| 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) |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|

| Large accelerated filer [  ] |   |   |   | Accelerated filer [  ] |
|----------------------------------------|--------|--------|--------|----------------------------------|

|  Non-accelerated filer [  ] |   | (Do not check if a smaller reporting company) |   | Smaller reporting company [X] |
|--------------------------------------------|--------|-----------------------------------------------|--------|-------------------------------|

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|                                                    | Page                                                                                                                    |
|---------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|
|                                                    |                                                                                                                    |
| PART I.  FINANCIAL INFORMATION                |                                                                                                                    |
|                                                    |                                                                                                                    |
| Item 1.                                                 | Financial Statements                                                                                                    | F-1  |
|                                                    |                                                                                                                    |   |
|                                                    | Consolidated Balance Sheets as of June 30, 2009 (unaudited) and December 31, 2008 (audited)                             | F-1  |
|                                                    |                                                                                                                    |   |
|                                                    | Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2009 and 2008 (unaudited) | F-2  |
|                                                    |                                                                                                                    |   |
|                                                    | Consolidated Statement of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2009 (unaudited) | F-3  |
|                                                    |                                                                                                                    |   |
|                                                    | Consolidated Statements of Cash Flows for Six Months Ended June 30, 2009 and 2008(unaudited)                            | F-4  |
|                                                    |                                                                                                                    |   |
|                                                    | Notes to Consolidated Financial Statements                                                                              | F-5-F-20  |
|                                                    |                                                                                                                    |   |
| Item 2.                                                 | Management's Discussion and Analysis of Financial Condition and Results of Operations                                   | 4  |
|                                                    |                                                                                                                    |   |
| Item 3.                                                 | Quantitative and Quantitative Disclosures about Market Risk                                                             | 12  |
|                                                    |                                                                                                                    |   |
| Item 4.                                                 | Controls and Procedures                                                                                                 | 13  |
|                                                    |                                                                                                                    |
| PART II.     OTHER INFORMATION |                                                                                                                    |
|                                                    |                                                                                                                    |
| Item 1.                                                 | Legal Proceedings                                                                                                       | 14  |
|                                                    |                                                                                                                    |   |
| Item 2.                                                 | Changes in Securities                                                                                                   | 14  |
|                                                    |                                                                                                                    |   |
| Item 3.                                                 | Defaults Upon Senior Securities                                                                                         | 14  |
|                                                    |                                                                                                                    |   |
| Item 4.                                                 | Submissions of Matters to a Vote of Security Holders                                                                    | 14  |
|                                                    |                                                                                                                    |   |
| Item 5                                                  | Other Information                                                                                                       | 14  |
|                                                    |                                                                                                                    |   |
| Item 6.                                                 | Exhibits and Reports on Form 8-K                                                                                        | 15  |
|                                                    |                                                                                                                    |
| Signatures                                              |                                                                                                                    |

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| ANCHOR FUNDING SERVICES, INC.                                                                         |   |
|-------------------------------------------------------------------------------------------------------|--------|
|                                                                                                  |   |   |   |   |   |   |
| CONSOLIDATED BALANCE SHEETS                                                                           |   |
|                                                                                                  |   |   |   |   |   |   |
| ASSETS                                                                                                |   |
|                                                                                                  |   | (Unaudited) |   |   | (Audited) |   |
|                                                                                                  |   | June |   |   | December |   |
|                                                                                                  |   |   | 30, 2009 |   |   |   | 31, 2008 |   |
| CURRENT ASSETS:                                                                                       |   |   |   |   |   |   |   |   |
|   Cash                                                                                      |   | $ | 382,648 |   |   | $ | 401,104 |   |
|   Retained interest in purchased accounts receivable, net                                   |   |   | 4,287,428 |   |   |   | 4,292,366 |   |
|   Earned but uncollected fee income                                                         |   |   | 101,764 |   |   |   | 87,529 |   |
|   Other receivable                                                                          |   |   | 215,152 |   |   |   | - |   |
|   Deferred financing costs, current                                                         |   |   | 145,454 |   |   |   | 85,130 |   |
|   Prepaid expenses and other                                                                |   |   | 77,962 |   |   |   | 116,950 |   |
|     Total current assets                                                          |   |   | 5,210,408 |   |   |   | 4,983,079 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
| PROPERTY AND EQUIPMENT, net                                                                           |   |   | 56,265 |   |   |   | 70,181 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
| DEFERRED FINANCING COSTS, non-current                                                                 |   |   | - |   |   |   | 156,073 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
| SECURITY DEPOSITS                                                                                     |   |   | 19,500 |   |   |   | 19,500 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
|                                                                                                  |   | $ | 5,286,173 |   |   | $ | 5,228,833 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                  |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
| CURRENT LIABILITIES:                                                                                  |   |   |   |   |   |   |   |   |
|   Due to financial institution                                                              |   | $ | 1,972,464 |   |   | $ | 1,187,224 |   |
|   Accounts payable                                                                          |   |   | 79,748 |   |   |   | 122,900 |   |
|   Loan fees payable                                                                         |   |   | - |   |   |   | 50,000 |   |
|   Accrued payroll and related taxes                                                         |   |   | 64,596 |   |   |   | 35,067 |   |
|   Accrued expenses                                                                          |   |   | 19,708 |   |   |   | 45,141 |   |
|   Collected but unearned fee income                                                         |   |   | 52,339 |   |   |   | 58,707 |   |
|   Preferred dividends payable                                                               |   |   | 260,711 |   |   |   | - |   |
|     Total current liabilities                                                     |   |   | 2,449,566 |   |   |   | 1,499,039 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
| LOAN FEES PAYABLE, non-current                                                                        |   |   | - |   |   |   | 50,000 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                     |   |   | 2,449,566 |   |   |   | 1,549,039 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
| COMMITMENTS AND CONTINGENCIES                                                                         |   |   |   |   |   |   |   |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
| PREFERRED STOCK, net of issuance costs of                                                             |   |   |   |   |   |   |   |   |
|      $1,209,383                                                              |   |   | 5,361,512 |   |   |   | 5,361,512 |   |
| COMMON STOCK                                                                                          |   |   | 12,941 |   |   |   | 12,941 |   |
| ADDITIONAL PAID IN CAPITAL                                                                            |   |   | 1,751,693 |   |   |   | 1,660,516 |   |
| ACCUMULATED DEFICIT                                                                                   |   |   | (4,289,539 | ) |   |   | (3,355,175 | ) |
|                                                                                                  |   |   | 2,836,607 |   |   |   | 3,679,794 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
|                                                                                                  |   | $ | 5,286,173 |   |   | $ | 5,228,833 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
| The accompanying notes to consolidated financial statements are an integral part of these statements. |   |

