---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-QSB

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

For the quarterly period ended March 31, 2006

Or

**[]**
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934

For the transition period from ______________________ To
______________________

Commission file number 0  30927

GARUDA CAPITAL CORP.(Exact name of registrant as specified in its charter)

|Nevada                                                         | 980209053                                 
|-------------------------------------------------------------- | ------------------------------------------
|(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification
      No.)
|                                                               |                                           
|502-1978 Vine Street, Vancouver, BC                            | V6K 4S1                                   
|(Address of principal executive offices)                       | (Zip Code)                                

604-737-0203(Registrants telephone
number, including area code)

______________________________________________________(Former
name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be
  filed by Section 13 or 15(d) of the Exchange Act during the past 
  12 months (or for such shorter period that the registrant was require to file
  such reports), and (2) has been subject to such 
  filing requirements for the past 90 days.
  [ x ] Yes []
  No

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCYPROCEEDINGS
DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all
  documents and reports required to be filed by 
  Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to
  the distribution of securities 
  under a plan confirmed by a court.[]
  Yes []
  No

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date.

Common Stock, $0.001 par value, 45,762,784 shares as of April
27, 2006

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2

PART I  FINANICAL INFORMATION

ITEM
1.                  
FINANICAL STATEMENTS

The unaudited consolidated financial statements of Garuda
Capital Corp. (the Company, we, our, us) follow. All currency references
in this report are in US dollars unless otherwise noted.



CONSOLIDATED FINANCIAL STATEMENTS



|1. | CONSOLIDATED BALANCE SHEETS                                
|-- | -----------------------------------------------------------
|   |                                                            
|2. | CONSOLIDATED STATEMENTS OF OPERATIONS                      
|   |                                                            
|3. | CONSOLIDATED STATEMENTS OF STOCKHOLDERS
        DEFICIENCY
|   |                                                            
|4. | CONSOLIDATED STATEMENTS OF CASH FLOW                       
|   |                                                            
|5. | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                 

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|3                                   
|------------------------------------
|                                    
|                                    
|GARUDA CAPITAL CORP.                
|Consolidated Balance Sheets         
|March 31, 2006 and June 30, 2005    
|(Unaudited)                         
|(Going concern uncertainty  Note 2)

|                                                               |   | US Dollars |  
|-------------------------------------------------------------- | - | ---------- | -
|                                                               |   | March 31,  |  
|                                                               |   | 2006       |  
|                                                               |   |            |  
|ASSETS(Notes 3 and 5)                                          |   |            |  
|CURRENT ASSETS                                                 |   |            |  
|Cash                                                           | $ | 79,936     |  
|Accounts receivable                                            |   | 88,027     |  
|Marketable securities                                          |   | -          |  
|Inventory (Note 4)                                             |   | 373,610    |  
|Prepaid expenses and deferred charges                          |   | 28,061     |  
|TOTAL CURRENT ASSETS                                           |   | 569,634    |  
|                                                               |   |            |  
|PROPERTY AND EQUIPMENT                                         |   |            |  
|Machinery and equipment, net of
      accumulated depreciation |   | 188,023    |  
|TOTAL PROPERTY AND EQUIPMENT                                   |   | 188,023    |  
|                                                               |   |            |  
|OTHER ASSETS                                                   |   |            |  
|Patents and trademarks, net of
      accumulated amortization  |   | 12,747     |  
|TOTAL OTHER ASSETS                                             |   | 12,747     |  
|                                                               |   |            |  
|TOTAL ASSETS                                                   | $ | 770,404    |  
|                                                               |   |            |  
|LIABILITES AND STOCKHOLDERS DEFICIENCY                        |   |            |  
|CURRENT LIABILITIES                                            |   |            |  
|Bank indebtedness (Note 5)                                     | $ | -          |  
|Accounts payable and accrued expenses
      (Note 3)           |   | 335,805    |  
|Bank loan (Note 2 and 5)                                       |   | 135,000    |  
|Note payable  related party (Note 3)                          |   | 461,583    |  
|Capital lease obligation                                       |   | 458        |  
|TOTAL CURRENT LIABILITIES                                      |   | 932,846    |  
|                                                               |   |            |  
|LONG TERM LIABILITIES                                          |   |            |  
|Government loan                                                |   | 14,220     |  
|TOTAL LIABILITIES                                              |   | 947,066    |  
|                                                               |   |            |  
|COMMITMENTS AND CONTINGENCIES (Note 7)                         |   |            |  
|                                                               |   |            |  
|STOCKHOLDERS DEFICIENCY                                       |   |            |  
|Preferred stock, $0.01 par value; 10,000,000 shares            |   | -          |  
|Authorized, none
      issued and outstanding                  |   |            |  
|Common stock, $0.001 par value; 100,000,000 shares             |   | 45,763     |  
|Authorized, 45,762,784 and 34,655,620 shares issued and        |   |            |  
|outstanding                                                    |   |            |  
|Additional paid-in capital                                     |   | 6,163,906  |  
|Contra equity (Note 10)                                        |   | (104,682   | )
|Accumulated deficit                                            |   | (6,288,522 | )
|Accumulated other comprehensive gain/(loss)                    |   | 6,873      |  
|TOTAL STOCKHOLDERS DEFICIENCY                                 |   | (176,662   | )
|                                                               |   |            |  
|TOTAL LIABILITIES AND STOCKHOLDERS
      DEFICIENCY           | $ | 770,404    |  

The accompanying notes are an integral part of these
statements.

