**Quarterly      Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act Of      1934**

**For      The Quarterly Period Ended September 30, 2007**

**Commission      File Number: 0-52589**

**ANCHOR      FUNDING SERVICES, INC.**

| **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) |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**(866)      789-3863**

**Not      Applicable**

----

**ANCHOR      FUNDING SERVICES, INC.**

**Form      10-QSB Quarterly Report**

**Table      of Contents**

|                          |                                                                                                                                                           | Page    |
|-------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
|                          |                                                                                                                                                           |    |
| **PART                  I.**  | **FINANCIAL                  INFORMATION**                                                                                                                     | 3       |
|                          |                                                                                                                                                           |    |
| Item                  1.      | Financial                  Statements                                                                                                                          |    |
|                          |                                                                                                                                                           |    |
|                          | Unaudited                  Consolidated Balance Sheet as of September 30, 2007 and Audited                  Consolidated Balance Sheet as of December 31, 2006 | 3       |
|                          |                                                                                                                                                           |    |
|                          | Unaudited                  Consolidated Statements of Operations for the Three and Nine months                  Ended                  September 30, 2007      |    |
|                          |   and                  2006                                                                                                                          | 4       |
|                          |                                                                                                                                                           |    |
|                          | Unaudited                  Consolidated Statements of Stockholders’ Equity for the Nine Months Ended                  September 30, 2007                 |  5 |
|                          |                                                                                                                                                           |    |
|                          | Unaudited                  Consolidated Statements of Cash Flows for the Nine Months Ended                  September                  30, 2007 and            |    |
|                          |    September                  30, 2006                                                                                                          | 6       |
|                          |                                                                                                                                                           |    |
|                          | Notes                  to Consolidated Financial Statements                                                                                                    | 7       |
|                          |                                                                                                                                                           |    |
| Item                  2.      | Management's                  Discussion and Analysis of Financial Condition and Results of                  Operations                                        | 25      |
|                          |                                                                                                                                                           |    |
| Item                  3.      | Controls                  and Procedures                                                                                                                       | 33      |
|                          |                                                                                                                                                           |    |
| **PART                  II.** | **OTHER                  INFORMATION**                                                                                                                         | 33      |
|                          |                                                                                                                                                           |    |
| Item                  1.      | Legal                  Proceedings                                                                                                                             | 33      |
|                          |                                                                                                                                                           |    |
| Item                  2.      | Changes                  in Securities                                                                                                                         | 33      |
|                          |                                                                                                                                                           |    |
| Item                  3.      | Defaults                  Upon Senior Securities                                                                                                               | 33      |
|                          |                                                                                                                                                           |    |
| Item                  4.      | Submissions                  of Matters to a Vote of Security Holders                                                                                          | 33      |
|                          |                                                                                                                                                           |    |
| Item                  5       | Other                  Information                                                                                                                             | 33      |
|                          |                                                                                                                                                           |    |
| Item                  6.      | Exhibits                  and Reports on Form 8-K                                                                                                              | 34      |
|                          |                                                                                                                                                           |    |
| **Signatures**                |                                                                                                                                                           | 35      |
|                          |                                                                                                                                                           |    |
|                          |                                                                                                                                                           |    |

----

**PART      I. FINANCIAL INFORMATION**

**ANCHOR          FUNDING SERVICES, INC.**

**CONSOLIDATED          BALANCE SHEETS**

| **ASSETS**                                                          |   |
|---------------------------------------------------------------------|--------|
|                                                                |   | (Unaudited) |   |   | (Audited) |   |
|                                                                |   | September                  30,                    2007 |   |   | December                  31,                    2006 |   |
| CURRENT                  ASSETS:                                    |   |   |   |   |   |   |   |   |
| Cash                                                                |   | $ | 4,259,913 |   |   | $ | 55,771 |   |
| Retained                  interest in purchased accounts receivable |   |   | 1,194,069 |   |   |   | 441,255 |   |
| Earned                  but uncollected fee income                  |   |   | 38,337 |   |   |   | 10,799 |   |
| Due                  from financial institution                     |   |   | 2,470 |   |   |   | - |   |
| Prepaid                  expenses and other                         |   |   | 50,542 |   |   |   | 41,134 |   |
| Total                  current assets                               |   |   | 5,545,331 |   |   |   | 548,959 |   |
|                                                                |   |   |   |   |   |   |   |   |
| PROPERTY                  AND EQUIPMENT, net                        |   |   | 78,815 |   |   |   | 4,010 |   |
|                                                                |   |   |   |   |   |   |   |   |
| SECURITY                  DEPOSITS                                  |   |   | 19,203 |   |   |   | - |   |
|                                                                |   |   |   |   |   |   |   |   |
|                                                                |   | $ | 5,643,349 |   |   | $ | 552,969 |   |
|                                                                |   |   |   |   |   |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**           |   |
|                                                                |   |   |   |   |   |   |   |   |
| CURRENT                  LIABILITIES:                               |   |   |   |   |   |   |   |   |
| Due                  to financial institution                       |   | $ | - |   |   | $ | 44,683 |   |
| Accounts                  payable                                   |   |   | 78,037 |   |   |   | 39,218 |   |
| Due                  to related company                             |   |   | - |   |   |   | 21,472 |   |
| Accrued                  payroll and related taxes                  |   |   | 97,382 |   |   |   | 37,796 |   |
| Accrued                  expenses                                   |   |   | 12,278 |   |   |   | - |   |
| Collected                  but unearned fee income                  |   |   | 29,982 |   |   |   | 11,730 |   |
| Dividends                  payable                                  |   |   | 269,169 |   |   |   | - |   |
| Total                  current liabilities                          |   |   | 486,848 |   |   |   | 154,899 |   |
|                                                                |   |   |   |   |   |   |   |   |
| COMMITMENTS                  AND CONTINGENCIES                      |   |   |   |   |   |   |   |   |
|                                                                |   |   |   |   |   |   |   |   |
| MEMBERS'                  EQUITY                                    |   |   | - |   |   |   | 391,800 |   |
| PREFERRED                  STOCK                                    |   |   | 6,712,500 |   |   |   | - |   |
| COMMON                  STOCK                                       |   |   | 11,795 |   |   |   | 3,795 |   |
| ADDITIONAL                  PAID IN CAPITAL                         |   |   | (780,851 | ) |   |   | 4,580 |   |
| ACCUMULATED                  DEFICIT                                |   |   | (786,943 | ) |   |   | (2,105 | ) |
|                                                                |   |   | 5,156,501 |   |   |   | 398,070 |   |
|                                                                |   |   |   |   |   |   |   |   |
|                                                                |   | $ | 5,643,349 |   |   | $ | 552,969 |   |