----

|                                                                                                  |   | (Unaudited)                      |       |   | (Unaudited)                        |   |
|-------------------------------------------------------------------------------------------------------|--------|----------------------------------|------------|--------|------------------------------------|--------|
|                                                                                                  |   | For the quarters ending June 30, |       |   | For the six months ending June 30, |   |
|                                                                                                  |   | 2009                             |       |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
| FINANCE REVENUES                                                                                      |   | $                                | 393,202    |   |                               | $      | 273,516 |   |   | $ | 797,480 |   |   | $ | 485,177 |   |
| INTEREST EXPENSE - financial institution                                                              |   |                             | (20,718    | )      |                               |   | - |   |   |   | (33,617 | ) |   |   | - |   |
| INTEREST INCOME                                                                                       |   |                             | -          |   |                               |   | 10,902 |   |   |   | - |   |   |   | 34,519 |   |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| NET FINANCE REVENUES                                                                                  |   |                             | 372,484    |   |                               |   | 284,418 |   |   |   | 763,863 |   |   |   | 519,696 |   |
| PROVISION FOR CREDIT LOSSES                                                                           |   |                             | (21,646    | )      |                               |   | (11,140 | ) |   |   | (27,709 | ) |   |   | (5,044 | ) |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| FINANCE REVENUES, NET OF INTEREST EXPENSE                                                             |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|  AND CREDIT LOSSES                                                                               |   |                             | 350,838    |   |                               |   | 273,278 |   |   |   | 736,154 |   |   |   | 514,652 |   |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES                                                                                    |   |                             | 698,610    |   |                               |   | 557,650 |   |   |   | 1,409,807 |   |   |   | 1,221,905 |   |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS BEFORE INCOME TAXES                                                                          |   |                             | (347,772   | )      |                               |   | (284,372 | ) |   |   | (673,653 | ) |   |   | (707,253 | ) |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| INCOME TAXES:                                                                                         |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|   Current                                                                                   |   |                             | -          |   |                               |   | - |   |   |   | - |   |   |   | - |   |
|   Deferred                                                                                  |   |                             | -          |   |                               |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|   Total                                                                                     |   |                             | 0          |   |                               |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS                                                                                              |   |                             | (347,772   | )      |                               |   | (284,372 | ) |   |   | (673,653 | ) |   |   | (707,253 | ) |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| DEEMED DIVIDEND ON CONVERTIBLE PREFERRED STOCK                                                        |   |                             | (131,076   | )      |                               |   | (124,777 | ) |   |   | (260,711 | ) |   |   | (261,181 | ) |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDER                                                           |   | $                                | (478,848   | )      |                               | $      | (409,149 | ) |   | $ | (934,364 | ) |   | $ | (968,434 | ) |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS ATTRIBUTABLE TO COMMON                                                                       |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|   STOCKHOLDER, per share                                                                    |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|   Basic                                                                                     |   | $                                | (0.04      | )      |                               | $      | (0.03 | ) |   | $ | (0.07 | ) |   | $ | (0.08 | ) |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|   Dilutive                                                                                  |   | $                                | (0.04      | )      |                               | $      | (0.03 | ) |   | $ | (0.07 | ) |   | $ | (0.08 | ) |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                                                         |   |                             |       |   |                               |   |   |   |   |   |   |   |   |
|   Basic and dilutive                                                                        |   |                             | 12,940,378 |   |                               |   | 12,883,803 |   |   |   | 12,940,378 |   |   |   | 12,500,507 |   |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |                             |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes to consolidated financial statements are an integral part of these statements. |   |                             |       |   |                               |   |   |   |   |

----

| ANCHOR FUNDING SERVICES, INC.                                                                         |   |      |      |   |   |   |   |
|-------------------------------------------------------------------------------------------------------|--------|-----------|-----------|--------|--------|--------|--------|
| UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                                             |   |      |      |   |   |   |   |
| For the six months ended June 30, 2009                                                                |   |      |      |   |   |   |   |
|                                                                                                  |   |      |      |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |      |      |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   | Preferred |      |   | Common |   |   | Additional |   |   | Accumulated |   |
|                                                                                                  |   | Stock     |      |   | Stock  |   |   | Paid in Capital |   |   | Deficit |   |
|                                                                                                  |   |      |      |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2008 (audited)                                                                  |   | $         | 5,361,512 |   |   | $      | 12,941 |   |   | $ | 1,660,516 |   |   | $ | (3,355,175 | ) |
|                                                                                                  |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for compensation expense related to issued stock options                                    |   |      | -         |   |   |   | -      |   |   |   | 3,601 |   |   |   | - |   |
|                                                                                                  |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Benefit for compensation expense related to expired stock options                                     |   |      | -         |   |   |   | -      |   |   |   | (8,424 | ) |   |   | - |   |
|                                                                                                  |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock options issued to directors/officers related to financing agreement obtained                    |   |      | -         |   |   |   | -      |   |   |   | 96,000 |   |   |   | - |   |
|                                                                                                  |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock dividends                                                                             |   |      | -         |   |   |   | -      |   |   |   | - |   |   |   | (260,711 | ) |
|                                                                                                  |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the six months ended June 30, 2009                                                       |   |      | -         |   |   |   | -      |   |   |   | - |   |   |   | (673,653 | ) |
|                                                                                                  |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, June 30, 2009 (unaudited)                                                                    |   | $         | 5,361,512 |   |   | $      | 12,941 |   |   | $ | 1,751,693 |   |   | $ | (4,289,539 | ) |
|                                                                                                  |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes to consolidated financial statements are an integral part of these statements. |   |      |      |   |   |   |   |   |   |

