |
|                                              |   |   |   |   |   |   |
| $                                                 | 7,558,000 |   |   | $ | 2,779,000 |   |

----

|   | Property      and equipment consist of thefollowing: |
|--------|------------------------------------------------------|

|                               | Estimated         |   | June      30, |    |   | December      31, |   |
|------------------------------------|-------------------|--------|---------------|---------|--------|-------------------|--------|
|                               | Useful      Lives |   | 2008          |    |   | 2007              |   |
| Furniture      and fixtures        | 2-5      years    |   | $             | 33,960  |   |              | $      | 33,960 |   |
| Computers      and software        | 3-7      years    |   |          | 111,863 |   |              |   | 93,866 |   |
|                               |              |   |          | 145,823 |   |              |   | 127,826 |   |
| Less      accumulated depreciation |              |   |          | (59,435 | )      |              |   | (38,782 | ) |
|                               |              |   |          |    |   |              |   |   |   |
|                               |              |   | $             | 86,388  |   |              | $      | 89,044 |   |

|   | The      Company had an agreement with a financial institution under which the      institution financed their purchased accounts receivable.  The      institution received a fee of .3 percent of the receivables financed plus      interest as described below.  The Company terminated this      agreement on July 16, 2007. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Borrowings      were made at the request of the Company.  The amount eligible to      be borrowed was the lower of $1,000,000 or a borrowing base formula as      defined in the agreement.  The interest on borrowings was paid      monthly at a rate ranging from the institution’s prime rate plus 1% to      12.75%. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      agreement was collateralized by all current and future Company assets and      was guaranteed by the Company’s majority  shareholders. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Company’s capital structure consists of preferred and common stock as      described below: |
|--------|------------------------------------------------------------------------------------------------------------|

|   | Preferred Stock – The      Company is authorized to issue 10,000,000 shares of $.001 par value      preferred stock.  The Company’s Board of Directors determines      the rights and preferences of its preferred  stock. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On      January 31, 2007, the Company filed a Certificate of Designation with the      Secretary of State of Delaware.  Effective with this filing,      2,000,000 preferred shares became Series 1 Convertible Preferred      Stock.  Series 1 Convertible Preferred Stock will rank senior to      Common Stock. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Series      1 Convertible Preferred Stock is convertible into 5 shares of the      Company’s Common Stock.  The holder of the Series 1 Convertible      Preferred Stock has the option to convert the shares to Common Stock at      any time.  Upon conversion all accumulated and unpaid dividends      will be paid as additional shares of Common  Stock. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      dividend rate on Series 1 Convertible Preferred Stock is      8%.  Dividends are paid annually on December 31st in the form of      additional Series 1 Convertible Preferred Stock unless the Board of      Directors approves a cash dividend.  Dividends on Series 1      Convertible Preferred Stock shall cease to accrue on the earlier of      December 31, 2009, or on the date they are converted to Common      Shares.  Thereafter, the holders of Series 1 Convertible      Preferred Stock have the same dividend rights as holders of Common Stock,      as if the Series 1 Convertible Preferred Stock had been converted to      Common Stock.  Accrued dividends at June 30, 2008 and December      31, 2007 were $257,624 and$405,995. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Common Stock – The      Company is authorized to issue 40,000,000 shares of $.001 par value Common      Stock.  Each share of Common Stock entitles the holder to one      vote at all stockholder meetings.  Dividends on Common Stock      will be determined annually by the Company’s Board of      Directors. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      changes in Series 1 Convertible Preferred Stock and Common Stock shares      for the six months ended June 30, 2008 is summarized as      follows: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                  |   | Series      1 Convertible |      |   | Common |   |
|-------------------------------------------------------------------------------------------------------|--------|---------------------------|-----------|--------|--------|--------|
|                                                                                                  |   | Preferred      Stock      |      |   | Stock  |   |
| Balance,      December 31, 2007                                                                       |   |                      | 1,342,500 |   |   |   | 11,820,555 |   |
|                                                                                                  |   |                      |      |   |   |   |   |   |
| Shares      issued in exchange with dividend on      preferred shares                                 |   |                      | 94,865    |   |   |   | - |   |
|                                                                                                  |   |                      |      |   |   |   |   |   |
| Shares      issued (redeemed) in connection conversion of      preferred shares to common shares |   |                      | (220,366  | )      |   |   | 1,119,823 |   |
|                                                                                                  |   |                      |      |   |   |   |   |   |
| Balance,      June 30, 2008                                                                           |   |                      | 1,216,999 |   |   |   | 12,940,378 |   |

|   | The      Company used the administrative staff and facilities of a limited      liability company (LLC) related through common ownership.  The      services provided by the LLC consist primarily of rent, credit,      collection, invoicing, payroll and bookkeeping.  The Company      paid the LLC a fee for these services.  The fee is computed as a      percentage of accounts receivable purchased by the Company.  The      administrative fee charged by the LLC was as  follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  For      the six months ending June 30, |
|-----------------------------------------------|
|                                          |   |   |   |   |
| 2008                                          |   |   | 2007 |   |
|                                          |   |   |   |   |
| $                                             | - |   |   | $ | 14,000 |   |
|                                          |   |   |   |   |   |   |
|                                          |   |   |   |   |   |   |
|  For      the quarters ending June 30,   |
|                                          |   |   |   |   |   |   |
| 2008                                          |   |   | 2007 |   |
|                                          |   |   |   |   |   |   |
| $                                             | - |   |   | $ | 7,100 |   |