----

**ANCHOR          FUNDING SERVICES, INC.**

**UNAUDITED            CONSOLIDATED STATEMENTS OF OPERATIONS**

|                                                              |   | For                    the quarters ending September 30,   |       |   | For                    the nine months ending September 30, |   |
|-------------------------------------------------------------------|--------|----------------------------------------------------------------------|------------|--------|-------------------------------------------------------------|--------|
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |
|                                                              |   | 2007                                                                 |       |   | 2006                                                        |   |   | 2007 |   |   | 2006 |   |
| FINANCE                    REVENUES                               |   | $                                                                    | 121,996    |   |                                                        | $      | 109,862 |   |   | $ | 297,740 |   |   | $ | 519,335 |   |
| INTEREST                    EXPENSE - financial institution       |   |                                                                 | (5,866     | )      |                                                        |   | (14,760 | ) |   |   | (27,231 | ) |   |   | (120,564 | ) |
| INTEREST                    INCOME                                |   |                                                                 | 56,823     |   |                                                        |   | - |   |   |   | 154,352 |   |   |   | - |   |
| INTEREST                    EXPENSE, net - related parties        |   |                                                                 | -          |   |                                                        |   | (20,758 | ) |   |   | - |   |   |   | (53,229 | ) |
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| NET                    FINANCE REVENUES                           |   |                                                                 | 172,953    |   |                                                        |   | 74,344 |   |   |   | 424,861 |   |   |   | 345,542 |   |
| PROVISION                    FOR CREDIT LOSSES                    |   |                                                                 | 22,000     |   |                                                        |   | - |   |   |   | 22,000 |   |   |   | - |   |
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| FINANCE                    REVENUES, NET OF INTEREST EXPENSE      |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| AND                    CREDIT LOSSES                              |   |                                                                 | 150,953    |   |                                                        |   | 74,344 |   |   |   | 402,861 |   |   |   | 345,542 |   |
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING                    EXPENSES                             |   |                                                                 | 380,074    |   |                                                        |   | 48,078 |   |   |   | 939,530 |   |   |   | 152,954 |   |
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| NET                    INCOME (LOSS) BEFORE INCOME TAXES          |   |                                                                 | (229,121   | )      |                                                        |   | 26,266 |   |   |   | (536,669 | ) |   |   | 192,588 |   |
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                    TAX (PROVISION) BENEFIT:                |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Current                                                           |   |                                                                 | -          |   |                                                        |   | - |   |   |   | - |   |   |   | - |   |
| Deferred                                                          |   |                                                                 | 4,000      |   |                                                        |   | - |   |   |   | 21,000 |   |   |   | - |   |
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                             |   |                                                                 | 4,000      |   |                                                        |   | - |   |   |   | 21,000 |   |   |   | - |   |
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| NET                    INCOME (LOSS)                              |   |                                                                 | (225,121   | )      |                                                        |   | 26,266 |   |   |   | (515,669 | ) |   |   | 192,588 |   |
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| DEEMED                    DIVIDEND ON CONVERTIBLE PREFERRED STOCK |   |                                                                 | (134,849   | )      |                                                        |   | - |   |   |   | (269,169 | ) |   |   | - |   |
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| NET                    INCOME (LOSS) ATTRIBUTABLE TO COMMON       |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDER                                                       |   | $                                                                    | (359,970   | )      |                                                        | $      | 26,266 |   |   | $ | (784,838 | ) |   | $ | 192,588 |   |
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| NET                    INCOME (LOSS) ATTRIBUTABLE TO COMMON       |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDER,                    per share                         |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                             |   | $                                                                    | (0.03      | )      |                                                        | N/A    |   |   | $ | (0.07 | ) |   | N/A |   |
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Dilutive                                                          |   | $                                                                    | (0.03      | )      |                                                        | N/A    |   |   | $ | (0.07 | ) |   | N/A |   |
|                                                              |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED                    AVERAGE NUMBER OF SHARES OUTSTANDING  |   |                                                                 |       |   |                                                        |   |   |   |   |   |   |   |   |
| Basic                    and dilutive                             |   |                                                                 | 11,820,555 |   |                                                        | N/A    |   |   |   | 10,912,130 |   |   | N/A |   |

----

**ANCHOR          FUNDING SERVICES, INC.**

**UNAUDITED          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY**

**For          the nine months ended September 30, 2007**

|                                                                                                        |   | Members' |     |   | Preferred |   |      | Common |   |   | Additional                         |   |   | Accumulated |       |
|-------------------------------------------------------------------------------------------------------------|--------|----------|----------|--------|-----------|--------|-----------|--------|--------|--------|------------------------------------|--------|--------|-------------|------------|
|                                                                                                        |   | Equity   |     |   | Stock     |   |      | Stock  |   |   | Paid                    in Capital |   |   | Deficit     |       |
|                                                                                                        |   |     |     |   |      |   |      |   |   |   |                               |   |   |        |       |
| Balance,                    December 31, 2006                                                               |   | $        | 391,800  |   |      | $      | 0         |   |   | $      | 3,795                              |   |   | $           | 4,580      |   |   | $ | (2,105 | ) |
|                                                                                                        |   |     |     |   |      |   |      |   |   |   |                               |   |   |        |       |   |   |   |   |   |
| To                    record the exchange of 8,000,000 common shares of BTHC XI,                    Inc.    |   |     |     |   |      |   |      |   |   |   |                               |   |   |        |       |   |   |
| stock                    for 100,000 membership units of Anchor Funding Services,                    LLC    |   |     | (391,800 | )      |      |   | -         |   |   |   | 8,000                              |   |   |        | 383,800    |   |   |   | - |   |
|                                                                                                        |   |     |     |   |      |   |      |   |   |   |                               |   |   |        |       |   |   |   |   |   |
| To                    record issuance of 1,342,500 shares of convertible preferred                    stock |   |     |     |   |      |   |      |   |   |   |                               |   |   |        |       |   |   |
| and                    related costs of raising this capital                                                |   |     | -        |   |      |   | 6,712,500 |   |   |   | -                                  |   |   |        | (1,209,383 | ) |   |   | - |   |
|                                                                                                        |   |     |     |   |      |   |      |   |   |   |                               |   |   |        |       |   |   |   |   |   |
| To                    record issuance of 1,970,000 in stock options                                         |   |     | -        |   |      |   | -         |   |   |   | -                                  |   |   |        | 40,152     |   |   |   | - |   |
|                                                                                                        |   |     |     |   |      |   |      |   |   |   |                               |   |   |        |       |   |   |   |   |   |
| Preferred                    stock dividends                                                                |   |     | -        |   |      |   | -         |   |   |   | -                                  |   |   |        | -          |   |   |   | (269,169 | ) |
|                                                                                                        |   |     |     |   |      |   |      |   |   |   |                               |   |   |        |       |   |   |   |   |   |
| Net                    loss for the nine months ended September 30, 2007                                    |   |     | -        |   |      |   | -         |   |   |   | -                                  |   |   |        | -          |   |   |   | (515,669 | ) |
|                                                                                                        |   |     |     |   |      |   |      |   |   |   |                               |   |   |        |       |   |   |   |   |   |
|                                                                                                        |   |     |     |   |      |   |      |   |   |   |                               |   |   |        |       |   |   |   |   |   |
| Balance,                    September 30, 2007                                                              |   | $        | -        |   |      | $      | 6,712,500 |   |   | $      | 11,795                             |   |   | $           | (780,851   | ) |   | $ | (786,943 | ) |