----

| ANCHOR FUNDING SERVICES, INC.                                                            |   |
|------------------------------------------------------------------------------------------|--------|
|                                                                                     |   |   |   |   |   |   |
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                                    |   |
|                                                                                     |   |   |   |   |   |   |
| For the six months ended June 30,                                                   |   |
|                                                                                     |   | (Unaudited) |   |   | (Unaudited) |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |   | 2009 |   |   | 2008 |   |
|   Net loss:                                                                    |   | $ | (673,653 | ) |   | $ | (707,253 | ) |
|   Adjustments to reconcile net loss to net cash                                |   |   |   |   |   |   |   |   |
|     used in operating activities:                                    |   |   |   |   |   |   |   |   |
|     Depreciation                                                     |   |   | 24,945 |   |   |   | 20,653 |   |
|     Compensation expense (benefit) related to issuance of            |   |   |   |   |   |   |   |   |
|        stock options                                  |   |   | (4,823 | ) |   |   | 10,257 |   |
|     Allowance for uncollectible accounts                             |   |   | 21,646 |   |   |   | 5,044 |   |
|     Amortization of loan fees                                        |   |   | 50,115 |   |   |   | - |   |
|     Increase in retained interest in purchased                       |   |   |   |   |   |   |   |   |
|        accounts receivable                            |   |   | (16,708 | ) |   |   | (1,046,300 | ) |
|     Increase in earned but uncollected                               |   |   | (14,235 | ) |   |   | (21,831 | ) |
|     Other receivable                                                 |   |   | (215,152 | ) |   |   | - |   |
|     Decrease in prepaid expenses and other                           |   |   | 38,988 |   |   |   | 7,769 |   |
|     Decrease in accounts payable                                     |   |   | (1,518 | ) |   |   | (19,636 | ) |
|     Increase (decrease) in accrued payroll and related taxes         |   |   | 29,529 |   |   |   | (5,164 | ) |
|     (Decrease) increase in collected but not earned                  |   |   | (6,368 | ) |   |   | 3,915 |   |
|     Decrease in accrued expenses                                     |   |   | (25,433 | ) |   |   | (40,495 | ) |
|       Net cash used in operating activities                |   |   | (792,667 | ) |   |   | (1,793,041 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |   |   |   |   |   |   |   |   |
|   Purchases of property and equipment                                          |   |   | (11,029 | ) |   |   | (17,997 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |   |   |   |   |   |   |   |   |
|   Proceeds from financial institution, net                                     |   |   | 785,240 |   |   |   | - |   |
|                                                                                     |   |   |   |   |   |   |   |   |
| DECREASE IN CASH                                                                         |   |   | (18,456 | ) |   |   | (1,811,038 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |
| CASH, beginning of period                                                                |   |   | 401,104 |   |   |   | 3,499,044 |   |
|                                                                                     |   |   |   |   |   |   |   |   |
| CASH, end of period                                                                      |   | $ | 382,648 |   |   | $ | 1,688,006 |   |
|                                                                                     |   |   |   |   |   |   |   |   |
|                                                                                     |   |   |   |   |   |   |   |   |
|                                                                                     |   |   |   |   |   |   |   |   |
| The accompanying notes to financial statements are an integral part of these statements. |   |

----

|   | The consolidated financial statements include the accounts of Anchor Funding Services, Inc. and its wholly owned subsidiary, Anchor Funding Services, LLC (“the Company”).  All significant intercompany balances and transactions have been eliminated in consolidation. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

|   | 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 amountsof revenues and expenses during the reporting period.  Actual results could differ from those estimates. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

| 1)   | Fixed Transaction Fee - Fixed transaction fees are derived from 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 vary based on the length of time the purchased invoice is outstanding.   As specified in its contract with the customer, the Company charges variable increasing percentages of the purchased invoice as timeelapses 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 revenueestimate 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 monthsof 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 and collected but unearned fee income, plus earned but uncollected fee income.  The Company purchases a customer’saccounts 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.  Upon collection, the retained interest is refunded back to the client. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Property and Equipment – Property and equipment, consisting primarily of furniture and fixtures, computers and software, are stated at cost.  Depreciation is provided over the estimated useful lives of the depreciable assets using the straight-line method.  Estimated useful lives range from 2 to 7 years. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Deferred Financing Costs – Costs incurred to obtain financing are capitalized and amortized over the term of the debt using the straight-line method, which approximates the effective interest method. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In March 2009, the Company issued stock options to its Chief Executive Officer and President.  These options were issued to reward these executive’s for providing personal guarantees on the Company’s financing agreement obtained in November of 2008 (see Note 5).  The fair value of these options were computed as specified by current accounting standards (see Note 7) and recorded asdeferred financing costs.  This amount will be amortized to operations over the remaining term of the financing agreement. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In May 2009, the terms of the financing agreement were amended.  One of the amendments was to remove the Company from its obligation to pay the lender $100,000 in loan fees.  Also, in May the Company negotiated a reduction in legal fees charged by their corporate attorney related to work done on this financing agreement.  This reduction was approximately $41,600. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As of June 30, 2009 and December 31, 2008, the total amount capitalized and accumulated amortization is as follows: |
|--------|---------------------------------------------------------------------------------------------------------------------|

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

----

|                                                                                                 |   | June 30, 2009 |    |   | December 31, 2008 |   |
|------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                                                                                                 |   |          |    |   |              |   |
| Cash paid or payable                                                                                 |   | $             | 105,000 |   |              | $      | 246,634 |   |
| Stock options granted                                                                                |   |          | 96,000  |   |              |   | - |   |
| Accumulated amortization                                                                             |   |          | (55,546 | )      |              |   | (5,431 | ) |
|                                                                                                 |   |          |    |   |              |   |   |   |
|                                                                                                 |   | $             | 145,454 |   |              | $      | 241,203 |   |
|                                                                                                 |   |          |    |   |              |   |   |   |
| The net amount is classified in the balance sheets based on future expected amortization as follows: |   |          |    |   |              |   |   |   |
|                                                                                                 |   |          |    |   |              |   |   |   |
|                                                                                                 |   | June 30, 2009 |    |   | December 31, 2008 |   |
|                                                                                                 |   |          |    |   |              |   |   |   |
| Current                                                                                              |   | $             | 145,454 |   |              | $      | 85,130 |   |
| Non-current                                                                                          |   |          | -       |   |              |   | 156,073 |   |
|                                                                                                 |   |          |    |   |              |   |   |   |
|                                                                                                 |   | $             | 145,454 |   |              | $      | 241,203 |   |
|                                                                                                 |   |          |    |   |              |   |   |   |

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

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

| For the six months ending June 30, |    |
|------------------------------------|---------|
| 2009                               |    |   | 2008 |   |
| $                                  | 173,000 |   |   | $ | 230,600 |   |

| For the quarters ending June 30, |   |
|----------------------------------|--------|
| 2009                             |   |   | 2008 |   |
| $                                | 86,000 |   |   | $ | 79,200 |   |

|   | Earnings per Share – Basic earnings per share is computed by dividing the earnings for the period by the weighted average number of common shares outstanding during the period.  Dilutive earnings per share includes the potential impact of dilutive securities, such as convertible preferred stock, stock options and stock warrants.  Thedilutive 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 – The fair value of transactions in which the Company exchanges its equity instruments for employee services (share-based payment transactions) must be recognized as an expense in the financial statements as services are performed. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | See Note 7 for the impact on the operating results for the six months ended June 30, 2009 and 2008. |
|--------|-----------------------------------------------------------------------------------------------------|