---

|4                                            
|---------------------------------------------
|                                             
|                                             
|GARUDA CAPITAL CORP.                         
|Consolidated Statements of Operations        
|For the periods ended March 31, 2006 and 2005
|(Unaudited)                                  

|                                                       |   | Three months ended |   |   | Nine months ended |  
|------------------------------------------------------ | - | ------------------ | - | - | ----------------- | -
|                                                       |   | March 31           |   |   | March 31          |  
|                                                       |   | 2006               |   |   | 2005              |  
|                                                       |   |                    |   |   |                   |  
|REVENUE                                                |   |                    |   |   |                   |  
|                                                       |   |                    |   |   |                   |  
|SALES                                                  | $ | 242,033            |   | $ | 134,275           |  
|                                                       |   |                    |   |   |                   |  
|COST OF SALES                                          |   | 165,986            |   |   | 116,799           |  
|                                                       |   |                    |   |   |                   |  
|GROSS PROFIT                                           |   | 76,047             |   |   | 17,476            |  
|                                                       |   |                    |   |   |                   |  
|EXPENSES                                               |   |                    |   |   |                   |  
|                                                       |   |                    |   |   |                   |  
|General and administrative
      (Note 3)              |   | 249,815            |   |   | 213,070           |  
|Legal and accounting                                   |   | 40,904             |   |   | 24,560            |  
|Depreciation and amortization                          |   | 3,260              |   |   | 7,335             |  
|Advertising and promotion                              |   | 155,687            |   |   | 7,592             |  
|Premises leases                                        |   | 43,395             |   |   | 41,508            |  
|Total Operation Expenses                               |   | 493,061            |   |   | 294,065           |  
|                                                       |   |                    |   |   |                   |  
|LOSS BEFORE OTHER INCOME (EXPENSES)                    |   | (417,014           | ) |   | (276,589          | )
|                                                       |   |                    |   |   |                   |  
|OTHER INCOME (EXPENSES)                                |   |                    |   |   |                   |  
|Foreign currency
      transaction income (loss)       |   | (1,831             | ) |   | -                 |  
|Gain on sale of marketable securities                  |   | 28,785             |   |   | -                 |  
|Other income                                           |   | 1,617              |   |   | -                 |  
|Interest expense (Note 3)                              |   | (21,380            | ) |   | (179,027          | )
|Total Other Income (Expense)                           |   | 7,191              |   |   | (179,027          | )
|                                                       |   |                    |   |   |                   |  
|NET LOSS                                               |   | (409,823           | ) |   | (455,616          | )
|                                                       |   |                    |   |   |                   |  
|OTHER COMPREHENSIVE INCOME                             |   |                    |   |   |                   |  
|Gain (loss) on foreign currency translation            |   | 34,054             |   |   | (45,080           | )
|Reclassification of
      unrealized gain on available |   |                    |   |   |                   |  
|for sale marketable securities                         |   | -                  |   |   | -                 |  
|Unrealized gain on available
      for sale of         |   |                    |   |   |                   |  
|marketable securities                                  |   | (19,727            | ) |   | -                 |  
|                                                       |   |                    |   |   |                   |  
|COMPREHENSIVE LOSS                                     |   | (395,496           | ) |   | (500,696          | )
|                                                       |   |                    |   |   |                   |  
|NET LOSS PER COMMON SHARE,                             |   |                    |   |   |                   |  
|BASIC AND
      DILUTED                                | $ | (0.01              | ) | $ | (0.04             | )
|                                                       |   |                    |   |   |                   |  
|WEIGHTED AVERAGE
      NUMBER                          |   |                    |   |   |                   |  
|OF COMMON SHARES OUTSTANDING,                          |   |                    |   |   |                   |  
|BASIC AND
      DILUTED                                |   | 39,789,717         |   |   | 11,178,582        |  

The accompanying notes are an integral part of these
statements.

---

|5                                                        
|---------------------------------------------------------
|                                                         
|Garuda Capital Corp.                                     
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS
      DEFICIENCY
|Period ended March 31, 2006                              
|(Expressed in U.S. dollars)                              
|(Unaudited)                                              

AccumulatedAdditional
      
    
    
      
    
    other
      
    
    
      
    
    TotalCommon stock
      
    
    paid-in
      
    
    Accumulated
      
    
    comprehensive
      
    
    Contra
      
    
    StockholdersShares
    
    
    Amount
      
    
    capital
      
    
    deficit
      
    
    loss
      
    
    equity
      
    
    deficiency#
    
    
    $
      
    
    $
      
    
    $
      
    
    $
      
    
    $
      
    
    $Balance, June 30, 2004
    
    6,373,576
    
    
    6,374
      
    
    2,444,715
      
    
    (3,572,755
      )
    
    (3,391
      )
    
    -
      
    
    (1,125,057
      )Shares issued for
    
    1,555,000
    
    
    1,555
      
    
    29,545
      
    
    -
      
    
    -
      
    
    -
      
    
    31,100compensation at$0.02 pershareShares issued for
    
    800,000
    
    
    800
      
    
    79,200
      
    
    -
      
    
    -
      
    
    -
      
    
    80,000compensation at $0.10 pershareShares issued for services
    
    2,980,000
    
    
    2,980
      
    
    295,020
      
    
    -
      
    
    -
      
    
    -
      
    
    298,000at $0.10 per shareShares issued for services
    
    3,000,000
    
    
    3,000
      
    
    357,000
      
    
    -
      
    
    -
      
    
    -
      
    
    360,000at $0.15 per shareShares issued for debt at
    
    11,170,044
    
    
    11,170
      
    
    1,105,834
      
    
    -
      
    
    -
      
    
    -
      
    
    1,117,004$0.10 per shareShares issued for cash at
    
    8,750,000
    
    
    8,750
      
    
    866,250
      
    
    -
      
    
    -
      
    
    -
      
    
    875,000$0.10 per shareGain/loss on foreign
    
    -
    
    
    -
      
    
    -
      
    
    -
      
    
    (32,467
      )
    
    -
      
    
    (32,467
      )currency translationUnrealized loss on available
    
    -
    
    
    -
      
    
    -
      
    
    -
      
    
    (88,277
      )
    