----

**ANCHOR          FUNDING SERVICES, INC.**

**UNAUDITED            CONSOLIDATED STATEMENTS OF CASH FLOWS**

**For              the nine months ended September 30,**

| CASH                    FLOWS FROM OPERATING ACTIVITIES:                         |   | 2007   |       |   | 2006   |   |
|----------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Net                    income (loss):                                            |   | $      | (515,669   | )      |   | $      | 192,588 |   |
| Adjustments                    to reconcile net income (loss) to net cash        |   |   |       |   |   |   |   |   |
| (used                    in) provided by operating activities:                   |   |   |       |   |   |   |   |   |
| Depreciation                    and amortization                                 |   |   | 10,562     |   |   |   | 4,386 |   |
| Provision                    for uncollectible accounts                          |   |   | 22,000     |   |   |   | - |   |
| Compensation                    expense related to issuance of stock options     |   |   | 61,152     |   |   |   | - |   |
| Benefit                    for income taxes                                      |   |   | (21,000    | )      |   |   | - |   |
| (Increase)                    decrease in retained interest in purchased         |   |   |       |   |   |   |   |   |
| accounts                    receivable                                           |   |   | (774,814   | )      |   |   | 298,884 |   |
| (Increase)                    decrease in earned but uncollected fee income      |   |   | (27,538    | )      |   |   | 3,658 |   |
| (Increase)                    decrease in prepaid expenses and other             |   |   | (9,408     | )      |   |   | 5,701 |   |
| Increase                    in security deposits                                 |   |   | (19,203    | )      |   |   | - |   |
| Increase                    in accounts payable                                  |   |   | 38,819     |   |   |   | 3,916 |   |
| Increase                    (decrease) in collected but unearned fee income      |   |   | 18,252     |   |   |   | (14,108 | ) |
| (Decrease)                    increase in due to related company                 |   |   | (21,472    | )      |   |   | 213,474 |   |
| Increase                    in accrued payroll and related taxes                 |   |   | 59,586     |   |   |   | 7,342 |   |
| Increase                    in accrued expenses                                  |   |   | 12,278     |   |   |   | - |   |
| Net                    cash (used in) provided by operating activities           |   |   | (1,166,455 | )      |   |   | 715,841 |   |
|                                                                             |   |   |       |   |   |   |   |   |
| CASH                    FLOWS FROM INVESTING ACTIVITIES:                         |   |   |       |   |   |   |   |   |
| Purchases                    of property and equipment                           |   |   | (85,367    | )      |   |   | (1,329 | ) |
|                                                                             |   |   |       |   |   |   |   |   |
| CASH                    FLOWS FROM FINANCING ACTIVITIES:                         |   |   |       |   |   |   |   |   |
| Payments                    to financial institution, net                        |   |   | (47,153    | )      |   |   | (753,422 | ) |
| Repayments                    on subordinated related party demand notes payable |   |   | -          |   |   |   | (3,230 | ) |
| Proceeds                    from sale of preferred stock                         |   |   | 6,712,500  |   |   |   | - |   |
| Payments                    made related to sale of preferred stock              |   |   | (1,209,383 | )      |   |   | - |   |
| Net                    cash provided by (used in) financing activities           |   |   | 5,455,964  |   |   |   | (756,652 | ) |
|                                                                             |   |   |       |   |   |   |   |   |
| INCREASE                    IN CASH                                              |   |   | 4,204,142  |   |   |   | (42,140 | ) |
|                                                                             |   |   |       |   |   |   |   |   |
| CASH,                    beginning of period                                     |   |   | 55,771     |   |   |   | 30,240 |   |
|                                                                             |   |   |       |   |   |   |   |   |
| CASH,                    end of period                                           |   | $      | 4,259,913  |   |   | $      | (11,900 | ) |

----

**ANCHOR          FUNDING SERVICES, INC**

**Notes          To Consolidated Financial Statements**

**Three          and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

**1.**
**BACKGROUND          AND DESCRIPTION OF BUSINESS:**

|   | The                    consolidated financial statements include the accounts of 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 in                    consolidation. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | BTHC                    XI, Inc. is a Delaware corporation.  BTHC XI, 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. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**2.**
**SUMMARY          OF SIGNIFICANT ACCOUNTING POLICIES:**

|   | **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. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

|   | **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 accounts                    receivable. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 been                    material. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **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.  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. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

|   | **Property                    and Equipment –** Property and equipment, consisting furniture and                    fixtures and computers and software, are stated at                    cost.  Depreciation is provided over the estimated useful lives                    of the depreciable assets using the straight-line                    method.  Estimated useful lives range from 2 to 5                    years. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ANCHOR              FUNDING SERVICES, INC**