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

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

|   | Income Taxes – 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 differences between financial statement and taxable income for the Company are as follows: |
|--------|--------------------------------------------------------------------------------------------------------|

| ·   | Compensation costs related to the issuance of stock options |
|--------------------|-------------------------------------------------------------|

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

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

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

----

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

|                                      |   |   | June 30, 2009  |   |   |   | December 31, 2008  |   |
|-------------------------------------------|--------|--------|---------------------|--------|--------|--------|-------------------------|--------|
|                                      |   |   |                |   |   |   |                    |   |
| Purchased accounts receivable outstanding |   | $      | 5,118,364           |   |   | $      | 5,340,975               |   |
| Reserve account                           |   |   | (708,722            | )      |   |   | (954,104                | )      |
| Allowance for uncollectible accounts      |   |   | (122,214            | )      |   |   | (94,505                 | )      |
|                                      |   |   |                |   |   |   |                    |   |
|                                      |   | $      | 4,287,428           |   |   | $      | 4,292,366               |   |

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

|           |   | June 30, 2009 |      |   | December 31, 2008 |   |
|----------------|--------|---------------|-----------|--------|-------------------|--------|
| Staffing       |   | $             | 578,675   |   |              | $      | 1,049,623 |   |
| Transportation |   |          | 1,629,424 |   |              |   | 1,666,895 |   |
| Publishing     |   |          | 3,748     |   |              |   | 2,664 |   |
| Construction   |   |          | 5,218     |   |              |   | 5,218 |   |
| Service        |   |          | 1,992,031 |   |              |   | 1,417,615 |   |
| Other          |   |          | 200,547   |   |              |   | 244,856 |   |
|           |   |          |      |   |              |   |   |   |
|           |   | $             | 4,409,642 |   |              | $      | 4,386,871 |   |

----

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

|  For the six months ending June 30, |                                   |
|------------------------------------------|----------------------------------------|
| 2009                                     |                                   |   | 2008 |   |
|                                     |                                   |   |   |   |
| $                                        | 24,496,000                             |   |   | $ | 13,596,000 |   |
|                                     |                                   |   |   |   |   |   |
|                                     |                                   |   |   |   |   |   |
|                                     |  For the quarters ending June 30, |   |
|                                     | 2009                                   |   |   |   | 2008 |   |
|                                     |                                   |   |   |   |   |   |
| $                                        | 13,099,000                             |   |   | $ | 7,558,000 |   |

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

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

|                          | Estimated    |   | June 30, |     |   | December 31, |   |
|-------------------------------|--------------|--------|----------|----------|--------|--------------|--------|
|                          | Useful Lives |   | 2009     |     |   | 2008         |   |
| Furniture and fixtures        | 2-5 years    |   | $        | 33,960   |   |         | $      | 33,960 |   |
| Computers and software        | 3-7 years    |   |     | 132,041  |   |         |   | 121,012 |   |
|                          |         |   |     | 166,001  |   |         |   | 154,972 |   |
| Less accumulated depreciation |         |   |     | (109,736 | )      |         |   | (84,791 | ) |
|                          |         |   |     |     |   |         |   |   |   |
|                          |         |   | $        | 56,265   |   |         | $      | 70,181 |   |

|   | In November 2008, the Company entered into an agreement with a financial institution to finance the factoring of receivables and to provide ongoing working capital.  The agreement is a revolving credit facility that allows the Company to borrow up to a maximum amount, subject to a borrowing base formula.  This agreement was amended in May 2009. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The original agreement permitted the Company to borrow up to $15,000,000; the amended agreement lowers the maximum borrowing amount to $5,000,000.  The original agreement was scheduled to expire in November 2011; the amended agreement expires on December 31, 2009.  The amended agreement requires the Company to pay a $50,000 fee if any amounts are unpaid on the expiration date. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In the event the Company is not able to obtain replacement financing for this revolving credit facility on or before its expiration date (December 31, 2009) sever liquidity problems could occur. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Borrowings are made at the request of the Company.  The amount eligible to be borrowed is based on a borrowing base formula as defined in the agreement.  The interest on borrowings is paid monthly at LIBOR rate plus 4%.  In addition to interest, the Company pays the financial institution various monthly fees as defined in the agreement. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The agreement is collateralized by a first lien on all Company assets.  Borrowings on this agreement are partially guaranteed by the Company’s President and Chief Executive Officer.  The partial guarantee is $250,000 each. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The original agreement, among other covenants, required the Company to maintain certain financial ratios.  The amended agreement revised the financial ratio covenants.  As of June 30, 2009 and December 31, 2008, the Company was in compliance with, or obtained waivers for, all provisions of this agreement. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

|   | The dividend rate on Series 1 Convertible Preferred Stock is 8%.  Dividends are paid annually on December 31st in the form of additional Series 1 Convertible Preferred Stock unless the Board of Directors approves a cash dividend.  Dividends on Series 1 Convertible Preferred Stock shall cease to accrue on the earlier of December 31, 2009, or on the date they are converted to Common Shares.  Thereafter,the holders of Series 1 Convertible Preferred Stock have the same dividend rights as holders of Common Stock, as if the Series 1 Convertible Preferred Stock had been converted to Common Stock.  Accrued dividends at June 30, 2009 and December 31, 2008 were $260,711 and $0. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 shares issued in Series 1 Convertible Preferred Stock and Common Stock as of June 30, 2009 and December 31, 2008 is summarized as follows: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                       |   | Series 1 Convertible |      |   | Common |   |
|----------------------------|--------|----------------------|-----------|--------|--------|--------|
|                       |   | Preferred Stock      |      |   | Stock  |   |
|                       |   |                 |      |   |   |   |
| Balance, December 31, 2008 |   |                 | 1,314,359 |   |   |   | 12,940,378 |   |
|                       |   |                 |      |   |   |   |   |   |
| Balance, June 30, 2009     |   |                 | 1,314,359 |   |   |   | 12,940,378 |   |

|   | Employee/Directors |
|--------|--------------------|

|   | The Company has employment and stock option agreements with its Chief Executive Officer, Morry Rubin (“M. Rubin”) and its President, Brad Bernstein (“B. Bernstein”) |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | The employment agreement (dated January 31, 2007) 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 the Company 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 andthe Company, 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) the Company’s industry, size and performance, and (iii) other relevant factors. M. Rubin is eligible to receive annual bonuses as determined by the Company’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 the Company’s 2007 Omnibus Equity Compensation Plan. Vesting of the options was one-third immediately, one-third on February 29, 2008 and one-third on February 28, 2009. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 10-year options to purchase 250,000 shares exercisable at $.62 per share, pursuant to agreements entered into in March 2009.  These options were issued in March 2009 in connection with a personal guarantee provided to a financial institution (see Note 5).  These options were recorded as deferred financing costs and will be amortizedto operations over the remaining life of the line of credit agreement. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