    -
      
    
    (88,277
      )for sale securitiesNet loss for the year ended
    
    -
    
    
    -
      
    
    -
      
    
    (1,365,993
      )
    
    -
      
    
    -
      
    
    (1,365,993
      )June 30, 200534,655,620
    
    
    34,656
      
    
    5,181,587
      
    
    (4,938,748
      )
    
    (124,135
      )
    
    -
      
    
    153,360Contra equity
    
    -
    
    
    -
      
    
    -
      
    
    -
      
    
    -
      
    
    (418,667
      )
    
    (418,667
      )Balance, June
      30, 2005
    
    34,655,620
    
    
    34,656
      
    
    5,181,587
      
    
    (4,938,748
      )
    
    (124,135
      )
    
    (418,667
      )
    
    (265,307
      )Shares issued for cash at
    
    525,000
    
    
    525
      
    
    51,975
      
    
    -
      
    
    -
      
    
    -
      
    
    52,500$0.10 per shareShares issued for cash at
    
    2,500,000
    
    
    2,500
      
    
    197,500
      
    
    -
      
    
    -
      
    
    -
      
    
    200,000$0.08 per shareShares issued for cash at
    
    1,000,000
    
    
    1,000
      
    
    64,000
      
    
    -
      
    
    -
      
    
    -
      
    
    65,000$0.065 per shareContra equity
    
    -
    
    
    -
      
    
    -
      
    
    -
      
    
    -
      
    
    313,985
      
    
    313,985Shares issued for services
    
    4,683,000
    
    
    4,683
      
    
    458,977
      
    
    -
      
    
    -
      
    
    -
      
    
    463,660Shares issued for debt
    
    2,399,164
    
    
    2,399
      
    
    209,867
      
    
    -
      
    
    -
      
    
    -
      
    
    212,266Gain on foreign
    
    -
    
    
    -
      
    
    -
      
    
    -
      
    
    42,731
      
    
    -
      
    
    42,731currency translationReclassification of
    
    -
    
    
    -
      
    
    -
      
    
    -
      
    
    88,277
      
    
    -
      
    
    88,277unrealized loss on availablefor sale marketable securitiesNet loss for the nine months
    
    -
    
    
    -
      
    
    -
      
    
    (1,349,774
      )
    
    -
      
    
    -
      
    
    (1,349,774
      )ended March 31,
      2006Balance, March 31, 2006
    
    45,762,784
    
    
    45,763
      
    
    6,163,906
      
    
    (6,288,522
      )
    
    6,873
      
    
    (104,682
      )
    
    (176,662
      )


The accompanying notes are an integral part of these
statements.

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|6                                   
|------------------------------------
|                                    
|GARUDA CAPITAL CORP.                
|Consolidated Statements of Cash Flow
|March 31, 2006 and 2005             
|(Unaudited)                         

|                                                                   |  | Nine months ended
      March 31 |  
|------------------------------------------------------------------ |  | -------------------------------- | -
|                                                                   |  | 2006                             |  
|                                                                   |  |                                  |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                              |  |                                  |  
|Net
      loss                                                     |  | (1,349,774                       | )
|Adjustments to reconcile net loss to net cash:                     |  |                                  |  
|Depreciation and
      amortization                                |  | 35,523                           |  
|Consulting services paid in common stock in prior year             |  | 313,985                          |  
|Common stock issued
      for debt and interest                    |  | 212,266                          |  
|Common stock issued for services                                   |  | 463,660                          |  
|Gain from sale of
      marketable securities                      |  | (6,995                           | )
|Changes in net working capital items:                              |  |                                  |  
|Accounts receivable                                                |  | (3,931                           | )
|Prepaid expenses and deferred charges                              |  | (1,593                           | )
|Inventory                                                          |  | (95,658                          | )
|Accounts payable and accrued expenses                              |  | (9,087                           | )
|Net
      cash used by operating activities                        |  | (441,604                         | )
|                                                                   |  |                                  |  
|CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:                       |  |                                  |  
|Purchase of machinery and equipment                                |  | (16,460                          | )
|Purchase of
      marketable securities                            |  | (63,689                          | )
|Proceeds from sale of marketable securities                        |  | 466,126                          |  
|Net
      cash provided by investing activities                    |  | 385,977                          |  
|                                                                   |  |                                  |  
|CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:                       |  |                                  |  
|Decrease in bank indebtedness                                      |  | (94,754                          | )
|Decrease in bank
      loan                                        |  | (50,000                          | )
|Decrease in capital lease obligations                              |  | (1,917                           | )
|Increase (decrease)
      in note payable  related party          |  | (62,975                          | )
|Common stock issued for cash                                       |  | 317,500                          |  
|Net cash provided by financing activities                          |  | 107,854                          |  
|                                                                   |  |                                  |  
|Effect of exchange
      rate changes on cash and cash equivalents |  | 27,709                           |  
|                                                                   |  |                                  |  
|Net increase in
      cash                                         |  | 79,936                           |  
|                                                                   |  |                                  |  
|Cash, beginning of period                                          |  | -                                |  
|                                                                   |  |                                  |  
|Cash, end of period                                                |  | 79,936                           |  
|                                                                   |  |                                  |  
|SUPPLEMENTAL DISCLOSURE OF FINANCIAL INFORMATION:                  |  |                                  |  
|Cash used for bank loan interest payments                          |  | 22,057                           |  

The accompanying notes are an integral part of these
statements.