**Notes              To Consolidated Financial Statements**

**Three              and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

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

| For                      the nine months ending September 30, |
|---------------------------------------------------------------|
|                                                          |   |   |   |
| 2007                                                          |   |   | 2006 |
|                                                          |   |   |   |
| $                                                             | 151,700 |   |   | $ | 48,700 |
|                                                          |   |   |   |   |   |
|                                                          |   |   |   |   |   |
|                                                          |   |   |   |   |   |
| For                      the quarters ending September 30,    |
|                                                          |   |   |   |   |   |
| 2007                                                          |   |   | 2006 |
|                                                          |   |   |   |   |   |
| $                                                             | 64,800 |   |   | $ | 17,200 |

|   | **Earnings                    per Share –** The Company computes net income per share in                    accordance with SFAS No. 128 “Earnings Per Share.”  Basic net                    income per share is computed by dividing the net income for the                    period by                    the weighted average number of common shares outstanding during                    the                    period.  The dilutive impact of convertible preferred stock,                    stock options and stock warrants were excluded since their impact                    would                    have been anti-dilutive.  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. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | See                    Note 9 for the SFAS No. 123(R) impact on the operating results                    for the                    quarter and nine months ended September 30, 2007.  The adoption                    of SFAS No. 123(R) had no impact on the Company’s operating results for                    the quarter and nine months ended September 30,                    2006. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Recent                    Accounting Pronouncements–** |
|--------|----------------------------------------------------------------|

*Fair Value          Measurements*

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

*Considering the Effects of Prior          Year Misstatements when Quantifying Misstatements in Current Year Financial          Statements*

*The Fair Value Option for          Financial Assets and Financial Liabilities – Including an amendment of FASB          Statement No. 115.*
*Accounting for Certain Investments in Debt          and Equity Securities*

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

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

|   | **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. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                    primary difference between financial statement and taxable income                    for the                    Company are compensation costs related to the issuance of stock                    options                    and net operating loss carryforwards.  The deferred tax asset                    represents the future tax return consequences of utilizing this                    net                    operating loss.   Deferred tax assets are reduced by a                    valuation reserve, when management is uncertain if the net operating                    loss                    carryforwards will ever be                    utilized. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

** **

**3.**
**RETAINED          INTEREST IN PURCHASED ACCOUNTS RECEIVABLE:**

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

|                                                           |   |                                    |      |   |                                   |   |
|----------------------------------------------------------------|--------|-----------------------------------------|-----------|--------|----------------------------------------|--------|
|                                                           |   | September                      30, 2007 |      |   | December                      31, 2006 |   |
| Purchased                      accounts receivable outstanding |   | $                                       | 1,502,539 |   |                                   | $      | 614,034 |   |
| Reserve                      account                           |   |                                    | (286,470  | )      |                                   |   | (172,779 | ) |
| Allowance                      for uncollectible invoices      |   |                                    | (22,000   | )      |                                   |   | - |   |
|                                                           |   |                                    |      |   |                                   |   |   |   |
|                                                           |   | $                                       | 1,194,069 |   |                                   | $      | 441,255 |   |

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

|   | Total                      accounts receivable purchased were as                      follows: |
|--------|------------------------------------------------------------------------------------------------|

| For                    the nine months ending September 30,   |
|-------------------------------------------------------------------------|
|                                                                    |   |   |   |
| 2007                                                                    |   |   | 2006 |
|                                                                    |   |   |   |
| $                                                                       | 7,561,800 |   |   | $ | 9,298,600 |
|                                                                    |   |   |   |   |   |
|                                                                    |   |   |   |   |   |
|                                                                    |   |   |   |   |
|                                                                    | For                    the quarters ending September 30,      |
|                                                                    |   |   |   |   |
| 2007                                                                    |   |   | 2006 |
|                                                                    |   |   |   |   |   |
| $                                                                       | 3,192,000 |   |   | $ | 1,877,900 |

|   | Retained                    interest in purchased accounts receivable consists, excluding                    amounts                    recorded as uncollectible, of United States companies in the                    following                    industries: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|           |   |                                    |      |   |                                   |   |
|----------------|--------|-----------------------------------------|-----------|--------|----------------------------------------|--------|
|           |   | September                      30, 2007 |      |   | December                      31, 2006 |   |
| Staffing       |   | $                                       | 671,108   |   |                                   | $      | 397,061 |   |
| Transportation |   |                                    | (369      | )      |                                   |   | (52,854 | ) |
| Publishing     |   |                                    | 10,155    |   |                                   |   | 45,971 |   |
| Construction   |   |                                    | 14,961    |   |                                   |   | 26,591 |   |
| Service        |   |                                    | 425,891   |   |                                   |   | 14,951 |   |
| Other          |   |                                    | 94,323    |   |                                   |   | 9,535 |   |
|           |   |                                    |      |   |                                   |   |   |   |
|           |   | $                                       | 1,216,069 |   |                                   | $      | 441,255 |   |

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

**4.**
**PROPERTY              AND EQUIPMENT:**

|   | Property                        and equipment consist of the                        following: |
|--------|------------------------------------------------------------------------------------------------|

|                                               |                              |   |                                           |    |   |                                   |   |
|----------------------------------------------------|-----------------------------------|--------|------------------------------------------------|---------|--------|----------------------------------------|--------|
|                                               | Estimated                         |   |                                           |    |   |                                   |   |
|                                               | Useful                      Lives |   | September                      30,   2007 |    |   | December                      31, 2006 |   |
| Furniture                      and fixtures        | 2-5                      yers     |   | $                                              | 27,520  |   |                                   | $      | 1,235 |   |
| Computers                      and software        | 3-7                      years    |   |                                           | 74,613  |   |                                   |   | 15,531 |   |
|                                               |                              |   |                                           | 102,133 |   |                                   |   | 16,766 |   |
| Less                      accumulated depreciation |                              |   |                                           | (23,318 | )      |                                   |   | (12,756 | ) |
|                                               |                              |   |                                           |    |   |                                   |   |   |   |
|                                               |                              |   | $                                              | 78,815  |   |                                   | $      | 4,010 |   |

**5.  DUE          FROM/TO FINANCIAL INSTITUTION:**

|   | 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%. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As                    of September 30, 2007, the financial institution had collected                    more cash                    from previously factored receivables than was loaned to fund                    current                    factored receivables.  The excess collected is recorded as a                    receivable from the financial                    institution. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

