**U.S.
      Securities and Exchange Commission**


**Washington,
      D.C. 20549**









**FORM
      10-QSB**









x
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934
                for the quarterly period ended August 31,
                2005**





o
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934
                for the transition period from _______ to
                _______**











**CAPITAL
      RESOURCE FUNDING, INC.**


**(Exact
      name of small business issuer as specified in its charter)**




**North
                Carolina**
            **54-2142880****(State
                or other jurisdiction of**
            **(IRS
                Employer identification No.)****incorporation
                or organization)**





**2212
      Lantern Way Circle, Cornelius, North Carolina 28031**


**(Address
      of principal executive offices)**





**(704)
      564-1676**


**(Issuer's
      telephone number, including area code)**







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





Number
      of
      shares of common stock outstanding as of October 19, 2005: 10,790,000





Number
      of
      shares of preferred stock outstanding as of October 19, 2005: -0-
















**INDEX
                TO FORM 10-QSB**Page
                No.PART
                IItem
                1. Financial
                StatementsCondensed
                  Consolidated Balance Sheet
            3-
                As of August 31, 2005Condensed
                  Consolidated Statements of
                  Operations
            4-
                Three-Month Period Ended August 31, 2005 and
                2004Condensed
                  Consolidated Statements of Cash
                  Flows
            5-
                Three-Month Period Ended August 31, 2005 and 20046Notes
                to Financial StatementsItem
                2. Management’s
                Discussion and Analysis of Financial Condition And
                Results of Operations
            11Item
                3. Controls
                and Procedures
            15PART
                IIItem
                1. Legal
                Proceedings
            17Item
                2. Changes
                in Securities
            17Item
                3. Defaults
                Upon Senior Securities
            17Item
                4. Submission
                of Matters to a Vote of Security
                Holders
            17Item
                5. Other
                Information
            17Item
                6. Exhibits
            17




2
 *Index*




ITEM
      1.




**Capital
                  Resource Funding, Inc.****(FKA
                  Capital Business Funding, Inc.)****(A
                  Development Stage Company)**BALANCE
                  SHEETAS
                  OF AUGUST 31, 2005**ASSETS**CURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              1,624TOTAL
                  CURRENT ASSETS
              
              
              1,624TOTAL
                  ASSETS
              
              $
              1,624**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**CURRENT
                  LIABILITIESAccrued
                  interest
              
              $
              583Notes
                  payable
              
              
              59,43560,018STOCKHOLDERS'
                  DEFICITConvertible
                  preferred stock ($.00000005 par value, 100,000,000shares
                  authorized; none issued and outstanding at August 31,
                  2005)
              
              
              -Common
                  stock ($.00000005 par value, 100,000,000 shares
                  authorized;10,790,000
                  issued and outstanding at August 31, 2005)
              
              
              1Additional
                  paid in capital
              
              
              202,331Deficit
                  accumulated during the development stage
              
              
              (260,726
              )TOTAL
                  STOCKHOLDERS' DEFICIT
              
              
              (58,394
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              1,624


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




3
 *Index*




**Capital
                  Resource Funding, Inc.****(FKA
                  Capital Business Funding, Inc.)****(A
                  Development Stage Company)**STATEMENTS
                  OF OPERATIONSFOR
                  THE QUARTERS ENDED AUGUST 31, 2005 AND 20043
                  Months Ended 8/31/05
              
              3
                  Months Ended 8/31/04
              
              Cumulative
                  Totals Since InceptionREVENUES:Commissions
                  earned
              
              $
              542
              
              $
              4,040
              
              $
              12,733TOTAL
                  REVENUE
              
              $
              542
              
              $
              4,040
              
              $
              12,733EXPENSES:Operating
                  expensesSelling,
                  general, and administrative
              
              $
              587
              
              $
              10,819
              
              $
              35,287Consulting
                  fees
              
              
              -
              
              
              -
              
              
              236,335TOTAL
                  EXPENSES
              
              
              587
              
              
              10,819
              
              
              271,622OPERATING
                  (LOSS)
              
              
              (45
              )
              
              (6,779
              )
              
              (258,889
              )Interest
                  Expense
              
              
              371
              
              
              89
              
              
              1,837371
              
              
              89
              
              
              1,837NET
                  (LOSS)
              
              $
              (416
              )
              $
              (6,868
              )
              $
              (260,726
              )Net
                  (loss) per share-basic
                  and fully diluted
              
              $
              *
              
              $
              *
              
              $
              *Weighted
                  average shares outstanding
              
              
              10,790,000
              
              
              10,790,000
              
              
              10,790,000*
                  less than $.01 per share.