---

7

|                                                    
|----------------------------------------------------
|GARUDA CAPITAL CORP.                                
|Condensed Notes to Consolidated Financial Statements
|March 31, 2006 and 2005 (US Dollars)                
|(Unaudited)                                         

NOTE 1  BASIS OF PRESENTATION

The following unaudited interim consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB and Regulation S-B as promulgated by the Securities and Exchange
Commission. Accordingly, these financial statements do not include all of the
disclosures required by generally accepted accounting principles for complete
financial statements. These unaudited interim consolidated financial statements
should be read in conjunction with the Companys audited consolidated financial
statements for the year ended June 30, 2005. In the opinion of management, the
unaudited interim consolidated financial statements furnished herein include all
adjustments, all of which are of a normal recurring nature, necessary for a fair
statement of the results for the interim period presented.

The preparation of financial statements in accordance with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.

Certain amounts from prior periods have been reclassified to
conform to the current period presentation. This reclassification has resulted
in no changes to the Companys accumulated deficit or net loss presented.

Operating results for the nine-month period ended March 31,
2006 are not necessarily indicative of the results that may be expected for the
year ending June 30, 2006.

NOTE 2 - GOING CONCERN UNCERTAINTY

The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business for the foreseeable
future. The Company has incurred material recurring losses from operations. For
the nine months ended March 31, 2006, the Company sustained a net loss of
$1,349,774. At March 31, 2006, the Company had a working capital deficiency of
$363,212 and a shareholders deficiency of $176,662. The Company was in
violation of the covenants set in the bank loan. However, the bank waived any
action until March 31, 2006. (See further discussions in Note 7 of bank
loans.)

These factors raise substantial doubt about the Companys
ability to continue as a going concern. The Companys continuation as a going
concern is contingent upon its ability to obtain additional financing and to
generate revenue and cash flow to meet its obligations on a timely basis. The
Companys management is currently putting sales strategies in place which will,
if successful, mitigate these factors which raise substantial doubt about the
Companys ability to continue as a going concern. There are no assurances that
the Company will be successful in achieving these goals. These financial
statements do not give effect to adjustment to the amount and classifications of
assets and liabilities that might be necessary should the Company be unable to
operate as a going concern.

NOTE 3  RELATED PARTY TRANSACTIONS

Unless otherwise noted, all related party transactions are
incurred in the normal course of business and are recorded at the exchange
amount as agreed upon by the related parties.

The Company is indebted to certain shareholders as follows:

|                                                   |   | March
      31, 2006 |  |   | June
      30, 2005 | 
|-------------------------------------------------- | - | -------------------- |  | - | ------------------- | 
|Shareholder notes bearing interest at 10%,         |   |                      |  |   |                     | 
|no specific due dates, collaterized by             |   |                      |  |   |                     | 
|all personal property of Hagensborg Foods Ltd. and |   |                      |  |   |                     | 
|Garuda Capital Corporation                         | $ | 58,839               |  | $ | 54,670              | 
|Shareholder note bearing interest at 15%,          |   |                      |  |   |                     | 
|no specific due date, unsecured                    |   | 215,000              |  |   | 260,056             | 

---

8

|Shareholder convertible note bearing
      interest at 1% |   |         |  |   |         | 
|--------------------------------------------------------- | - | ------- |  | - | ------- | 
|per month, due June 30, 2006                              |   | -       |  |   | 100,000 | 
|Advances from shareholders, unsecured,
      bearing      |   |         |  |   |         | 
|interest at 10% with no specific due dates                |   | 187,744 |  |   | 109,832 | 
|                                                          | $ | 461,583 |  | $ | 524,558 | 

During the nine months ended March 31, 2006, $112,266 of loans
from related parties have been converted into common stock.

During the nine months ended March 31, 2006, $100,000 of
convertible note from related party was converted to 1,000,000 units of common
stock with a price of $0.10 per unit.

See Note 9 for further discussion of common stock.

At March 31, 2006, the Company had a balance due to a
shareholder, who is also a sales consultant to Hagensborg Foods Ltd., for
services rendered in the amount of $22,849 (June 30, 2005 - $14,118.85)
contained in accounts payable.

For the three months ended March 31, 2006, interest expense on
related party loans was $13,568, compared to $166,359 for the same period in
2005. For the nine months ended March 31, 2006, interest expense on related
party loans totaled $36,309, compared to $172,359 for the nine months ended
March 31, 2005. These interest expenses on related party loans were included in
interest expense.

NOTE 4  INVENTORY

Inventories are stated at the lower of average cost or net
realizable value. The cost of finished goods includes the cost of raw material,
direct and indirect labor, and other indirect manufacturing costs. The Company
has not recorded an allowance for inventory obsolescence in either period.

The components of inventory at March 31, 2006 and June 30, 2005
are as follows:

|                   |   | March 31, 2006 |  |   | June
      30, 2005 | 
|------------------ | - | -------------- |  | - | ------------------- | 
|Packaging supplies | $ | 217,717        |  | $ | 175,553             | 
|Finished goods     |   | 107,248        |  |   | 59,140              | 
|Raw materials      |   | 48,481         |  |   | 37,666              | 
|Other supplies     |   | 165            |  |   | 5,593               | 
|                   | $ | 373,610        |  | $ | 277,952             | 

NOTE 5  BANK INDEBTEDNESS AND BANK LOANS

Demand Loan

The Company has a demand loan facility from a bank in the
amount of $200,000, which is personally guaranteed by a shareholder of the
Company. Outstanding advances at March 31, 2006 of $135,000 bear interest at the
banks base rate plus 2%, payable on demand by the bank. The loan is
collaterized by all present and future personal property of Hagensborg Foods
Ltd.

Overdraft

The Company has a bank overdraft facility in the amount of
$100,000. Outstanding advances bear interest at the banks base rate plus 2% per
annum, payable monthly. At March 31, 2006 and June 30, 2005, the Company had a
net outstanding balance of $nil and $94,754, respectively, on this overdraft
facility. The facility is personally guaranteed by a shareholder of the Company
and collaterized by all present and future personal property of Hagensborg Foods
Ltd.