| ·   | The employment agreement (dated January 31, 2007) 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 salaryin accordance with such policies as the Company may hereafter adopt from time to time.  B. Bernstein is eligible to receive annual bonuses as determined by the Company’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 the Company’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. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   |  10-year options to purchase 250,000 shares exercisable at $.62 per share, pursuant to agreements entered into in March 2009.  These options were issued in March 2009 in connection with a personal guarantee provided to a financial institution (see Note 5).  These options were recorded as deferred financing costs and will be amortizedto operations over the remaining life of the line of credit agreement. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Outside Directors |
|--------|-------------------|

|   | The Company entered into stock option agreements with outside directors.  The following summarizes stock option agreements entered into with these directors: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | As of December 31, 2008, there were 460,000 shares exercisable at $1.25 per share, pursuant to the Company’s 2007 Omnibus Equity Compensation Plan.  The exercise period for these options is 10 years.  Vesting of the options was one-third immediately, one-third one year from the grant date and the remainder two years from grantdate.  If any director ceases serving the Company 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.  In December 2008, one of these directors resigned.  As of June 30, 2009, all options granted to this director expired. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Managerial Employees |
|--------|----------------------|

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

----

| ·   | As of June 30, 2009, 10-year options to purchase 69,000 shares exercisable at $1.00 to $1.25 per share, pursuant to the Company’s 2007 Omnibus Equity Compensation Plan were granted. The grant dates vary from September 2007 to March 2009.  Vesting periods range from one to four years.  If any employee ceases being employed by theCompany for any reason, all vested and unvested options shall terminate immediately. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|          |   |        |   |             |   |        |
|---------------|--------|-------------|--------|------------------|--------|-------------|
|          |   |        |   | Weighted Average |   |        |
| Exercise      |   | Number      |   | Remaining        |   | Number      |
| Price         |   | Outstanding |   | Contractual Life |   | Exercisable |
|          |   |        |   |             |   |        |
| $.62 to $1.25 |   | 2,445,500   |   | 10 years         |   | 2,318,833   |
|          |   |        |   |             |   |        |

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

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

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

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

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

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

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

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

| Exercise price |   |   |   | $.62 to $1.25  |
|----------------|--------|--------|--------|----------------|
| Term           |   |   |   | 10 years       |
| Volatility     |   |   |   | 83% to 250%    |
| Dividends      |   |   |   | 0%             |
| Discount rate  |   |   |   | 2.82% to 4.75% |
|           |   |   |   |           |

| Options to value                |   |   | 1,945,500 |   |   |   | 500,000 |   |   |   | 2,445,500 |   |
|---------------------------------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|--------|-----------|--------|
| Option price                    |   | $      | 0.0468    |   |   | $      | 0.1920  |   |   |   |      |   |
| Total expense to recognize over |   |   |      |   |   |   |    |   |   |   |      |   |
|   life of options     |   | $      | 91,049    |   |   | $      | 96,000  |   |   | $      | 187,049   |   |

----

|                              |   | For the six   |   |   | For the six   |   |
|-----------------------------------|--------|---------------|--------|--------|---------------|--------|
|                              |   | months ended  |   |   | months ended  |   |
|                              |   | June 30, 2009 |   |   | June 30, 2008 |   |
|                              |   |          |   |   |          |   |
|                              |   |          |   |   |          |   |
| Fully vested stock options        |   | $             | 1,759  |   |          | $      | 2,548 |   |
| Unvested portion of stock options |   |          | 1,842  |   |          |   | 7,709 |   |
|                              |   |          |   |   |          |   |   |   |
|                              |   |          | 3,601  |   |          |   | 10,257 |   |
|                              |   |          |   |   |          |   |   |   |
| Benefit for expired stock options |   |          | (8,424 | )      |          |   | - |   |
|                              |   |          |   |   |          |   |   |   |
| (Benefit) provision, net          |   | $             | (4,823 | )      |          | $      | 10,257 |   |

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

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

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

----

| Industry       |   |  For the six months ending June 30, |    |
|----------------|--------|------------------------------------------|---------|
|           |   |                                     |    |   |   |   |
|           |   | 2009                                     |    |   | 2008 |   |
|           |   |                                     |    |   |   |   |
| Staffing       |   | $                                        | 143,164 |   |   | $ | 152,583 |   |
| Transportation |   |                                     | 300,022 |   |   |   | 166,428 |   |
| Construction   |   |                                     | -       |   |   |   | 2,869 |   |
| Service        |   |                                     | 321,748 |   |   |   | 138,250 |   |
| Other          |   |                                     | 32,546  |   |   |   | 25,047 |   |
|           |   |                                     |    |   |   |   |   |   |
|           |   |                                     |    |   |   |   |   |   |
|           |   | $                                        | 797,480 |   |   | $ | 485,177 |   |

| Industry       |   |  For the quarter ending June 30, |    |
|----------------|--------|---------------------------------------|---------|
|           |   |                                  |    |   |   |   |
|           |   | 2009                                  |    |   | 2008 |   |
|           |   |                                  |    |   |   |   |
| Staffing       |   | $                                     | 60,840  |   |   | $ | 71,322 |   |
| Transportation |   |                                  | 143,454 |   |   |   | 113,190 |   |
| Construction   |   |                                  | -       |   |   |   | 1,515 |   |
| Service        |   |                                  | 170,008 |   |   |   | 76,633 |   |
| Other          |   |                                  | 18,900  |   |   |   | 10,859 |   |
|           |   |                                  |    |   |   |   |   |   |
|           |   |                                  |    |   |   |   |   |   |
|           |   | $                                     | 393,202 |   |   | $ | 273,519 |   |

----

|                   |   | For the six   |    |   | For the six   |   |
|------------------------|--------|---------------|---------|--------|---------------|--------|
|                   |   | months ended  |    |   | months ended  |   |
|                   |   | June 30, 2009 |    |   | June 30, 2008 |   |
|                   |   |          |    |   |          |   |
| Revenues               |   | $             | 80,700  |   |          | $      | 48,900 |   |
|                   |   |          |    |   |          |   |   |   |
|                   |   | As of         |    |   | As of         |   |
|                   |   | June 30,2009  |    |   | June 30,2008  |   |
| Purchased accounts     |   |          |    |   |          |   |   |   |
| receivable outstanding |   | $             | 545,300 |   |          | $      | 308,600 |   |