----

|   | On      January 31, 2007, Anchor Funding Services, LLC and its members entered      into a Securities Exchange Agreement with BTHC XI, Inc.  The      members namely, George Rubin, Morry Rubin (“M. Rubin”) and Ilissa      Bernstein exchanged their units in Anchor Funding Services, LLC for an      aggregate of 8,000,000 common shares of BTHC XI, Inc. issued to George      Rubin (2,400,000 shares), M. Rubin (3,600,000 shares) and Ilissa Bernstein      (2,000,000 shares).  Upon the closing of this transaction Anchor      Funding Services, LLC became a wholly-owned subsidiary of BTHC XI,      Inc. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At      the time of this transaction, BTHC XI, Inc. had no operations and no      assets or liabilities. After this transaction the former members of Anchor      Funding Services, LLC owned approximately 67.7% of the outstanding common      stock of BTHC XI, Inc. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | This      transaction was accounted for as a purchase.  There was no      market value for the common shares of BTHC XI, Inc. or the membership      units of Anchor Funding Services, LLC at the transaction      date.  Accordingly, BTHC XI, Inc. recorded the membership units      received in Anchor Funding Services, LLC at Anchor Funding Service LLC’s      net asset value as of the transactiondate. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At      closing of the exchange transaction described above, M. Rubin and Brad      Bernstein (“B. Bernstein”), the husband of Ilissa Bernstein and President      of the Company, entered into employment contracts and stock option      agreements with the BTHC XI, Inc.  Additionally, at closing two      non-employee directors entered into stock option agreements with BTHC XI,      Inc. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | The      following summarizes M. Rubin’s employment agreement and stock      options: |
|--------|---------------------------------------------------------------------------------------------|

| ·   | The      employment agreement with M. Rubin retains his services as Co-chairman and      Chief Executive Officer for a three-yearperiod. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | An      annual salary of $1 until, the first day of the first month following such      time as BTHC XI, Inc. shall have, within any period beginning on January 1      and ending not more than 12 months thereafter, earned pre-tax net income      exceeding $1,000,000, M. Rubin’s base salary shall be adjusted to an      amount, to be mutually agreed upon between M. Rubin and BTHC XI, Inc.,      reflecting the fair value of the services provided, and to be provided, by      M. Rubin taking into account (i) his position, responsibilities and      performance, (ii) BTHC XI, Inc.’s  industry, size and      performance, and (iii) other relevant factors. M. Rubin is eligible to      receive annual bonuses as determined by BTHC XI, Inc.’s compensation      committee.  M. Rubin shall be entitled to a monthly automobile      allowance of $1,500. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 10-year      options to purchase 650,000 shares exercisable at $1.25 per share,      pursuant to BTHC XI, Inc.’s 2007 Omnibus Equity Compensation Plan. Vesting      of the options is one-third immediately, one-third on February 29, 2008      and one-third on February 28, 2009, provided that in the event of a change      in control or M. Rubin is terminated without cause or M. Rubin terminates      for good reason, all unvested options shall accelerate and immediately      vest and become exercisable in full on the earliest of the date of change      in control or date of M. Rubin’s voluntary termination or by BTHC XI, Inc.      without cause. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      following summarizes B. Bernstein’s employment agreement and stock      options: |
|--------|-------------------------------------------------------------------------------------------------|

| ·   | The      employment agreement with B. Bernstein retains his services as President      for a three-year period. |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | An      annual salary of $205,000 during the first year, $220,000 during the      second year and      $240,000 during the third year and any additional year of      employment.  The Board may periodically review B. Bernstein’s      base salary and may determine to increase (but not decrease) the base      salary in accordance with such policies as BTHC XI, Inc. may hereafter      adopt from time to time.  B. Bernstein is eligible to receive      annual bonuses as determined by BTHC XI, Inc.’s compensation      committee.  B. Bernstein shall be entitled to a monthly      automobile allowance of $1,000. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | 10-year      options to purchase 950,000 shares exercisable at $1.25 per share,      pursuant to BTHC XI, Inc.’s 2007 Omnibus Equity Compensation Plan. Vesting      of the options is one-third immediately, one-third on February 29, 2008      and one-third on February 28, 2009, provided that in the event of a change      in control or B. Bernstein is terminated without cause or B. Bernstein      terminates for good reason, all unvested options shall accelerate and      immediately vest and become exercisable in full on the earliest of the      date of change in control or date of B. Bernstein’s voluntary termination      or by BTHC XI, Inc. without cause. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      following summarizes the non-employee stock option agreements entered into      with three directors: |
|--------|----------------------------------------------------------------------------------------------------------------|