See Note 2 and 7 for further discussions of bank loans.

---

9

NOTE 6  SEGMENT INFORMATION

The Company has adopted Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an Enterprise and Related
Information, (hereinafter SFAS No. 131). SFAS No. 131 established standards
for reporting information about operating segments in annual financial
statements and requires selected information about operating segments in interim
financial reports issued to stockholders. It also established standards for
related disclosures about products and services and geographic areas. Operating
segments are defined as components of an enterprise about which separate
financial information is available, evaluated regularly by the chief operating
decision makers, or a decision making group, in deciding how to allocate
resources and in assessing performance for the company. These segments are
defined by product line.

The following table reflects certain information for the
Companys segments:

Nine Months Ended March 31, 2006Hagensborg
    
    
    Natural
    
    
    CorporateHagensborg
    
    
    Seafoods
    
    
    Program
    
    
    andFoods Ltd.
    
    
    Ltd.
    
    
    Inc.
    
    
    Eliminations
    
    
    TotalSales
    $
    533,865
    
    $
    -
    
    $
    60,861
    
    $
    -
    
    $
    594,726Gross profit (loss)
    
    89,038
    
    
    -
    
    
    (3,983
    )
    
    -
    
    
    85,055Other income (expense)
    
    (2,026
    )
    
    -
    
    
    -
    
    
    (7,748
    )
    
    (9,774
    )Net loss
    
    (925,598
    )
    
    (88
    )
    
    (28,640
    )
    
    (395,448
    )
    
    (1,349,774
    )


Nine Months Ended March 31, 2005Hagensborg
    
    
    Natural
    
    
    CorporateHagensborg
    
    
    Seafoods
    
    
    Program
    
    
    andFoods Ltd.
    
    
    Ltd.
    
    
    Inc.
    
    
    Eliminations
    
    
    TotalSales
    $
    385,286
    
    $
    186,456
    
    $
    65,435
    
    $
    -
    
    $
    637,177Gross profit (loss)
    
    23,520
    
    
    75,585
    
    
    (17,018
    )
    
    -
    
    
    82,087Other income (expense)
    
    (29,427
    )
    
    -
    
    
    3
    
    
    (141,694
    )
    
    (171,118
    )Net loss
    
    (575,905
    )
    
    72,248
    
    
    (52,463
    )
    
    (304,898
    )
    
    (861,018
    )


Three Months Ended March 31, 2006Hagensborg
    
    
    Natural
    
    
    CorporateHagensborg
    
    
    Seafoods
    
    
    Program
    
    
    andFoods Ltd.
    
    
    Ltd.
    
    
    Inc.
    
    
    Eliminations
    
    
    TotalSales
    $
    217,729
    
    $
    -
    
    $
    24,304
    
    $
    -
    
    $
    242,033Gross profit (loss)
    
    76,980
    
    
    -
    
    
    (933
    )
    
    -
    
    
    76,047Other income (expense)
    
    (7,999
    )
    
    -
    
    
    -
    
    
    15,190
    
    
    7,191Net loss
    
    (286,105
    )
    
    (16
    )
    
    (9,874
    )
    
    (113,828
    )
    
    (409,823
    )


Three Months Ended March 31, 2005Hagensborg
    
    
    Natural
    
    
    CorporateHagensborg
    
    
    Seafoods
    
    
    Program
    
    
    andFoods Ltd.
    
    
    Ltd.
    
    
    Inc.
    
    
    Eliminations
    
    
    TotalSales
    $
    96,106
    
    $
    19,095
    
    $
    19,074
    
    $
    -
    
    $
    134,275Gross profit (loss)
    
    17,476
    
    
    7,228
    
    
    (7,228
    )
    
    -
    
    
    17,476Other income (expense)
    
    (12,671
    )
    
    -
    
    
    3
    
    
    (166,359
    )
    
    (179,027
    )Net loss
    
    (207,838
    )
    
    6,437
    
    
    (16,682
    )
    
    (237,533
    )
    
    (455,616
    )


---

10

Hagensborg
    
    
    Natural
    
    
    CorporateHagensborg
    
    
    Seafoods
    
    
    Program
    
    
    andFoods Ltd.
    
    
    Ltd.
    
    
    Inc.
    