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

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

|   | Cash – The Company places its cash and cash equivalents on deposit with a North Carolina financial institution. In October and November, 2008 the Federal Deposit Insurance Corporation (FDIC) temporarily increased coverage to $250,000 for substantially all depository accounts and temporarily provides unlimited coverage for certain qualifying and participatingnon-interest bearing transaction accounts.  The increased coverage is scheduled to expire on December 31, 2009, at which time it is anticipated amounts insured by the FDIC will return to $100,000.  During the year, the Company from time to time may have had amounts on deposit in excess of the insured limits. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The income tax benefit for the six months ending June 30, 2009 and 2008 consists of the following: |
|--------|----------------------------------------------------------------------------------------------------|

|                          |   | June   |     |   | June   |   |
|-------------------------------|--------|--------|----------|--------|--------|--------|
|                          |   |   | 30, 2009 |   |   |   | 30, 2008 |   |
|                          |   |   |     |   |   |   |   |   |
|   Current provision |   | $      | 0        |   |   | $      | 0 |   |
|   Deferred benefit  |   |   | 239,000  |   |   |   | 251,000 |   |
|                          |   |   |     |   |   |   |   |   |
|                          |   |   | 239,000  |   |   |   | 251,000 |   |
|                          |   |   |     |   |   |   |   |   |
|   Valuation reserve |   |   | (239,000 | )      |   |   | (251,000 | ) |
|                          |   |   |     |   |   |   |   |   |
|                          |   | $      | 0        |   |   | $      | 0 |   |

|   | The net operating loss carryforward generated in the six months ending June 30, 2009 and 2008 was approximately $646,500 and $689,000, respectively.  The deferred tax assets related to these net operating loss carryforwards was approximately $239,000 and $251,000 as June 30, 2009 and 2008, respectively.  These deferred tax assets havebeen reduced by valuation allowances.  Management is uncertain if this net operating loss will ever be utilized, therefore it has been fully reserved. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 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.  On November 1, 2007, the Company entered into a lease for additional space adjoining its Charlotte office.  The lease is for 19 months and includes a two year renewal option at substantially the same terms.  Themonthly rent for the combined space is approximately $2,250. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | Total rent expense for the six months ending June 30, 2009 and 2008 was approximately $69,000 and $63,000 respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | Other receivable represents an amount due from a customer that the Company had purchased accounts receivable from.  In June of 2009, the Company learned that the accounts receivable purchased from this customer were not paid to the Company, but to another party.  The Company’s factoring and security agreements provide the Company with several remedies for collecting.  The Companyintends to pursue all collection remedies available to them under their factoring and security agreements, including personal guarantees by the customer’s principals.  As of June 30, 2009, the Company believes these funds will be collected and has ceased accruing fees on the invoices. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Cash paid for interest for the six months ended June 30, 2009 and 2008 was $34,000 and $0 respectively. |
|--------|---------------------------------------------------------------------------------------------------------|

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

|   | For the six months ending June 30, 2009 - |
|--------|-------------------------------------------|

|   | None. |
|--------|-------|

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

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

|   | Exchange of 220,366 preferred shares for 1,119,613 of common shares. |
|--------|----------------------------------------------------------------------|

----

|   | In April 2009, the FASB issued FSP SFAS 107-1 and APB 28-1 “Interim Disclosures about Fair Value of Financial Instruments” (FSP SFAS 107-1 and APB 28-1).  FSP SFAS 107-1 and APB 28-1 amend the disclosure requirements in SFAS No. 107, “Disclosures about Fair Value of Financial Instruments”(“SFAS 107”), and APB Opinion No. 28, “Interim Financial Reporting,” to require disclosures about the fair value of financial instruments within the scope of SFAS 107, including disclosure of the method(s) and significant assumptions used to estimate the fair value of financial instruments, in interim financial statements as well as in annual financial statements.  Previously, these disclosures were required only in annualfinancial statements.  FSP SFAS 107-1 and APB 28-1 are effective and should be applied prospectively for financial statements issued for interim and annual reporting periods ending after June 15, 2009.  In periods after initial adoption, FSP SFAS 107-1 and APB 28-1 require comparative disclosures only for periods ending subsequent to initial adoption and does not require earlier periods to be disclosed for comparative purposes at initial adoption.  The Company was not impacted bythe adoption of this pronouncement. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In May 2009, the FASB issued FASB Statement No. 165, Subsequent Events, which establishes general standards of and accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issues or are available to be issued.  This FASB was effective for interim and annual periods ending after June 15, 2009.  TheCompany has complied with the requirements of FASB 165. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In June 2009, the FASB issued Statement No. 168, The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162.  Under the Statement, The FASB Accounting Standards Codification (Codification) will become the source of authoritative U.S. generally accepted accountingprinciples (GAAP) recognized by the FASB to be applied by nongovernmental entities.  Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards.  All other non-grandfathered non-SEC accounting literature not included in the Codificationwill become non-authoritative.  This Statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  In FASB’s view, the issuance of this Statement and the Codification will not change GAAP, except for those nonpublic nongovernmental entities that must now apply the American Institute of Certified Public Accountants Technical Inquiry Service Section 5100, “Revenue Recognition,” paragraphs 38-76.  The Companydoes not expect that adoption of this Statement will have a material impact on the Company’s consolidated financial statements. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Subsequent events have been evaluated through August 13, 2009, which is the date the financial statements were available to be issued. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------|

----

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

|   | 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 amountsof revenues and expenses during the reporting period.  Actual results could differ from those estimates. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

| 1)   | Fixed Transaction Fee - Fixed transaction fees are derived from 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 vary based on the length of time the purchased invoice is outstanding.   As specified in its contract with the customer, the Company charges variable increasing percentages of the purchased invoice as timeelapses 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 revenueestimate 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 monthsof 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 and collected but unearned fee income, plus earned but uncollected fee income.  The Company purchases a customer’saccounts 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.  Upon collection, the retained interest is refunded back to the client. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Property and Equipment – Property and equipment, consisting primarily of furniture and fixtures, computers and software, are stated at cost.  Depreciation is provided over the estimated useful lives of the depreciable assets using the straight-line method.  Estimated useful lives range from 2 to 7 years. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Deferred Financing Costs – Costs incurred to obtain financing are capitalized and amortized over the term of the debt using the straight-line method, which approximates the effective interest method. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In March 2009, the Company issued stock options to its Chief Executive Officer and President.  These options were issued to reward these executive’s for providing personal guarantees on the Company’s financing agreement obtained in November of 2008 (see Note 5).  The fair value of these options were computed as specified by current accounting standards (see Note 7) and recorded asdeferred financing costs.  This amount will be amortized to operations over the remaining term of the financing agreement. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In May 2009, the terms of the financing agreement were amended.  One of the amendments was to remove the Company from its obligation to pay the lender $100,000 in loan fees.  Also, in May the Company negotiated a reduction in legal fees charged by their corporate attorney related to work done on this financing agreement.  This reduction was approximately $41,600. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As of June 30, 2009 and December 31, 2008, the total amount capitalized and accumulated amortization is as follows: |
|--------|---------------------------------------------------------------------------------------------------------------------|