| ·   | 10-year      options to purchase 460,000 shares exercisable at $1.25 per share,      pursuant to BTHC XI, Inc.’s 2007 Omnibus Equity Compensation Plan. Vesting      of the options is one-third immediately, one-third on 1 year from grant      date and the remainder 2 years from grant date.  If any director      ceases serving BTHC XI, Inc. for any reason, all unvested options shall      terminate immediately and all vested options must be exercised within 90      days after the director ceases serving as a  director. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      following summarizes stock option agreements entered into with three      managerial employees: |
|--------|----------------------------------------------------------------------------------------------------------|

| ·   | 10-year      options to purchase 12,000 shares exercisable at $1.25 per share, pursuant      to the Company’s 2007 Omnibus Equity Compensation Plan. The grant dates      range from September 28, 2007 to February 21, 2008.  The vesting      periods range from one year to four years.  If the employee      ceases being employed by the Company for any reason, all vested and      unvested options shall terminateimmediately. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      following summarizes a stock subscription agreement entered into with an      unrelated individual: |
|--------|--------------------------------------------------------------------------------------------------------------|

| ·   | Pursuant      to a subscription agreement entered into on December 11, 2007, the Company      awarded 25,000 shares of common stock, at $1 per share, in exchange for a      full recourse note receivable of $25,000.  This transaction was      accounted for in accordance with SFAS123(R). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|     |   |   |        |   | Weighted      Average |   |          |   |
|----------|--------|--------|-------------|--------|-----------------------|--------|---------------|--------|
| Exercise |   |   | Number      |   | Remaining             |   | Number        |   |
| Price    |   |   | Outstanding |   | Contractual      Life |   | Exercisable   |   |
|     |   |   |        |   |                  |   |          |   |
| $        | 1.25   |   |        |   | 1,972,000             |   | 10      years |   |   | 1,307,668 |   |

| Exercise      price |   |   |   | $1.25         |
|---------------------|--------|--------|--------|---------------|
| Term                |   |   |   | 10      years |
| Volatility          |   |   |   | 2.5           |
| Dividends           |   |   |   | 0%            |
| Discount      rate  |   |   |   | 4.75%         |

| Options      to value                |   |   | 1,972,000 |   |
|--------------------------------------|--------|--------|-----------|--------|
| Option      price                    |   | $      | 0.0468    |   |
| Total      expense to recognize over |   |   |      |
|   life      of options     |   | $      | 92,290    |   |

----

|                                   |   | For      the six   |   |   | For      the six   |   |
|----------------------------------------|--------|--------------------|--------|--------|--------------------|--------|
|                                   |   | months      ended  |   |   | months      ended  |   |
|                                   |   | June      30, 2008 |   |   | June      30, 2007 |   |
| Fully      vested stock options        |   | $                  | 2,548  |   |               | $      | 30,576 |   |
| Unvested      portion of stock options |   |               | 7,709  |   |               |   | 19,110 |   |
|                                   |   |               |   |   |               |   |   |   |
| After-tax      effect                  |   | $                  | 10,257 |   |               | $      | 49,686 |   |

| Gross      proceeds                   |   | $      | 6,712,500 |   |
|---------------------------------------|--------|--------|-----------|--------|
|                                  |   |   |      |   |
| Cash      fees:                       |   |   |      |   |
| Placement      agent                  |   |   | (949,050  | )      |
| Legal      and accounting             |   |   | (218,552  | )      |
| Blue      sky                         |   |   | (39,348   | )      |
| Net      cash proceeds                |   | $      | 5,505,550 |   |
|                                  |   |   |      |   |
| Non-cash      fees:                   |   |   |      |   |
| Placement      agents fees - warrants |   |   | (62,695   | )      |
|                                  |   |   |      |   |
| Net      proceeds                     |   | $      | 5,442,855 |   |

| Exercise      price |   | $1.10        |   |
|---------------------|--------|--------------|--------|
| Term                |   | 5      years |   |
| Volatility          |   | 2.5          |   |
| Dividends           |   | 0%           |   |
| Discount      rate  |   | 4.70%        |   |

----

|     |   |   |        |   | Weighted      Average |   |         |   |
|----------|--------|--------|-------------|--------|-----------------------|--------|--------------|--------|
| Exercise |   |   | Number      |   | Remaining             |   | Number       |   |
| Price    |   |   | Outstanding |   | Contractual      Life |   | Exercisable  |   |
|     |   |   |        |   |                  |   |         |   |
| $        | 1.10   |   |        |   | 1,342,500             |   | 5      years |   |   | 1,342,500 |   |

|   | Revenues – The Company      recorded revenues from United States companies in the following industries      as follows: |
|--------|-------------------------------------------------------------------------------------------------------------------------------|