    
    Eliminations
    
    
    TotalSegment assetsAs of March 31, 2006
    
    723,847
    
    
    -
    
    
    36,911
    
    
    9,646
    
    
    770,404As of June 30, 2005
    
    494,300
    
    
    57,399
    
    
    43,472
    
    
    304,493
    
    
    899,664


NOTE 7  COMMITENTS AND CONTINGENCIES

|(a) | Pursuant to the Companys bank loan agreement (discussed
        in Note 5), the Companys ratio of current assets to current liabilities
        cannot exceed 1.2 to 1.0. At March 31, 2006 and June 30, 2005, the Company
        was in violation of this condition. At March 31, 2006 and June 30, 2005,
        the Company was also in violation of a second covenant whereby the Companys
        ratio of debt to tangible net worth may not exceed 3.0 to 1.0. The bank
        waived any action until March 31, 2006 and has not taken any action to
        date.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(b) | During the year ended June 30, 2005, Garuda Gold Corporation,
        a wholly owned subsidiary, entered into a Letter of Intent to earn the
        exclusive right and option to acquire a 65% right and interest in and
        to the Mining Rights to mine rock vein system in an area in Prestia, Ghana.                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | In order to have the option exercised, Garuda Gold Corporation
        must, on or before May 17, 2006, incur direct or indirect expenses totaling
        $300,000 on a program of work in respect of this particular mining right.                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | No expenses have been incurred on this mining right
        to date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | On April 4, 2006, the Company announced that its subsidiary,
        Garuda Gold Corporation had elected not to exercise its option to joint
        venture the mining prospects in Ghana, as detailed in Note 11.                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(c) | During the year ended June 30, 2005, Garuda Minerals
        Inc., a wholly owned subsidiary, entered into a Letter of Intent to earn
        the exclusive right and option to acquire 65% right, title and interest
        in and to an exploration license on an area of approximately 200 km2located near the town of Ho in the Volta region of Ghana.                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | In order to have the option exercised, Garuda Minerals
        Inc. must, on or before May 17, 2006, incur direct or indirect expenses
        totaling $300,000 on a program of work in respect of this particular property.                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | No expenses have been incurred on this property to date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | On April 4, 2006, the Company announced that its subsidiary,
        Garuda Minerals Inc. had elected not to exercise its option to joint venture
        the mining prospects in Ghana, as detailed in Note 11.                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(d) | On April 12, 2006, Leone International Marketing Inc.
        (the "Claimant") filed a claim in the Supreme Court of British against
        the Companys wholly owned subsidiary, Hagensborg Foods Ltd. claiming
        that Hagensborgs use of the name Leone to sell its chocolates
        infringes its trademark rights, causing damages. The Claimant is seeking:                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | An injunction restraining Hagensborg from using the name Leone
          and the stylized lion logo to sell its products and services;Damages for trademark infringement;An accounting of Hagensborgs profits; andCosts and interest.                                                                                                                                                                                                                                                                                                                                       

Hagensborg intends to defend the claim.
The Company believes it has a strong chance of success of defending the claim.
No court date has yet been set and the damage amount is undeterminable at this
point of time.

---

11

NOTE 8  STOCK OPTIONS

During nine months ended March 31, 2006, the Company granted
3,500,000 stock options at the exercise price of $0.10 per share to employees
and consultants. At March 31, 2006, 4,500,000 stock options were available for
future grant under the 2005 Stock Option Plan and 105,000 stock options were
available for grant (subject to vesting requirements) pursuant to an employment
agreement.

Options outstandingShares
    Number
    Price
    Weighted
    Weightedavailable
    of
    per
    average exercise
    averagefor grant
    shares
    share
    price
    remaining#
    #
    $
    $
    lifeBalance June 30, 2004
    1,600,000
    400,000
    0.15
    0.15
    3.7 yearsOptions forfeited
    
    (400,000)
    0.15
    0.15
    2.7 yearsOptions vested and granted
    
    40,000
    0.10
    0.10
    4.5 yearsOptions exercised
    
    -
    -
    -Balance June 30, 2005
    8,210,000
    40,000
    0.10
    0.10
    4.5 yearsOptions vested and granted
    
    3,605,000
    0.10
    0.10
    1.92 yearsOptions exercised
    
    -
    -
    -Balance March 31, 2006
    4,605,000
    3,645,000
    0.10
    0.10
    1.82 years


The Company applies APB Opinion No. 25 in accounting for
options and, accordingly, recognized no compensation cost for its stock options
vested and granted in the periods ended March 31, 2006 and 2005. The following
reflects the Companys pro forma net loss and net loss per share as if the fair
value-based method using the Black-Scholes option pricing model had been applied
in measuring compensation expense.

|                                                      |  | Nine months ended March 31 |  
|----------------------------------------------------- |  | -------------------------- | -
|                                                      |  | 2006                       |  
|                                                      |  | $                          |  
|Net loss as reported                                  |  | (1,345,809                 | )
|Compensation expense determined under the             |  |                            |  
|fair value method                                     |  | (173,502                   | )
|Pro forma net loss                                    |  | (1,519,311                 | )
|                                                      |  |                            |  
|Pro forma net loss
      per share, basic and diluted |  | (0.04                      | )

The following assumptions were made to measure compensation
expense under the Black-Scholes option pricing model:

Risk-free interest rate: 4% 
  Expected life: 1.82 years 
  Expected volatility: 108.63% 
  Dividend yeilds: nil

The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options, which have no vesting
restrictions and are fully transferable. The weighted average fair value of
stock options under employee stock option plans granted during the period was
$173,502 [2005  $nil].

In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Companys employee stock options have characteristics significantly
different from those of traded options and because changes in the subjective
assumptions can materially affect the fair value estimate, in managements
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

NOTE 9  COMMON STOCK

[a] Authorized

The Company is authorized to issue up to 100,000,000 shares of
common stock, par value $0.001 per share. The Company is also authorized to
issue up to 10,000,000 shares of preferred stock, par value $0.01 per share.

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12

[b] Issued and outstanding

On August 11, 2005, the shareholders convertible note was
converted to 1,000,000 units with a price of $0.10 per unit. Each unit is
comprised of one share of common stock in the Company, and one warrant to
acquire an additional share of the Company at $0.20 for every two units issued
upon conversion.

On November 30, 2005, the Company issued 609,164 common stock
shares with a price of $0.10 per share to one of the shareholders for the
consideration of interest owed to the shareholder to September 30, 2005.

On January 6, 2006, the Company issued 790,000 common shares
with a price of $0.065 per share to repay $51,350 of one shareholders loan.

During nine months ended March 31, 2006, the Company issued
4,025,000 common stock shares and 3,262,500 warrants pursuant to private
placements for cash proceeds of $317,500.

During nine months ended March 31, 2006, the Company issued
4,683,000 common stock shares for the total amount of $463,660 for the services
rendered to the Company.

[c] Warrants

As at March 31, 2006, the Company had issued 14,117,522
warrants that had not been exercised. Each warrant allows the purchase of one
share of common stock at an exercise price of $0.20 per share, exercisable for
two years from issuance. The outstanding warrants expire as follows:

|No. of warrants | Expiry date     
|--------------- | ----------------
|500,000         | June 2006       
|8,210,022       | March 2007      
|1,750,000       | June 2007       
|87,500          | August 2007     
|895,000         | January 2008    
|2,675,000       | March
      2008
|14,117,522      |                 

Any value associated with the outstanding warrants was included
in the original common stock price and included in the additional paid-in
capital.