**6.**
**CAPITAL          STRUCTURE:**

|   | 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. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

|   | 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 September 30, 2007 and                    December 30, 2006 were $269,169 and $0,                    respectively. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **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 nine months ended September 30, 2007 is summarized as                    follows: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                   |   |                                      |      |   |   |   |
|--------------------------------------------------------|--------|-------------------------------------------|-----------|--------|--------|--------|
|                                                   |   | Series                      1 Convertible |      |   | Common |   |
|                                                   |   | Preferred                      Stock      |      |   | Stock  |   |
| Balance,                      December 31, 2006        |   |                                      | -         |   |   |   | 3,820,555 |   |
|                                                   |   |                                      |      |   |   |   |   |   |
| Shares                      issued in exchange for     |   |                                      |      |   |   |   |   |   |
| the                      membership units of           |   |                                      |      |   |   |   |   |   |
| Anchor                      Funding Services, LLC      |   |                                      | -         |   |   |   | 8,000,000 |   |
|                                                   |   |                                      |      |   |   |   |   |   |
| Shares                      issued in connection       |   |                                      |      |   |   |   |   |   |
| with                      sale of Series 1 Convertible |   |                                      |      |   |   |   |   |   |
| Preferred                      Stock                   |   |                                      | 1,342,500 |   |   |   | - |   |
|                                                   |   |                                      |      |   |   |   |   |   |
|                                                   |   |                                      |      |   |   |   |   |   |
| Balance,                      September 30, 2007       |   |                                      | 1,342,500 |   |   |   | 11,820,555 |   |

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

|   | As                      of September 30, 2007 and December 31, 2006 the components                      of additional                      paid in capital were as follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                         |   |  September                      30, |       |   |  December                      31, |   |
|--------------------------------------------------------------|--------|------------------------------------------|------------|--------|-----------------------------------------|--------|
|                                                         |   |  2007                               |       |   | 2006                                    |   |
| Consideration                      received in excess of     |   |                                     |       |   |                                    |   |
|   common                      stock's par value    |   | $                                        | 463,380    |   |                                    | $      | 79,580 |   |
|                                                         |   |                                     |       |   |                                    |   |   |   |
| Equity                      issuance fees                    |   |                                     | (1,347,078 | )      |                                    |   | (75,000 | ) |
|                                                         |   |                                     |       |   |                                    |   |   |   |
| Stock                      warrants                          |   |                                     | 62,695     |   |                                    |   | - |   |
|                                                         |   |                                     |       |   |                                    |   |   |   |
| Stock                      options, net of $21,000           |   |                                     |       |   |                                    |   |   |   |
|   deferred                      income tax benefit |   |                                     | 40,152     |   |                                    |   | - |   |
|                                                         |   |                                     |       |   |                                    |   |   |   |
|                                                         |   |                                     |       |   |                                    |   |   |   |
|                                                         |   | $                                        | (780,851   | )      |                                    | $      | 4,580 |   |

**7.  RELATED          PARTY TRANSACTIONS:**

|   | **Due                    from/to Related Company –** Prior to December 31, 2006, the Company                    had borrowing and loan transactions with a limited liability                    company (LLC)                    related through common ownership.  These amounts were unsecured,                    interest bearing (at 10 percent), and payable on demand.  The                    Company recorded the following interest income (expense) amounts                    related                    to this activity: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|      |   |                      For                      the nine months ending September  30,  |                                                                                        |
|-----------|--------|----------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
|      |   |                                                                                                     |                                                                                        |   |   |   |
|      |   | 2007                                                                                                     |                                                                                        |   | 2006 |   |
| Income    |   | $                                                                                                        | -                                                                                           |   |   | $ | 11,193 |   |
| (Expense) |   |                                                                                                     | -                                                                                           |   |   |   | (64,422 | ) |
|      |   |                                                                                                     |                                                                                        |   |   |   |   |   |
|      |   | $                                                                                                        | -                                                                                           |   |   | $ | (53,229 | ) |
|      |   |                                                                                                     |                                                                                        |   |   |   |   |   |
|      |   |                                                                                                     |                                                                                        |   |   |   |   |   |
|      |   |                                                                                                     | For                      the quarters ending  September                      30,  |   |
|      |   |                                                                                                     |                                                                                        |   |   |   |   |   |
|      |   | 2007                                                                                                     |                                                                                        |   | 2006 |   |
| Income    |   | $                                                                                                        | -                                                                                           |   |   | $ | 25 |   |
| (Expense) |   |                                                                                                     | -                                                                                           |   |   |   | (20,783 | ) |
|      |   |                                                                                                     |                                                                                        |   |   |   |   |   |
|      |   | $                                                                                                        | -                                                                                           |   |   | $ | (20,758 | ) |

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

|   | **Administrative                    Charges –** The Company uses the administrative staff and                    facilities of the LLC referred to above.  The services provided                    by the LLC consist primarily of rent, credit, collection, invoicing,                    payroll and bookkeeping.  The Company pays 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 nine months ending September 30,   |
|-----------------------------------------------------------------------------------------------------|
|                                                                                                |   |   |   |
| 2007                                                                                                |   |   | 2006 |
|                                                                                                |   |   |   |
|                                                                                                |   |   |   |
| $                                                                                                   | 14,000 |   |   | $ | 20,800 |
|                                                                                                |   |   |   |   |   |
|                                                                                                |   |   |   |   |   |
|                                                                                                | For                      the quarters ending September 30,     |
|                                                                                                |   |   |   |   |
| 2007                                                                                                |   |   | 2006 |
|                                                                                                |   |   |   |   |   |
|                                                                                                |   |   |   |   |   |
| $                                                                                                   | - |   |   | $ | 4,300 |

|   | In                    connection with the Company’s relocation (See Note 14) to their Charlotte,                    NC facility, the Company is no longer using the administrative                    services of                    the related LLC. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**8.  EXCHANGE          TRANSACTION:**

|   | 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. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**9.          EMPLOYMENT AND STOCK OPTION AGREEMENTS:**

|   | 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. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

|   | 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-year                    period. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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                    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. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

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

| ·   | 10-year                    options to purchase 360,000 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.  If either 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 the employee stock option agreements entered                      into                      with two managerial employees: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 10-year                    options to purchase 10,000 shares exercisable at $1.25 per share,                    pursuant                    to BTHC XI, Inc.’s 2007 Omnibus Equity Compensation Plan. The grant date                    was September 28, 2007.  Vesting of the options is one-fourth on                    September 28, 2008, one-fourth on September 28, 2009, one-fourth                    on                    September 28, 2010 and one-fourth on September 28, 2011.  If                    either employee ceases being employed by BTHC XI, Inc. for any                    reason, all                    vested and unvested options shall terminate                    immediately. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                      following table summarizes information about stock options                      as of September                      30, 2007: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|     |   |   |        |   | Weighted                      Average |   |                          |   |
|----------|--------|--------|-------------|--------|---------------------------------------|--------|-------------------------------|--------|
| Exercise |   |   | Number      |   | Remaining                             |   | Number                        |   |
| Price    |   |   | Outstanding |   | Contractual                      Life |   | Exercisable                   |   |
|     |   |   |        |   |                                  |   |                          |   |
| $        | 1.25   |   |        |   | 1,970,000                             |   | 10                      years |   |   | 653,000 |   |