| Industry       |   |  For      the six months ending June 30, |    |
|----------------|--------|-----------------------------------------------|---------|
|           |   |                                          |    |   |   |   |
| Staffing       |   | $                                             | 152,583 |   |   | $ | 136,192 |   |
| Transportation |   |                                          | 166,428 |   |   |   | 6,326 |   |
| Publishing     |   |                                          | -       |   |   |   | 2,059 |   |
| Construction   |   |                                          | 2,869   |   |   |   | 4,831 |   |
| Service        |   |                                          | 138,250 |   |   |   | 20,217 |   |
| Other          |   |                                          | 25,047  |   |   |   | 6,119 |   |
|           |   |                                          |    |   |   |   |   |   |
|           |   |                                          |    |   |   |   |   |   |
|           |   | $                                             | 485,177 |   |   | $ | 175,744 |   |

| Industry       |   |  For      the quarter ending June 30, |    |
|----------------|--------|--------------------------------------------|---------|
|           |   |                                       |    |   |   |   |
|           |   | 2008                                       |    |   | 2007 |   |
|           |   |                                       |    |   |   |   |
| Staffing       |   | $                                          | 71,322  |   |   | $ | 56,889 |   |
| Transportation |   |                                       | 113,190 |   |   |   | 102 |   |
| Publishing     |   |                                       | -       |   |   |   | 547 |   |
| Construction   |   |                                       | 1,515   |   |   |   | 2,156 |   |
| Service        |   |                                       | 76,633  |   |   |   | 13,785 |   |
| Other          |   |                                       | 10,859  |   |   |   | 2,159 |   |
|           |   |                                       |    |   |   |   |   |   |
|           |   |                                       |    |   |   |   |   |   |
|           |   | $                                          | 273,519 |   |   | $ | 75,638 |   |

|   | Major Customers – The      Company had the following transactions and balances with unrelated      customers (1 for the six months ending June 30, 2008 and 4 for the six      months ending June 30, 2007) which represent 10 percent or more of its      revenues for the six months June 30, 2008 and 2007 as    follows: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                        |   |  For      the six months ended June 30, 2008 |
|-----------------------------|--------|---------------------------------------------------|
|                        |   |                                              |   |   |   |   |   |   |   |   |   |   |
| Revenues                    |   | $                                                 | 48,900 |   |   |   |   |   |   |   |   |   |   |
|                        |   |                                              |   |   |   |   |   |   |   |   |   |   |   |
|                        |   |                                              |  As      of June 30,2008 |
| Purchased      accounts     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |
| receivable      outstanding |   | $                                                 | 308,600 |   |   |   |   |   |   |   |   |   |   |
|                        |   |                                              |   |   |   |   |   |   |   |   |   |   |   |
|                        |   |                                              |  For      the six months ended June 30, 2007 |
|                        |   |                                              |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                    |   | $                                                 | 25,300 |   |   | $ | 24,200 |   |   | $ | 28,900 |   |   | $ | 15,900 |   |
|                        |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                        |   |                                              |  As      of June 30,2007 |   |
| Purchased      accounts     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| receivable      outstanding |   | $                                                 | 159,300 |   |   | $ | 204,500 |   |   | $ | 155,400 |   |   | $ | 86,200 |   |

|   | Cash      paid for interest for the six months ended June 30, 2008 and 2007 was $0      and $21,000 respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------|

|   | Non-cash      financing and investing activities consisted of the    following: |
|--------|---------------------------------------------------------------------------------|

|   | For the six months      ending June 30, 2008 - |
|--------|------------------------------------------------|

|   | 94,685      preferred shares issued in satisfaction of the accrued dividend obligation      as of December 31, 2007 (see Note6). |
|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | Exchange      of 220,366 preferred shares for 1,119,613 of common shares (see Note      6). |
|--------|---------------------------------------------------------------------------------------------|

|   | 2,000      stock options were issued to an employee (see Note  9). |
|--------|--------------------------------------------------------------------|

|   | For the six months      ending June 30, 2007 - |
|--------|------------------------------------------------|

|   | 8,000,000      shares of common stock were issued in exchange for 100,000 membership      units of Anchor Funding Services, LLC (see Note 8).  In      connection with this exchange, the Company acquired cash of      $6,270. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1,970,000      stock options were issued to the Company’s President, CEO and two      non-employee directors (see Note9). |
|--------|---------------------------------------------------------------------------------------------------------------------------------|

----

|   | 1,342,500      stock warrants were issued to the placement agent handling the sale of the      Company’s convertible preferred stock (see Note  10). |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      income tax benefit for the six months ending June 30, 2008 and 2007      consists of the following: |
|--------|--------------------------------------------------------------------------------------------------------------|

|                               |   |   |          |   |   |   |
|------------------------------------|--------|--------|---------------|--------|--------|--------|
|                               |   | June   |          |   | June   |   |
|                               |   |   | 31,      2008 |   |   |   | 31,      2007 |   |
|                               |   |   |          |   |   |   |   |   |
|   Current      provision |   | $      | 0             |   |   | $      | 0 |   |
|   Deferred      benefit  |   |   | 251,000       |   |   |   | 104,000 |   |
|                               |   |   |          |   |   |   |   |   |
|                               |   |   | 251,000       |   |   |   | 104,000 |   |
|                               |   |   |          |   |   |   |   |   |
|   Valuation      reserve |   |   | (251,000      | )      |   |   | (87,000 | ) |
|                               |   |   |          |   |   |   |   |   |
|                               |   | $      | 0             |   |   | $      | 17,000 |   |