NOTE 10  CONTRA EQUITY

During the nine months ended March 31, 2006, the Company issued
common stock for services, some of which services will be rendered to the
Company subsequent to the period end. The value of the services to be rendered
subsequent to March 31, 2006 totaled $104,682 [June 30, 2005 - $418,667].

NOTE 11  SUBSEQUENT EVENT

On April 4, 2006, the Company announced that its subsidiaries,
Garuda Minerals Inc. and Garuda Gold Corporation had elected not to exercise
their options to joint venture two mining prospects in Ghana. The company's
wholly owned subsidiaries had entered into letters of intent with Newhaven
Resources Ltd, which will be allowed to expire on May 18, 2006.

Though no agreement has been entered into at this time, the
Company is reviewing possible acquisitions in the natural resource sector for
its mining subsidiaries.

ITEM
2.                  
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION / PLAN OF OPERATIONS

Forward Looking Statements

This report on Form 10-QSB contains certain forward-looking
statements within the meaning of Section 21e of the Securities Exchange Act of
1934, as other applicable securities laws. All statements other than statements
of

---

13

historical fact are forward-looking statements for purposes
of these provisions, including any projections of earnings, revenues, or other
financial items; any statements of the plans, strategies, and objectives of
management for future operation; any statements concerning proposed new
products, services, or developments; any statements regarding future economic
conditions or performance; statements of belief; and any statement of
assumptions underlying any of the foregoing. Such forward-looking statements are
subject to inherent risks and uncertainties, and actual results could differ
materially from those anticipated by the forward-looking statements.

Overview

We have seven wholly owned subsidiaries, Hagensborg Foods Ltd.,
Hagensborg Seafoods Ltd., Natural Program Inc., Natural Program Ltd., Garuda
Gold Corporation, Garuda Minerals Inc., and Garuda Ventures Canada Inc. Garuda
Gold and Garuda Minerals are currently seeking mineral exploration
opportunities. Garuda Ventures is active only in holding investments in
securities.

Through our subsidiary Hagensborg Foods, we are in the business
of manufacturing and marketing gourmet chocolates and other gourmet foods.
Hagensborg has recently repackaged its chocolate product line using a
fairyland theme as its marketing and promotional concept. We market our
gourmet chocolate products through North America and serve high-end departmental
and specialty stores both in Canada and the US.

Through our subsidiary Natural Program Inc. we operate a
Chinese herbal pharmacy to dispense high quality Chinese herbs to practitioners
and market a wholesale line of herbal remedies under the Natural Program name.

Results of Operations for the Nine Months ended March 31,
2006 Compared to nine months ended March 31, 2005  Garuda Capital Corp. on a
Consolidated Basis

During nine months ended March 31, 2006, we realized total
revenue of $594,726 compared to $637,177 in revenue for the nine months ended
March 31, 2005 and we incurred a net loss for the nine months ended March 31,
2006 of $1,349,774, compared to a net loss of $861,018 for the same period in
2005. The decrease in revenues and resultant increase in net loss for 2006 was
as a result of decreased sales for our Hagensborg operations during the nine
months ended March 31, 2006 and increase in operation expenses. The decreased
sales were mainly due to the weak marketing strategy in Hagensborg Foods Ltd. We
are planning a more aggressive strategy in marketing our Hagensborg products.
Gross profit for the nine months ended March 31, 2006 was $85,055 compared to
$82,087 for the same period in 2005.

Our general and administrative costs for the nine months ended
March 31, 2006 were $659,063 compared to $505,332 for the nine months ended
March 31, 2005. These costs consisted primarily of personnel costs, consulting
fees, and general office costs. The increase in general administrative cost
between the two periods is largely the result of increased consulting fees for
Garudas Ghana mining projects.

Our legal and accounting costs for the nine months ended March
31, 2006 were $140,776, compared to $61,699 for the nine months ended March 31,
2005. This increase is due to additional legal services provided and an
increased cost in accounting services.

Our premise leases were $127,261 and $132,979 for the nine
months ended March 31, 2006 and March 31, 2005, respectively. The difference
between the two periods is because of the exchange rate.

Our advertising and promotion costs for the nine months ended
March 31, 2006 were $484,210 and $59,208 for the nine months ended March 31,
2005. This increase in advertising and promotion costs between the two periods
is largely the result of our marketing research and product redesign for
Hagensborg.

We anticipate that we will incur increased sales and marketing
costs, including hiring sales personnel, broker fees and tradeshow attendance
fees, as we implement our business growth strategies for both Hagensborg and
Natural Program.

Liquidity and Capital Resources for the nine months ended
March 31, 2006, Compared to June 30, 2005 on Consolidated Basis.

We believe that sales from Hagensborg and Natural Program will
not provide sufficient capital resources to sustain our operations and fund
product development throughout the fiscal year ended June 30, 2006. Management
has been able, thus far, to finance the operations through a series of equity
and debt financings. While we have received a

---

14

going concern opinion from our auditors, management plans to
continue to seek other sources of financing on favorable terms; however, there
are no assurances that any such financing can be obtained on favorable terms, if
at all. Management believes it has implemented significant cost reductions and
expects to keep its operating costs to a minimum until cash is available through
financing or operating activities. There is no assurance that the Company will
be successful in achieving these goals. We continually evaluate opportunities to
sell additional equity or debt securities, or obtain credit facilities from
lenders to strengthen our financial position. The sale of additional equity or
convertible debt securities could result in additional dilution to our
stockholders.