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

|   | The                    financial effect of these options to record over their life is                    as                    follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   |   |      |
|------------------------------------------------------|--------|--------|-----------|
| Options                      to value                |   |   | 1,970,000 |   |
| Option                      price                    |   | $      | 0.0468    |   |
| Total                      expense to recognize over |   |   |      |   |
|   life                      of options     |   | $      | 92,196    |   |

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

|   | The                    amounts recorded for these options in the statement of operations                    for the                    nine months and quarter ended September 30, 2007 and 2006 as                    follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                   |   | For                      the nine       |    |   | For                      the quarter    |   |
|----------------------------------------|--------|-----------------------------------------|---------|--------|-----------------------------------------|--------|
|                                   |   | months                      ended       |    |   | ended                                   |   |
|                                   |   | September                      30, 2007 |    |   | September                      30, 2007 |   |
|                                   |   |                                    |    |   |                                    |   |
|                                   |   |                                    |    |   |                                    |   |
| Pre-tax                      effect    |   | $                                       | 61,152  |   |                                    | $      | 11,466 |   |
| Tax                      benefit (34%) |   |                                    | (21,000 | )      |                                    |   | (4,000 | ) |
|                                   |   |                                    |    |   |                                    |   |   |   |
| After-tax                      effect  |   | $                                       | 40,152  |   |                                    | $      | 7,466 |   |

|   | The                    pre-tax effect recorded in the financial statements for the nine                    months                    ending September 30, 2007 consists of $30,576 in fully vested                    stock                    options and a provision of $30,576 to record eight months of                    the unvested                    portions of stock options that will eventually vest on February                    28, 2008                    and 2009. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**10.          SALE OF CONVERTIBLE PREFERRED STOCK:**

| Gross                      proceeds                   |   | $      | 6,712,500 |   |
|-------------------------------------------------------|--------|--------|-----------|--------|
|                                                  |   |   |      |   |
| Cash                      fees:                       |   |   |      |   |
| Placement                      agent                  |   |   | (951,483  | )      |
| Legal                      and accounting             |   |   | (218,552  | )      |
| Blue                      sky                         |   |   | (39,348   | )      |
| Net                      cash proceeds                |   | $      | 5,503,117 |   |
|                                                  |   |   |      |   |
| Non-cash                      fees:                   |   |   |      |   |
| Placement                      agents fees - warrants |   |   | (62,695   | )      |
|                                                  |   |   |      |   |
| Net                      proceeds                     |   | $      | 5,440,422 |   |

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

|   | The                      placement agent was issued warrants to purchase 1,342,500 shares                      of the                      Company’s common stock.  The following information was input                      into a Black Scholes option pricing model to compute a per                      option price of                      $.0462: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

**ANCHOR              FUNDING SERVICES, INC**

**Notes              To Consolidated Financial Statements**

**Three              and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

**11.**
**CONCENTRATIONS:**

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

|           |   |                                                                                                |    |   |   |   |
|----------------|--------|-----------------------------------------------------------------------------------------------------|---------|--------|--------|--------|
| Industry       |   |                      For                      the nine months ending September 30,   |    |
|           |   |                                                                                                |    |   |   |   |
|           |   | 2007                                                                                                |    |   | 2006   |   |
|           |   |                                                                                                |    |   |   |   |
| Staffing       |   | $                                                                                                   | 214,831 |   |   | $      | 141,309 |   |
| Transportation |   |                                                                                                | 7,209   |   |   |   | 104,260 |   |
| Publishing     |   |                                                                                                | 2,997   |   |   |   | 20,438 |   |
| Construction   |   |                                                                                                | 8,559   |   |   |   | 237,802 |   |
| Service        |   |                                                                                                | 55,298  |   |   |   | 9,556 |   |
| Other          |   |                                                                                                | 8,846   |   |   |   | 5,970 |   |
|           |   |                                                                                                |    |   |   |   |   |   |
|           |   |                                                                                                |    |   |   |   |   |   |
|           |   | $                                                                                                   | 297,740 |   |   | $      | 519,335 |   |

|           |   |                                                                                             |    |   |   |   |
|----------------|--------|--------------------------------------------------------------------------------------------------|---------|--------|--------|--------|
| Industry       |   |                      For                      the quarters ending September 30,   |    |
|           |   |                                                                                             |    |   |   |   |
|           |   | 2007                                                                                             |    |   | 2006   |   |
|           |   |                                                                                             |    |   |   |   |
| Staffing       |   | $                                                                                                | 79,632  |   |   | $      | 56,722 |   |
| Transportation |   |                                                                                             | 1,132   |   |   |   | 38,789 |   |
| Publishing     |   |                                                                                             | 1,592   |   |   |   | 7,376 |   |
| Construction   |   |                                                                                             | 3,540   |   |   |   | 0 |   |
| Service        |   |                                                                                             | 31,786  |   |   |   | 5,083 |   |
| Other          |   |                                                                                             | 4,314   |   |   |   | 1,892 |   |
|           |   |                                                                                             |    |   |   |   |   |   |
|           |   |                                                                                             |    |   |   |   |   |   |
|           |   | $                                                                                                | 121,996 |   |   | $      | 109,862 |   |

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

|   | **Major                      Customers –** The Company had the following transactions and                      balances with unrelated customers (3 for the nine months ending                      September                      30, 2007 and 3 for the nine months ending September 30, 2006)                      which                      represent 10 percent or more of its revenues for the nine months                      September                      30, 2007 and 2006 as follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                        |   |                      For                      the nine months ended September 30, 2007   |                                                                                   |
|---------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|
|                                        |   |                                                                                                    |                                                                                   |   |   |   |   |   |   |
| Revenues                                    |   | $                                                                                                       | 45,500                                                                                 |   |   | $ | 45,000 |   |   | $ | 50,100 |   |
|                                        |   |                                                                                                    |                                                                                   |   |   |   |   |   |   |   |   |   |
|                                        |   |                                                                                                    |                                                                                   |   |   | As                      of September 30,2007 |   |   |   |   |
| Purchased                      accounts     |   |                                                                                                    |                                                                                   |   |   |   |   |   |   |   |   |   |
| receivable                      outstanding |   | $                                                                                                       | 156,500                                                                                |   |   | $ | 152,500 |   |   | $ | 270,100 |   |
|                                        |   |                                                                                                    |                                                                                   |   |   |   |   |   |   |   |   |   |
|                                        |   |                                                                                                    | For                      the nine months ended September 30, 2006       |   |
|                                        |   |                                                                                                    |                                                                                   |   |   |   |   |   |   |   |   |   |
| Revenues                                    |   | $                                                                                                       | 87,200                                                                                 |   |   | $ | 68,900 |   |   | $ | 228,100 |   |
|                                        |   |                                                                                                    |                                                                                   |   |   |   |   |   |   |   |   |   |
|                                        |   |                                                                                                    | As                      of September 30,2006        |
| Purchased                      accounts     |   |                                                                                                    |                                                                                   |   |   |   |   |   |   |   |   |   |
| receivable                      outstanding |   | $                                                                                                       | 258,300                                                                                |   |   | $ | 237,700 |   |   | $ | - |   |