|   | The net operating loss      carryforward generated in the six months ending June 30, 2008 and 2007 was      approximately $689,000 and $256,000, respectively.  The deferred      tax assets related to these net operating loss carryforwards was      approximately $251,000 and $87,000 as June 30, 2008 and 2007,      respectively.  These deferred tax assets have been reduced by      valuation allowances.  Management is uncertain if this net      operating loss will ever be utilized, therefore it has been fully      reserved. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM      2. | MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS |
|--------------|-------------------------------------------------------------------------------------------------|

----

|   | Revenue Recognition –      The Company charges fees to its customers in one of two ways as      follows: |
|--------|----------------------------------------------------------------------------------------------------------------|

| 1)   | Fixed      Transaction Fee. Fixed transaction fees are a fixed percentage of      the purchased invoice.  This percentage does not change from the      date the purchased invoice is funded until the date the purchased invoice      is collected. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2)   | Variable      Transaction Fee.  Variable transaction fees are variable      based on the length of time the purchased invoice is      outstanding.   As specified in its contract with the      client, the Company charges variable increasing percentages of the      purchased invoice as time elapses from the purchase date to the collection      date. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For      both Fixed and Variable Transaction fees, the Company recognizes revenue      by using one of two methods depending on the type of      customer.  For new customers the Company recognizes revenue      using the cost recovery method.  For established customers the      Company recognizes revenue using the accrual  method. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Under      the cost recovery method, all revenue is recognized upon collection of the      entire amount of purchased accountsreceivable. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Company considers new customers to be accounts whose initial funding has      been within the last three months or less.  Management believes      it needs three months of history to reasonably estimate a customer’s      collection period and accrued revenues.  If three months of      history has a limited number of transactions, the cost recovery method      will continue to be used until a reasonable revenue estimate can be made      based on additional history.  Once the Company obtains      sufficient historical experience, it will begin using the accrual method      to recognize revenue. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For      established customers the Company uses the accrual method of      accounting.  The Company applies this method by multiplying the      historical yield, for each customer, times the amount advanced on each      purchased invoice outstanding for that customer, times the portion of a      year that the advance is outstanding.  The customers’ historical      yield is based on the Company’s last six months of experience with the      customer along with the Company’s experience in the customer’s industry,      if applicable. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      amounts recorded as revenue under the accrual method described above are      estimates.  As purchased invoices are collected, the Company      records the appropriate adjustments to record the actual revenue earned on      each purchased invoice. These adjustments from the estimated revenue to      the actual revenue have not beenmaterial. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Retained Interest in Purchased      Accounts Receivable – Retained interest in purchased accounts      receivable represents the gross amount of invoices purchased from      factoring customers less amounts maintained in a reserve account and      collected but unearned fee income, plus earned but uncollected fee      income.  The Company purchases a customer’s accounts receivable      and advances them a percentage of the invoice total.  The      difference between the purchase price and amount advanced is maintained in      a reserve account.  The reserve account is used to offset any      potential losses the Company may have related to the purchased accounts      receivable. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Property and Equipment –      Property and equipment, consisting primarily of furniture and fixtures,      computers and software, are stated at cost.  Depreciation is      provided over the estimated useful lives of the depreciable assets using      the straight-line method. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Advertising Costs – The      Company charges advertising costs to expense as incurred.  Total      advertising costs were approximately $230,600 and $87,000 for the six      months ended June 30, 2008 and 2007, respectively and $79,200 and $55,200      for the three months ended June 30, 2008 and 2007,      repectively. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Earnings per Share – The Company      computes earnings per share in accordance with SFAS No. 128 “Earnings Per      Share.”  Basic earnings per share is computed by dividing the      earnings for the period by the weighted average number of common shares      outstanding during the period.  Dilutive earnings per share      includes the potential impact of dilutive securities, such as convertible      preferred stock, stock options and stock warrants.  The dilutive      effect of stock options and warrants is computed using the treasury stock      method, which assumes the repurchase of common shares at the average      market price. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Stock Based Compensation until      December 31, 2005 - In December 2004, the Financial Accounting      Standards Board (“FASB”) issued Statement of Financial Accounting Standard      (“SFAS”) No. 123(R), “Accounting for Stock-Based Compensation.” SFAS No.      123(R) establishes standards for the accounting for transactions in which      an entity exchanges its equity instruments for goods or services. This      statement focuses primarily on accounting for transactions in which an      entity obtains employee services in share-based payment transactions. SFAS      No. 123(R) requires that the fair value of such equity instruments be      recognized as an expense in the historical financial statements as      services are performed. Prior to SFAS No. 123(R), only certain pro forma      disclosures of fair value were required. The provisions of this statement      were effective for the first interim reporting period that began after      December 15, 2005. The Company adopted the provisions of SFAS No.123(R) in      the first quarter of fiscal 2006. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Fair Value of Financial      Instruments – The carrying value of cash equivalents, retained      interest in purchased accounts receivable, accounts payable and accrued      liabilities approximates their fairvalue. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Cash and cash equivalents      – Cash and cash equivalents consist primarily of highly liquid cash      investment funds with original maturities of three months or less when      acquired. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Income Taxes – Effective      January 31, 2007, the Company became a “C” corporation for income tax      purposes.  In a “C” corporation income taxes are provided for      the tax effects of transactions reported in the financial statements plus      deferred income taxes related to the differences between financial      statement and taxable income. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Compensation      costs related to the issuance of stockoptions |
|--------------------|-----------------------------------------------------------------|