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




4
 *Index*


**Capital
                  Resources Funding, Inc.****(FKA
                  Capital Business Funding, Inc.)****(A
                  Development Stage Company)**STATEMENTS
                  OF CASH FLOWSFOR
                  THE QUARTERDS ENDED AUGUST 31, 2005 AND 20043
                  Months Ended 8/31/05
              
              3
                  Months Ended 8/31/04
              
              Cumulative
                  Total Since InceptionCASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  (loss)
              
              $
              (416
              )
              $
              (6,868
              )
              $
              (260,726
              )Adjustments
                  to reconcile net (loss) to net cash used in operations:Non-cash
                  itemsConsulting
                  Fees
              
              
              -
              
              
              -
              
              
              236,335Other
              
              
              -
              
              
              -
              
              
              790Accrued
                  Interest
              
              
              -
              
              
              -
              
              
              944NET
                  CASH (USED IN) OPERATING ACTIVITIES
              
              
              (416
              )
              
              (6,868
              )
              
              (260,726
              )NET
                  (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              (416
              )
              
              (6,868
              )
              
              (260,726
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Issuance
                  of common stock
              
              
              -
              
              
              100
              
              
              100Proceeds
                  from notes payable to bank
              
              
              -
              
              
              -
              
              
              20,239Contributions
                  of capital
              
              
              -
              
              
              3,942
              
              
              3,942NET
                  CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              -
              
              
              4,042
              
              
              24,281NET
                  (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              (416
              )
              
              (2,826
              )
              
              (236,445
              )CASH
                  AND CASH EQUIVALENTS:BEGINNING
                  OF THE PERIOD
              
              
              2,040
              
              
              4,243
              
              
              2,040END
                  OF THE PERIOD
              
              
              1,624
              
              
              1,417
              
              
              1,624




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




5
 *Index*




**CAPITAL
      RESOURCE FUNDING, INC**


**(FKA
      CAPITAL BUSINESS FUNDING, INC.)**


**(A
      DEVELOPMENT STAGE COMPANY)**


NOTES
      TO
      FINANCIAL STATEMENTS


FOR
      THE
      QUARTER ENDED AUGUST 31, 2005







NOTE
      A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Business
      Activity —Capital
      Resource Funding, Inc. (FKA Capital Business Funding, Inc.) (“The Company”) was
      organized under the laws of the State of North Carolina on February 2, 2004
      as a
      subchapter S-Corporation. The Company is in the business of providing
      consultative services to small to mid sized businesses in need of financing
      sources ranging from SBA loans, commercial mortgages, factoring and asset based
      loans. The financial statements set forth above reflect all of the costs of
      doing business. The Company’s fiscal year-end is May 31, as
      elected.





Cash
      and Cash Equivalents —For
      purposes of the Statement of Cash Flows, the Company considers liquid
      investments with an original maturity of three months or less to be cash
      equivalents.





Management’s
      Use of Estimates —The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America 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
      financial statements and the reported amounts of revenues and expenses during
      the reporting period. Actual results could differ from those
      estimates.





Revenue
      Recognition —The
      Company’s revenue is derived primarily from brokering income which ranges from
      one time origination fees to on-going monthly commissions paid for the life
      of
      the financing. For purposes of one-time origination fees, revenue is recognized
      as earned when each loan deal is finalized. For purposes of on-going monthly
      commissions paid for the life of the financing, revenue is recognized as earned
      based on the total of the gross monthly financing fees generated.





Comprehensive
      Income (Loss) —The
      Company adopted Financial Accounting Standards Board Statement of Financial
      Accounting Standards (SFAS) No. 130, *“Reporting
      Comprehensive Income”* ,
      which
      establishes standards for the reporting and display of comprehensive income
      and
      its components in the financial statements. There were no items of comprehensive
      income (loss) applicable to the Company during the period covered in the
      financial statements.





Advertising
      Costs —Advertising
      costs are expensed as incurred. The advertising expense totaled $-0- for the
      three months ended August 31, 2005.





6
 *Index*


**CAPITAL
      RESOURCE FUNDING, INC**


**(FKA
      CAPITAL BUSINESS FUNDING, INC.)**


**(A
      DEVELOPMENT STAGE COMPANY)**


NOTES
      TO
      FINANCIAL STATEMENTS


FOR
      THE
      QUARTER ENDED AUGUST 31, 2005







NOTE
      A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)





Net
      Income per Common Share —Statement
      of Financial Accounting Standard (SFAS) No. 128 requires dual presentation
      of
      basic and diluted earnings per share (EPS) with a reconciliation of the
      numerator and denominator of the EPS computations. Basic earnings per share
      amounts are based on the weighted average shares of common stock outstanding.
      If
      applicable, diluted earnings per share would assume the conversion, exercise
      or
      issuance of all potential common stock instruments such as options, warrants
      and
      convertible securities, unless the effect is to reduce a loss or increase
      earnings per share. Accordingly, this presentation has been adopted for the
      period presented. There were no adjustments required to net income for the
      period presented in the computation of diluted earnings per share.