|   | **Cash                    –** The Company maintains cash deposits with a bank.  At                    various times throughout the year, these balances exceeded the                    federally                    insured limit of $100,000. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**12.**
**SUPPLEMENTAL          DISCLOSURES OF CASH FLOW:**

|   | Cash                    paid for interest for the nine months ended September 30, 2007                    and 2006                    was $27,000 and $147,000                    respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | 8,000,000                    shares of common stock were issued in exchange for 100,000 membership                    units of Anchor Funding Services, LLC (see Note                    8). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1,970,000                    stock options were issued to the Company’s President, CEO, two managerial                    employees and two non-employee directors (see Note                    9). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

**13.**
**INCOME          TAXES:**

|   | The                    income tax benefit for the nine months ending September 30, 2007                    consists                    of the change in deferred income taxes related to the issuance                    of stock                    options (See Note 9).  There is no current income tax liability                    for the period. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The** **net                    operating loss carryforward generated in the nine months ending                    September                    30, 2007 was approximately $474,000.  The deferred tax asset                    related to this net operating loss carryforward is approximately                    $161,000.  This deferred tax asset has been reduced by a                    $161,000 valuation allowance.  Management is uncertain if this                    net operating loss will ever be utilized, therefore it has been                    fully                    reserved.  The change is the valuation reserve from December 31,                    2006 to September 30, 2007 is                    $161,000. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ANCHOR            FUNDING SERVICES, INC**

**Notes            To Consolidated Financial Statements**

**Three            and Nine Months Ended September 30, 2007 and 2006**

**(Unaudited)**

**14.          FACILITY LEASES**

|   | In                    May 2007, the Company executed lease agreements for office space                    in                    Charlotte, NC and Boca Raton, FL.  Both lease agreements are                    with unrelated parties. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                    Charlotte lease is effective on August 15, 2007, is for a twenty-four                    month term and includes an option to renew for an additional                    three year                    term at substantially the same terms.  The monthly rental is                    approximately $1,500. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                    Boca Raton lease is expected to be effective on August 20, 2007                    and is for                    a sixty-one month term.  The monthly rental is approximately                    $8,300. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**15.**
**RECLASSIFICATION:**

----

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

**Estimates      –**

----

**Revenue      Recognition – **

**1)  **

**Fixed      Transaction Fee.**

**2)  **

**Variable      Transaction      Fee.  **

**Retained      Interest in Purchased Accounts Receivable –**

**Property      and Equipment**

----

**Advertising      Costs –**

| For                  the nine months ending September 30, |   |
|-----------------------------------------------------------|--------|
| 2007                                                      |   |   | 2006 |   |
|                                                      |   | $ | 151,700 |   |   |   | $ | 48,700 |   |
|                                                      |   |   |   |   |   |   |   |   |   |
| For                the quarters ending September 30,      |   |
| 2007                                                      |   |   | 2006 |   |
|                                                      |   | $ | 64,800 |   |   |   | $ | 17,200 |   |
|                                                      |   |   |   |   |   |   |   |   |   |

**Earnings      per Share –**

**Stock      Based Compensation until December 31, 2005 -**

**Recent      Accounting Pronouncements -**

*Fair Value      Measurements*

*Considering the Effects of Prior      Year Misstatements when Quantifying Misstatements in Current Year Financial      Statements*

*The Fair Value Option for      Financial Assets and Financial Liabilities – Including an amendment of FASB      Statement No. 115.*
*Accounting for Certain Investments in Debt      and Equity Securities*

----

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

**Cash      and cash equivalents –**

**Income      Taxes –**

** **

----

|                                                                         |   | Three                Months Ended September                30, |     |   |   |   |
|------------------------------------------------------------------------------|--------|----------------------------------------------------------------|----------|--------|--------|--------|
|                                                                         |   | 2007                                                           |     |   | 2006   |   |   | $                Change |   |   | %                Change |   |
| Finance                  revenues                                            |   | $                                                              | 121,996  |   |   | $      | 109,862 |   |   | $ | 12,134 |   |   |   | 11.0 |   |
| Interest                income (expense), net                                |   |                                                           | 50,957   |   |   |   | (35,518 | ) |   |   | 86,475 |   |   |   | - |   |
| Net                  finance revenues                                        |   |                                                           | 172,953  |   |   |   | 74,344 |   |   |   | 98,609 |   |   |   | 132.6 |   |
| Provision                for credit losses                                   |   |                                                           | 22,000   |   |   |   | - |   |   |   | 22,000 |   |   |   | - |   |
| Finance                  revenues, net of interest expense and credit losses |   |                                                           | 150,953  |   |   |   | 74,344 |   |   |   | 76,609 |   |   |   | 127.3 |   |
| Operating                expenses                                            |   |                                                           | 380,074  |   |   |   | 48,078 |   |   |   | 331,996 |   |   |   | 690.5 |   |
| Net                  income (loss) before income taxes                       |   |                                                           | (229,121 | )      |   |   | 26,266 |   |   |   | (255,387 | ) |   |   | - |   |
| Income                tax benefit:                                           |   |                                                           | 4,000    |   |   |   | - |   |   |   | 4,000 |   |   |   | - |   |
| Net                  income (loss)                                           |   | $                                                              | (225,121 | )      |   | $      | 26,266 |   |   | $ | (251,387 | ) |   |   | - |   |