| ·   | Use      of the reserve method of accounting for bad  debts |
|--------------------|-------------------------------------------------------------|

| ·   | Differences      in bases of property and equipment between financial and income tax      reporting |
|--------------------|-----------------------------------------------------------------------------------------------------|

| ·   | Net      operating loss carryforwards. |
|--------------------|----------------------------------------|

----

----

|                                                             |   | Three      Months Ended June 30, |     |   |   |   |     |          |   |
|------------------------------------------------------------------|--------|----------------------------------|----------|--------|--------|--------|----------|---------------|--------|
|                                                             |   | 2008                             |     |   | 2007   |   |     | $      Change |   |   | %      Change |   |
| Finance      revenues                                            |   | $                                | 273,516  |   |   | $      | 75,638   |          |   | $ | 197,878 |   |   |   | 261.6 |   |
| Interest      income (expense), net                              |   |                             | 10,902   |   |   |   | 51,389   |          |   |   | (40,487 | ) |   |   | (78.8 | ) |
| Net      finance revenues                                        |   |                             | 284,418  |   |   |   | 127,027  |          |   |   | 157,391 |   |   |   | 123.9 |   |
| Provision      for credit losses                                 |   |                             | (11,140  | )      |   |   |     |          |   |   | (11,140 | ) |   |   |   |   |
| Finance      revenues, net of interest expense and credit losses |   |                             | 273,278  |   |   |   | 127,027  |          |   |   | 146,251 |   |   |   | 115.1 |   |
| Operating      expenses                                          |   |                             | 557,650  |   |   |   | 289,668  |          |   |   | 267,982 |   |   |   | 92.5 |   |
| Net      income (loss) before income taxes                       |   |                             | (284,372 | )      |   |   | (162,641 | )             |   |   | (121,731 | ) |   |   | 74.8 |   |
| Income      tax (provision) benefit:                             |   |                             |     |   |   |   | 2,000    |          |   |   | (2,000 | ) |   |   |   |   |
| Net      income (loss)                                           |   | $                                | (284,372 | )      |   | $      | (160,641 | )             |   | $ | (123,731 | ) |   |   | 77.0 |   |

----

|                                     |   | Three      Months Ended |    |   |   |    |    |
|------------------------------------------|--------|-------------------------|---------|--------|--------|---------|---------|
|                                     |   | June      30,           |    |   |   |    |    |
|                                     |   | 2008                    |    |   | 2007   |    |    | $      Change |   | Explanation |
| Payroll,      payroll taxes and benefits |   | $                  | 257,780 |   |   | $  | 105,774 |   |   | $  | 152,006 |   | Increased      payroll and health benefits for sales and back office      personnel. |
| Advertising                              |   |                    | 79,195  |   |   |    | 55,221  |   |   |   | 23,974 |   | Increased      marketing |
| Rent                                     |   |                    | 34,446  |   |   |    | 1,738   |   |   |   | 32,708 |   | Rent      expense for North Carolina and Florida offices. |
|                                     |   | $                       | 371,421 |   |   | $       | 162,733 |   |   | $ | 208,688 |   |   |

|                                                     | Percentage      of Accounts Receivable | Percentage      of Revenues For |
|----------------------------------------------------------|----------------------------------------|---------------------------------|
|                                                     | Portfolio      As of                   | The      Three Months Ended     |
| Entity                                                   | June      30, 2008                     | June      30, 2008              |
| Electrical      Grounding Company in New Jersey          | 5.4%                                   | 5.7%                            |
| Transportation      Company in Tennessee                 | 5.7%                                   | 2.8%                            |
| Transportation      Company in California                | 5.7%                                   | 6.0%                            |
| Staffing      Company in New Jersey                      | 5.0%                                   | 8.1%                            |
| Medical      Staffing Company in New York                | 6.3%                                   | 4.3%                            |
| Medical      Staffing Company in New York                | 10.3%                                  | 9.5%                            |
| Intellectual      Technology Consulting Firm in Maryland | 5.6%                                   | 3.1%                            |