We have financed Hagensborgs operations partly through
revenues from operations and bank credit facilities, and partly through the
issuance of equity shares, warrants and convertible debentures. Hagensborg has
not been able to reach the break-even point for the last four fiscal years and
has had to rely on the Company for capital resources. We believe that sales from
Hagensborgs new product lines will add new capital resources over the coming
year, but may not be sufficient to sustain operations and fund new product
launches throughout the fiscal year ended June 30, 2006.

We have financed Natural Programs operations partly through
revenues and bank credit facilities, and partly through the issuance of equity
shares. Natural Program has not yet able to reach the break-even point and has
had rely on the Company for capital resources. We believe that additional sales
resulting from Natural Programs increased marketing efforts will add new
capital resources, but may not be sufficient to sustain operations and fund new
product launches throughout the fiscal year ended June 30, 2006.

During the nine months ended March 31, 2006, our current assets
decreased $106,203 from $679,831 in June 2005 to $573,628 in March 2006. Our
inventory increased $95,658 and we sold all of the $291,315 marketable
securities held at June 30, 2005.

Non-current assets for the nine months ended March 31, 2006
were $12,747, net of accumulated depreciation, compared to non-current assets of
$15,242 in June 2005.

Total liabilities decreased from $1,164,971 as on June 30, 2005
to $947,066 as of March 31, 2006. This amount includes $932,846 in current
liabilities, of which $135,000 is a bank loan. The Company was in violation of
the covenants set in the bank loan. However, the bank waived any action until
March 31, 2006. We are planning a more aggressive strategy in marketing our
Hagensborg products to improve our financial position to meet the covenants.

ITEM
3.                  
CONTROL AND PROCEDURES

(a) Evaluation of disclosure controls and procedures

Our Chief Executive Officer and our Chief Financial Officer
evaluated our disclosure controls and procedures (as defined in Rule 13a-14
(c) of the Securities Exchange Act of 1934 (the Exchange Act) as of a date
within 90 days before the filing date of this report and have concluded that as
of the evaluation date, our disclosure controls and procedures are effective to
ensure that information we are required to disclose in reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commissions
rules and forms.

(b) Changes in internal controls

Subsequent to the date of their evaluation, there were no
significant changes in our internal controls over financial reporting or in
other factors that could significantly affect these controls. There were no
significant deficiencies or material weaknesses in our internal controls so no
corrective actions were taken.

---

15

**PART II  OTHER INFORMATION**

**ITEM 1.                  
  LEGAL PROCEEDINGS:**

On April 12, 2006, Leone International Marketing Inc. (the
"Claimant") filed a claim in the Supreme Court of British against the Companys
wholly owned subsidiary, Hagensborg Foods Ltd. claiming that Hagensborgs use of
the name Leone to sell its chocolates infringes its trademark rights, causing
damages. The Claimant is seeking:

- An injunction restraining Hagensborg from using the name Leone and the
  stylized lion logo to sell its products and services;
- Damages for trademark infringement;
- An accounting of Hagensborgs profits; and
- Costs and interest.

Hagensborg intends to defend the claim. The Company believes it
has a strong chance of success of defending the claim. No court date has yet
been set and the damage amount is undeterminable at this point of time.

**ITEM 2.                  
  UNREGISTERED SALES OF EQUITY SECURITIES:**

On January 4, 2006, the Company entered into private placements
for the sale of 1,790,000 units at a price of $0.065 per unit (the "Units").
790,000 of the Units were issued to C. Robin Relph, the President of the
Company, for payment of outstanding debt in the amount of $51,350. 1,000,000 of
the Units were issued to Fadelle Ventures Ltd. for proceeds of $65,000. Each
unit consisted of one common share in the Company and one half warrant, with
each warrant carrying the right to purchase one share in the Company at an
exercise price of $0.10 per share exercisable for a period of two years from the
date of issuance.

On February 16, 2006, the Company issued 100,000 unregistered
shares at a deemed price of $0.10 per share to compensate an individual for
$10,000 worth of services rendered to the Company.

On March 29, 2006, the Company entered into private placements
for the sale of 2,500,000 units at a price of $0.08 per unit (the "Units") for
total proceeds of $200,000. Each unit consisted of one common share in the
Company and one warrant to purchase one share in the Company at an exercise
price of $0.20 per share exercisable for a period of two years from the date of
issuance.

**ITEM 3.                  
  DEFAULTS UPON SENIOR SECURITIES:**

None

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

None

**ITEM 5.                  
  OTHER INFORMATION:**

None

**ITEM 6.                  
  EXHIBITS AND REPORTS ON FORM 8-K**

---

16

Exhibits

|10.1 | Design Agreement between Hagensborg and Turner Duckworth
      dated March 16, 2005 (incorporated by reference as exhibit 10.1 to our
      Quarterly Report on Form 10-QSB filed on May 12, 2005)
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                   
|21   | Subsidiaries of the
Registrant                                                                                                                                                                    

| | Name                        | Place of Incorporation
| | --------------------------- | ----------------------
| |                             |                       
| | Hagensborg Foods Ltd.       | British Columbia      
| | Hagensborg Seafoods Ltd.    | British Columbia      
| | Natural Program Inc.        | Nevada                
| | Natural Program Ltd.        | British Columbia      
| | Garuda Ventures Canada Inc. | British Columbia      
| | Garuda Gold Corporation     | British Columbia      
| | Garuda Minerals Inc.        | Nevada                

|31.1 | Rule 13a-14(a) / 15d-14(a)
        Certification of CEO and CFO
|---- | ---------------------------------------------------------------
|     |                                                                
|32.1 | Section 906 Certification
        of CEO and CFO               

---

17

**SIGNATURES**

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

Date: May 15, 2006

GARUDA CAPITAL CORP. (Issuer)

By: /s/ C. Robin Relph

C. Robin Relph, President, Chief Executive Officer, Chief
Financial Officer, Principal Financial and Accounting Officer

---