**Finance      revenue**

**Interest      income (expense).**

**Provision      for credit losses. **

**Operating      expenses.**

|                                                                               |   | Percentage                of Accounts         |   |   | Percentage                of Revenues  |   |
|------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|--------|----------------------------------------|--------|
|                                                                               |   | Receivable                Portfolio           |   |   | For                The Three Months    |   |
|  Entity                                                                  |   | As                Of  September 30, 2007 |   |   | September                30, 2007 |   |
|                                                                               |   |                                          |   |   |                                   |   |
|  Staffing              Company in New Jersey                   |   |                                          | 24.9   | %      |                                   |   | 28.5 | % |
|  Medical              Staffing Company in New York                       |   |                                          | 18.5   | %      |                                   |   | 15.1 | % |
|  Medical              Staffing Company in New York                            |   |                                          | 14.0   | %      |                                   |   | 16.5 | % |
|  Intellectual              Technology Consulting Firm in Maryland   |   |                                          | 16.7   | %      |                                   |   | 14.1 | % |

----

|                                                                         |   | Nine                Months Ended September 30, |     |   |   |   |     |                    |   |
|------------------------------------------------------------------------------|--------|------------------------------------------------|----------|--------|--------|--------|----------|-------------------------|--------|
|                                                                         |   | 2007                                           |     |   | 2006   |   |     | $                Change |   |   | %                Change |   |
| Finance                  revenues                                            |   | $                                              | 297,740  |   |   | $      | 519,335  |                    |   | $ | (221,595 | ) |   |   | (42.7 | ) |
| Interest                income (expense), net                                |   |                                           | 127,121  |   |   |   | (173,793 | )                       |   |   | 300,914 |   |   |   | - |   |
| Net                  finance revenues                                        |   |                                           | 424,861  |   |   |   | 345,542  |                    |   |   | 79,319 |   |   |   | 22.9 |   |
| Provision                for credit losses                                   |   |                                           | 22,000   |   |   |   | -        |                    |   |   | 22,000 |   |   |   |   |   |
| Finance                  revenues, net of interest expense and credit losses |   |                                           | 402,861  |   |   |   | 345,542  |                    |   |   | 57,319 |   |   |   | 21.8 |   |
| Operating                expenses                                            |   |                                           | 939,530  |   |   |   | 152,954  |                    |   |   | 786,576 |   |   |   | 513.6 |   |
| Net                  income (loss) before income taxes                       |   |                                           | (536,669 | )      |   |   | 192,588  |                    |   |   | (729,257 | ) |   |   | - |   |
| Income                tax benefit:                                           |   |                                           | 21,000   |   |   |   | -        |                    |   |   | 21,000 |   |   |   | - |   |
| Net                  income (loss)                                           |   | $                                              | (515,669 | )      |   | $      | 192,588  |                    |   | $ | (708,257 | ) |   |   | -  |   |

**Finance      revenue**

**Interest      income (expense).**

----

**Provision      for credit losses. **

**Operating      expenses.**

|                                               |   | Nine                Months Ended September 30, |    |   |   |   |    |
|----------------------------------------------------|--------|------------------------------------------------|---------|--------|--------|--------|---------|
|                                               |   | 2007                                           |    |   | 2006   |   |    | $                Change |   | Explanation |
| Professional                  fees                 |   | $                                              | 123,669 |   |   | $      | 11,040  |   |   | $ | 112,629 |   | Increased                  cost for 2006 and 2005 audits. Additional legal fees for corporate                  matters                  and SEC filings |
| Payroll,                payroll taxes and benefits |   |                                           | 323,250 |   |   |   | 52,503  |   |   |   | 276,081 |   | Increased                payroll and health benefits for President and other corporate staff.                Increased health benefits for CEO and a Director. |
| Advertising                                        |   |                                           | 151,131 |   |   |   | 48,740  |   |   |   | 102,341 |   | Increased                  marketing |
| Consulting                expense                  |   |                                           | 25,000  |   |   |   | -  |   |   |   | 25,000 |   | Monthly                advisory fee to investment banking firm for acquiring other                companies |
| Insurance                                          |   |                                           | 54,664  |   |   |   | -  |   |   |   | 54,664 |   | Premiums                  for insurance policies including Directors and Officers and fidelity                  policies |
|                                               |   | $                                              | 677,714 |   |   | $      | 112,283 |   |   | $ | 570,765 |   |   |

----

**Liquidity      and Capital Resources**

**Cash      Flow Summary**

**Cash      Flows from Operating Activities**

**Cash      Flows from Investing Activities**

**Cash      Flows from Financing Activities**

**Capital      Resources**

----

**ITEM      3.                      CONTROLS      AND PROCEDURES**

**PART      II. OTHER INFORMATION**

**ITEM      1.                  LEGAL      PROCEEDINGS:**

**ITEM      2.                  CHANGES      IN SECURITIES.**

**ITEM      3.                  DEFAULTS      UPON SENIOR SECURITIES**

**ITEM      4.                  SUBMISSIONS      OF MATTERS TO A VOTE OF SECURITY HOLDERS:**

**ITEM        5.                  OTHER        INFORMATION:**

----

**ITEM        6.                      EXHIBITS:**

| 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-George                    Rubin |
|------|--------------------------------------------------------------------------------------------|

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

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

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

| 10.5 | Fordham                    Financial Management-Consulting                    Agreement |
|------|-----------------------------------------------------------------------------------------|

| 10.6             | Facilities                    Lease – Florida                                                    |
|------------------|--------------------------------------------------------------------------------------------------------|
|             |                                                                                                   |
| 10.7             | Facilities                    Lease – North Carolina                                             |
|             |                                                                                                   |
| 10.8        | Second                    Facilities Lease-North Carolina (1)                                          |
|             |                                                                                                   |
| 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 – Third Quarter                    Earnings*                            |

----

**SIGNATURES**

|                                                    | **ANCHOR                FUNDING SERVICES, INC.** |                                                     |
|---------------------------------------------------------|--------------------------------------------------|----------------------------------------------------------|
|                                                    |                                             |                                                     |   |
| Date:  November                19, 2007  | By:                                              | /s/ Morry                F. Rubin    |   |
|                                                    |                                             | Morry                F. Rubin                            |   |
|                                                    |                                             | Chief                Executive Officer                   |   |
|                                                    |                                             |                                                     |   |

|                                         |   |                                                 |   |
|----------------------------------------------|--------|------------------------------------------------------|--------|
| Date:                November 19, 2007  | By:    | /s/ Brad                Bernstein          |   |
|                                         |   | Brad                Bernstein                        |   |
|                                         |   | President                and Chief Financial Officer |   |
|                                         |   |                                                 |   |