----

|                                                             |   | Six      Months Ended June 30, |      |   |   |   |     |          |   |
|------------------------------------------------------------------|--------|--------------------------------|-----------|--------|--------|--------|----------|---------------|--------|
|                                                             |   | 2008                           |      |   | 2007   |   |     | $      Change |   |   | %      Change |   |
| Finance      revenues                                            |   | $                              | 485,177   |   |   | $      | 175,744  |          |   | $ | 309,433 |   |   |   | 176.1 |   |
| Interest      income (expense), net                              |   |                           | 34,519    |   |   |   | 76,164   |          |   |   | (41,645 | ) |   |   | (54.7 | ) |
| Net      finance revenues                                        |   |                           | 519,696   |   |   |   | 251,908  |          |   |   | 267,788 |   |   |   | 106.3 |   |
| Provision      for credit losses                                 |   |                           | (5,044    | )      |   |   |     |          |   |   | (5,044 | ) |   |   |   |   |
| Finance      revenues, net of interest expense and credit losses |   |                           | 514,652   |   |   |   | 251,908  |          |   |   | 262,744 |   |   |   | 104.3 |   |
| Operating      expenses                                          |   |                           | 1,221,905 |   |   |   | 559,456  |          |   |   | 662,449 |   |   |   | 118.4 |   |
| Net      income (loss) before income taxes                       |   |                           | (707,253  | )      |   |   | (307,548 | )             |   |   | (399,705 | ) |   |   | 130.0 |   |
| Income      tax (provision) benefit:                             |   |                           |      |   |   |   | 17,000   |          |   |   | (17,000 | ) |   |   |   |   |
| Net      income (loss)                                           |   | $                              | (707,253  | )      |   | $      | (290,548 | )             |   | $ | (416,705 | ) |   |   | 143.4 |   |

----

|                                     |   | Six      Months Ended |    |   |   |    |    |
|------------------------------------------|--------|-----------------------|---------|--------|--------|---------|---------|
|                                     |   | June      30,         |    |   |   |    |    |
|                                     |   | 2008                  |    |   | 2007   |    |    | $      Change |   | Explanation |
| Payroll,      payroll taxes and benefits |   | $                | 512,565 |   |   | $  | 174,292 |   |   | $  | 338,273 |   | Increased      payroll and health benefits for sales and back office      personnel. |
| Advertising                              |   |                  | 230,589 |   |   |    | 86,907  |   |   |   | 143,682 |   | Increased      marketing |
| Rent                                     |   |                  | 69,051  |   |   |    | 1,738   |   |   |   | 67,313 |   | Rent      expense for North Carolina and Florida offices. |
|                                     |   | $                     | 812,205 |   |   | $       | 262,937 |   |   | $ | 549,260 |   |   |

|                                                     | Percentage      of Accounts Receivable | Percentage      of Revenues For |
|----------------------------------------------------------|----------------------------------------|---------------------------------|
|                                                     | Portfolio      As of                   | The      Three Months Ended     |
| Entity                                                   | June      30, 2008                     | June      30, 2008              |
| Electrical      Grounding Company in New Jersey          | 5.0%                                   | 5.1%                            |
| Transportation      Company in Tennessee                 | 5.7%                                   | 1.6%                            |
| Transportation      Company in California                | 5.7%                                   | 3.8%                            |
| Staffing      Company in New Jersey                      | 5.0%                                   | 9.0%                            |
| Medical      Staffing Company in New York                | 6.3%                                   | 4.5%                            |
| Medical      Staffing Company in New York                | 10.3%                                  | 10.7%                           |
| Intellectual      Technology Consulting Firm in Maryland | 5.6%                                   | 4.3%                            |

----

| ITEM      3. | QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK |
|--------------|----------------------------------------------------------------|

----

| ITEM      4. | CONTROLS AND      PROCEDURES |
|--------------|------------------------------|

| ITEM      1. | LEGAL      PROCEEDINGS: |
|--------------|-------------------------|

| Item      1A. | Risk      Factors |
|---------------|-------------------|

| ITEM      2. | CHANGES IN      SECURITIES. |
|--------------|-----------------------------|

| Date      of Sale                     |    | Title      of Security  |    | NumberSold                                       |    |  ConsiderationReceived,Commissions                                                                         |    | Purchasers                      |    | Exemption      fromRegistrationClaimed                                                         |    |
|--------------------------------------------|--------------|------------------------------|--------------|--------------------------------------------------|--------------|----------------------------------------------------------------------------------------------------------------------|--------------|--------------------------------------|--------------|-----------------------------------------------------------------------------------------------------|--------------|
|                                       |         |                         |         |                                             |         |                                                                                                                 |         |                                 |         |                                                                                                |         |
| February      21and      May 28,2008  |         | Common      Stock            |         | Options      topurchase102,000      commonShares |         | Securities      granted under Equity Compensation Plan; no cash received; no commissions      paid                   |         | Directors      andOfficers           |         | Section      4(2) of the Securities Act of 1933 and/or Rule 506      promulgatedthereunder      (6) |         |
|                                       |         |                         |         |                                             |         |                                                                                                                 |         |                                 |         |                                                                                                |         |
| January2008                                |         | Series      1PreferredStock  |         | 94,865      Shares                               |         | Annual      Stock Dividend                                                                                           |         | AllPreferredStockInvestors           |         | Section      2(3) –No      sale(Preferred      StockDividend)                                 |         |
|                                       |         |                         |         |                                             |         |                                                                                                                 |         |                                 |         |                                                                                                |         |
| March      andApril      2008              |         | Common      Stock            |         | 1,119,823      Shares                            |         | Conversion      ofSeries      1 PreferredStock      into CommonStock;      no cash received;no      commissions paid |         | CertainPreferredStock      Investors |         | Section      3(a)(9)-Exchange      ofSecurities                                                     |         |
|                                       |         |                         |         |                                             |         |                                                                                                                 |         |                                 |         |                                                                                                |         |