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

----

|                     |   | June 30, 2009 |    |   | December 31, 2008 |   |
|--------------------------|--------|---------------|---------|--------|-------------------|--------|
|                     |   |          |    |   |              |   |
| Cash paid or payable     |   | $             | 105,000 |   |              | $      | 246,634 |   |
| Stock options granted    |   |          | 96,000  |   |              |   | - |   |
| Accumulated amortization |   |          | (55,546 | )      |              |   | (5,431 | ) |
|                     |   |          |    |   |              |   |   |   |
|                     |   | $             | 145,454 |   |              | $      | 241,203 |   |
|                     |   |          |    |   |              |   |   |   |

|   | The net amount is classified in the balance sheets based on future expected amortization as follows: |
|--------|------------------------------------------------------------------------------------------------------|

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

|        |   |          |    |   |              |   |    |   |
|-------------|--------|---------------|---------|--------|-------------------|--------|---------|--------|
|        |   |          |    |   |              |   |    |   |
|        |   | June 30, 2009 |    |   | December 31, 2008 |   |
|        |   |          |    |   |              |   |    |   |
| Current     |   | $             | 145,454 |   |              | $      | 85,130  |   |
| Non-current |   |          | -       |   |              |   | 156,073 |   |
|        |   |          |    |   |              |   |    |   |
|        |   | $             | 145,454 |   |              | $      | 241,203 |   |
|        |   |          |    |   |              |   |    |   |

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

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

| For the six months ending June 30, |    |
|------------------------------------|---------|
| 2009                               |    |   | 2008 |   |
| $                                  | 173,000 |   |   | $ | 230,600 |   |

| For the quarters ending June 30, |   |
|----------------------------------|--------|
| 2009                             |   |   | 2008 |   |
| $                                | 86,000 |   |   | $ | 79,200 |   |

|   | Earnings per Share – Basic earnings per share is computed by dividing the earnings for the period by the weighted average number of common shares outstanding during the period.  Dilutive earnings per share includes the potential impact of dilutive securities, such as convertible preferred stock, stock options and stock warrants.  Thedilutive 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 – The fair value of transactions in which the Company exchanges its equity instruments for employee services (share-based payment transactions) must be recognized as an expense in the financial statements as services are performed. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | See Note 7 for the impact on the operating results for the six months ended June 30, 2009 and 2008. |
|--------|-----------------------------------------------------------------------------------------------------|

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

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

|   | Income Taxes – 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 differences between financial statement and taxable income for the Company are as follows: |
|--------|--------------------------------------------------------------------------------------------------------|

| ·   | Compensation costs related to the issuance of stock options |
|--------------------|-------------------------------------------------------------|

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

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

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

----

|              |   | Three Months Ended |    |   |   |   |    |
|-------------------|--------|--------------------|---------|--------|--------|--------|---------|
|              |   | June 30,           |    |   |   |   |    |
|              |   | 2009               |    |   | 2008   |   |    | $ Change |   | Explanation |
| Professional fees |   | $                  | 47,264  |   |   | $      | 17,852  |   |   |   | 29,412 |   | Additional legal fees for corporate matters. |
| Payroll           |   |               | 258,865 |   |   |   | 198,494 |   |   |   | 60,371 |   | Increased payroll to support growth initiatives |
|              |   | $                  | 306,129 |   |   | $      | 216,346 |   |   | $ | 89,783 |   |   |
|              |   |               |    |   |   |   |    |   |   |   |   |   |   |

----

|                                                        |   | Three Months Ended |     |   |   |   |     |     |   |
|-------------------------------------------------------------|--------|--------------------|----------|--------|--------|--------|----------|----------|--------|
|                                                        |   | June 30,           |     |   |   |   |     |     |   |
|                                                        |   | 2009               |     |   | 2008   |   |     | $ Change |   |   | % Change |   |
| Finance revenues                                            |   | $                  | 393,202  |   |   | $      | 273,516  |     |   | $ | 119,686 |   |   |   | 43.8 |   |
| Interest income (expense), net                              |   |               | (20,718  | )      |   |   | 10,902   |     |   |   | (31,620 | ) |   |   | - |   |
| Net finance revenues                                        |   |               | 372,484  |   |   |   | 284,418  |     |   |   | 88,066 |   |   |   | 31.0 |   |
| Provision for  credit losses                      |   |               | (21,646  | )      |   |   | (11,140  | )        |   |   |   |   |   |   |   |   |
| Finance revenues, net of interest expense and credit losses |   |               | 350,838  |   |   |   | 273,278  |     |   |   | 77,560 |   |   |   | 28.4 |   |
| Operating expenses                                          |   |               | 698,610  |   |   |   | 557,650  |     |   |   | 140,960 |   |   |   | 25.3 |   |
| Net loss before income taxes                                |   |               | (347,772 | )      |   |   | (284,372 | )        |   |   | (63,400 | ) |   |   |   |   |
| Income tax (provision) benefit:                             |   |               |     |   |   |   |     |     |   |   |   |   |   |   |   |   |
| Net loss                                                    |   | $                  | (347,772 | )      |   | $      | (284,372 | )        |   | $ | (63,400 | ) |   |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                             | Percentage of Revenues for |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|----------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Percentage of Accounts ReceivablePortfolio as of | The Three Months Ended     |
| Entity                                                                         | June 30, 2009                                    | June 30, 2009              |
| Transportation Company in Virginia                                                                                                                                                                                                                                                                                                                                                                                                                     |  12.5                                       |  10.2                 |