----

| ITEM      3. | DEFAULTS UPON      SENIOR SECURITIES |
|--------------|--------------------------------------|

| ITEM      4. | SUBMISSIONS      OF MATTERS TO A VOTE OF SECURITYHOLDERS: |
|--------------|-----------------------------------------------------------|

| ITEM      5. | OTHER      INFORMATION: |
|--------------|-------------------------|

| ITEM      6. | EXHIBITS: |
|--------------|-----------|

| ExhibitNumber | Description             |
|---------------|-------------------------|
|          |                    |
|  2.1     | Exchange      Agreement |

| 3.1 | Certificate of      Incorporation-BTHC,INC. |
|-----|--------------------------------------------------|

| 3.2 | Certificate      of Merger of BTHC XI, LLC into BTHC XI,  Inc. |
|-----|----------------------------------------------------------------|

| 3.3 | Certificate      of Amendment |
|-----|-------------------------------|

| 3.4 | Designation      of Rights and Preferences-Series 1 Convertible Preferred      Stock |
|-----|--------------------------------------------------------------------------------------|

| 3.5 | Amended      and Restated By-laws |
|-----|-----------------------------------|

| 4.1 | Form      of Placement Agent Warrant issued to Fordham Financial      Management |
|-----|----------------------------------------------------------------------------------|

| 10.1 | Directors’      Compensation Agreement-GeorgeRubin |
|------|----------------------------------------------------------|

| 10.2 | Employment      Contract-Morry F. Rubin |
|------|-----------------------------------------|

| 10.3 | Employment      Contract-Brad Bernstein |
|------|-----------------------------------------|

| 10.4 | Agreement-Line      of Credit |
|------|-------------------------------|

| 10.5 | Fordham      Financial Management-ConsultingAgreement |
|------|-------------------------------------------------------|

| 10.6             | Facilities      Lease – Florida                                                                                                                                                          |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |                                                                                                                                                                                           |
| 10.7             | Facilities      Lease – North Carolina                                                                                                                                                   |
|             |                                                                                                                                                                                           |
| 10.8        | Second      Facilities Lease-North Carolina (1)                                                                                                                                                |
|             |                                                                                                                                                                                           |
| 10.9             | Facilities      Lease for Additional Space – Charlotte, NC* (Incorporated by      reference to the Registrant’s Form 10-Q/A filed for the quarter ended      March 31, 2008.) |
|             |                                                                                                                                                                                           |
| 11               | Statement-re:Compensation      of earnings per share-See Consolidated Statements of operations and notes      to financial statements                                                          |
|             |                                                                                                                                                                                           |
| 31.1   | Chief      Executive Officer Rule 13a-14(a)/15d-14(a) Certification      *                                                                                                                     |
|             |                                                                                                                                                                                           |
| 31.2             | Chief      Financial Officer Rule 13a-14(a)/15d-14(a) Certification      *                                                                                                                     |
|             |                                                                                                                                                                                           |
| 32.1             | Chief      Executive Officer Section 1350 Certification *                                                                                                                                      |
|             |                                                                                                                                                                                           |
| 32.2             | Chief      Financial Officer Section 1350 Certification *                                                                                                                                      |
|             |                                                                                                                                                                                           |
| 99.1             | 2007      Omnibus Equity Compensation Plan                                                                                                                                                     |
|             |                                                                                                                                                                                           |
| 99.2             | Form      of Non-Qualified Option under 2007 Omnibus Equity Compensation      Plan                                                                                                             |
|             |                                                                                                                                                                                           |
| 99.3             | Press      Release – Second QuarterEarnings*                                                                                                                                             |

----

----

|                                        | ANCHOR      FUNDING SERVICES, INC. |                                           |
|---------------------------------------------|------------------------------------|------------------------------------------------|
|                                        |                               |                                           |   |
| Date:  August      14, 2008  | By:                                | /s/ Morry      F. Rubin    |   |
|                                        |                               | Morry      F. Rubin                            |   |
|                                        |                               | Chief      Executive Officer                   |   |
|                                        |                               |                                           |   |

|                             |   |                                       |   |
|----------------------------------|--------|--------------------------------------------|--------|
| Date:      August 14, 2008  | By:    | /s/ Brad      Bernstein          |   |
|                             |   | Brad      Bernstein                        |   |
|                             |   | President      and Chief Financial Officer |   |
|                             |   |                                       |   |