| Key changes in certain selling, general and administrative expenses: |   |             |
|----------------------------------------------------------------------|--------|------------------|
|                                                                 |   | Six Months Ended |   |   |   |   |   |
|                                                                 |   | June 30,         |   |   |   |   |   |
|                                                                 |   | 2009             |   |   | 2008 |   |   | $ Change |   | Explanation |
| Professional fees                                                    |   | $                | 89,547 |   |   | $ | 34,738 |   |   |   | 54,809 |   | Additional legal fees for corporate matters. |
| Payroll                                                              |   |             | 490,630 |   |   |   | 408,301 |   |   |   | 82,329 |   | Increased payroll to support growth initiatives |
| Amortization of financing costs                                      |   |             | 46,411 |   |   |   |   |   |   |   | 46,411 |   | Increased amortization of deferred financing costs |
|                                                                 |   | $                | 626,588 |   |   | $ | 443,039 |   |   | $ | 183,549 |   |   |
|                                                                 |   |             |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                        |   | Six Months Ended |      |   |   |   |      |     |   |
|-------------------------------------------------------------|--------|------------------|-----------|--------|--------|--------|-----------|----------|--------|
|                                                        |   | June 30,         |      |   |   |   |      |     |   |
|                                                        |   | 2009             |      |   | 2008   |   |      | $ Change |   |   | % Change |   |
| Finance revenues                                            |   | $                | 797,480   |   |   | $      | 485,177   |     |   | $ | 312,303 |   |   |   | 64.4 |   |
| Interest income (expense), net                              |   |             | (33,617   | )      |   |   | 34,519    |     |   |   | (68,136 | ) |   |   | - |   |
| Net finance revenues                                        |   |             | 763,863   |   |   |   | 519,696   |     |   |   | 244,167 |   |   |   | 47.0 |   |
| Provision for  credit losses                      |   |             | (27,709   | )      |   |   | (5,044    | )        |   |   |   |   |   |   |   |   |
| Finance revenues, net of interest expense and credit losses |   |             | 736,154   |   |   |   | 514,652   |     |   |   | 221,502 |   |   |   | 43.0 |   |
| Operating expenses                                          |   |             | 1,409,807 |   |   |   | 1,221,905 |     |   |   | 187,902 |   |   |   | 15.4 |   |
| Net loss before income taxes                                |   |             | (673,653  | )      |   |   | (707,253  | )        |   |   | 33,600 |   |   |   |   |   |
| Income tax (provision) benefit:                             |   |             |      |   |   |   |      |     |   |   |   |   |   |   |   |   |
| Net loss                                                    |   | $                | (673,653  | )      |   | $      | (707,253  | )        |   | $ | 33,600 |   |   |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                             | Percentage of Revenues for |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|----------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Percentage of Accounts ReceivablePortfolio as of | The Six Months Ended       |
| Entity                                                                         | June 30, 2009                                    | June 30, 2009              |
| Transportation Company in Virginia                                                                                                                                                                                                                                                                                                                                                                                                                     |  12.5                                       |  10.4                 |

----

| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|---------|------------------------------------------------------------|

----

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

----

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

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

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

| Date of Sale  |    | Title of Security  |    | NumberSold                      |    | ConsiderationReceived,Commissions                                                     |    | Purchasers                     |    | Exemption fromRegistrationClaimed                                               |    |
|--------------------|--------------|-------------------------|--------------|---------------------------------|--------------|--------------------------------------------------------------------------------------------|--------------|-------------------------------------|--------------|--------------------------------------------------------------------------------------|--------------|
|               |         |                    |         |                            |         |                                                                                       |         |                                |         |                                                                                 |         |
| March 2009    |         | Common StockOptions     |         |     51,500  |         | Securities granted under Equity Compensation Plan; no cash received; no commissions paid   |         | Employees, directors and/orofficers |         | Section 4(2) of the Securities Act of 1933 and/or Rule 506 promulgatedthereunder (6) |         |
|               |         |                    |         |                            |         |                                                                                       |         |                                |         |                                                                                 |         |
| March 2009    |         | Common StockOptions     |         |     500,000 |         | Securities granted outside Equity Compensation Plan; no cash received; no commissions paid |         | Employees, directors and/orofficers |         | Section 4(2) of the Securities Act of 1933 and/or Rule 506 promulgatedthereunder (6) |         |

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

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

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

----

|  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  | Loan and Security Agreement with Textron Financial Corporation (1)              |
|       |                                                                            |
| 10.9       | Revolving Note (1)                                                              |
|       |                                                                            |
| 10.10      | Debt Subordination Agreement (1)                                                |
|       |                                                                            |
| 10.11      | Guaranty Agreement (Morry Rubin) (1)                                            |
|       |                                                                            |
| 10.12      | Guaranty Agreement (Brad Bernstein) (1)                                         |
|       |                                                                            |
| 10.13      | Continuing Guaranty Agreement (1)                                               |
|       |                                                                            |
| 10.14      | Pledge Agreement (1)                                                            |
|       |                                                                            |
| 10.15      | Amendment to Loan and Security Agreement with Textron Financial Corporation (2) |
|       |                                                                            |
| 31(a)      | Rule 13a-14(a) Certification – Chief Executive Officer *                  |
|       |                                                                            |
| 31(b)      | Rule 13a-14(a) Certification – Chief Financial Officer *                  |
|       |                                                                            |
| 32(a)      | Section 1350 Certification – Chief Executive Officer *                    |
|       |                                                                            |
| 32(b)      | Section 1350 Certification – Chief Financial Officer *                    |
|       |                                                                            |
| 99.1       | 2007 Omnibus Equity Compensation Plan                                           |

| 99.2   | Form of Non-Qualified Option under 2007 Omnibus Equity Compensation Plan |
|--------|--------------------------------------------------------------------------|
|   |                                                                     |
| 99.3   | Press Release – Results of Operations – Second Quarter 2009* |

| (1) | Incorporated by reference to the Registrant’s Form 8-K filed November 24, 2008 (date of earliest event November 21, 2008). |
|-----|----------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated by reference to Registrant’s Form 8-K filed May 21, 2009 (date of earliest event – May 20, 2009). |
|-----|----------------------------------------------------------------------------------------------------------------------------|

----

|                                   | ANCHOR FUNDING SERVICES, INC. |                                      |
|----------------------------------------|-------------------------------|-------------------------------------------|
|                                   |                          |                                      |   |
| Date:  August 13, 2009  | By:                           | /s/ Morry F. Rubin    |   |
|                                   |                          | Morry F. Rubin                            |   |
|                                   |                          | Chief Executive Officer                   |   |
|                                   |                          |                                      |   |

|                  |   |                                  |   |
|-----------------------|--------|---------------------------------------|--------|
| Date: August 13, 2009 | By:    | /s/ Brad Bernstein          |   |
|                  |   | Brad Bernstein                        |   |
|                  |   | President and Chief Financial Officer |   |
|                  |   |                                  |   |