Income
      Taxes —The
      S
      Corporation is not a taxpaying entity for federal and state income tax purposes
      and thus no provisions for income taxes has been recognized. Income of the
      S
      Corporation is faxed to the shareholders in their respective
      returns.





Fair
      Value of Financial Instruments —The
      carrying amounts reported in the balance sheet for cash, accounts receivable
      and
      payable approximate fair value based on the short-term maturity of these
      instruments.





Impairment
      of Long-Lived Assets —The
      Company evaluates the recoverability of its fixed assets and other assets in
      accordance with Statement of Financial Accounting Standards No. 144,
“ *Accounting
      for the Impairment or Disposal of Long-Lived Assets” (“SFAS
      144’).* SFAS 144
      requires recognition of impairment of long-lived assets in the event the net
      book value of such assets exceeds its expected cash flows, it is considered
      to
      be impaired and is written down to fair value, which is determined based on
      either discounted future cash flows or appraised values. The Company adopted
      the
      statement on inception. No impairments of these types of assets were recognized
      during the three months ended August 31, 2005 based upon a management review
      of
      such assets.





Recent
      Accounting Pronouncements —In
      June
      2001, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards (SFAS) No. 143, *“Accounting
      for Asset Retirement Obligations”* which
      addresses the accounting and reporting for obligations associated with the
      retirement of tangible long-lived assets and the associated retirement costs.
      SFAS No. 143 requires that the fair value of a liability for an asset retirement
      obligation be recognized in the period in which it is incurred if a reasonable
      estimate of fair value cannot be made. SFAS No. 143 is effective for financial
      statements issued for fiscal years beginning after June 15, 2002. The Company
      does not expect SFAS No. 143 to have a material effect on its financial
      condition or cash flows.





In
      August
      2001, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards (SFAS) No. 144, *“Accounting
      for the Impairment or Disposal of Long-Lived Assets”.* SFAS No.
      144 generally establishes a standard framework to measure the impairment of
      long-lived assets and expands the Accounting Principles Board (“APB”) 30,
“Reporting the Results of Operations—Reporting the Effects of Disposal of a
      Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
      Events and Transactions” to include a component of the entity (rather than a
      segment of the business). SFAS No.144 is effective for financial statements
      issued for fiscal years beginning after December 15, 2001. The Company does
      not
      expect SFAS No. 144 to have a material effect on its financial condition and
      cash flows.





7
 *Index*


**CAPITAL
      RESOURCE FUNDING, INC**


**(FKA
      CAPITAL BUSINESS FUNDING, INC.)**


**(A
      DEVELOPMENT STAGE COMPANY)**


NOTES
      TO
      FINANCIAL STATEMENTS


FOR
      THE
      QUARTER ENDED AUGUST 31, 2005







NOTE
      A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)








Recent
      Accounting Pronouncements (CONT.)





In
      April
      of 2002, Statement of Financial Accounting Standards (SFAS) No. 145 was issued
      which rescinded SFAS Statements 4, 44, and 64, amended No. 13 and contained
      technical corrections. As a result of SFAS No. 145, gains and losses from
      extinguishments of debt will be classified as extraordinary items only if they
      meet the criteria in APB Opinion No. 30, that they are unusual and infrequent
      and not part of an entity’s recurring operations. The Company does not expect
      SFAS No. 145 to have a material effect on its financial condition or cash flows.





In
      July
      of 2002, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standard (SFAS) No. 146, which addresses significant issues regarding
      the recognition, measurement, and reporting of costs that are associated with
      exit and disposal activities, including restructuring activities that are
      currently accounted for pursuant to the guidance that the Emerging Issues Task
      Force (EITF) has set forth in EITF Issue No. 94-3, *“Liability
      Recognition for Certain Employee Termination Benefits and Other Costs to Exit
      an
      Activity (Including Certain Costs Incurred in a Restructuring)”* .
      SFAS
      No. 146 revises the accounting for certain lease termination costs and employee
      termination benefits, which are generally recognized in connection with
      restructuring charges. The provisions of SFAS 146 are effective for exit or
      disposal activities that are initiated after December 31, 2002. The adoption
      of
      this standard will not have an impact on the Company’s financial
      statements.





In
      November 2002, the Financial Accounting Standards Board issued Interpretation
      No. 45 (FIN 45), “ *Guarantor’s
      Accounting and Disclosure Requirements for Guarantee, Including Indirect
      Guarantees or Indebtedness of Others”* ,
      which
      addresses the disclosures to be made by a guarantor in its interim and annual
      financial statements about its obligations under guarantees. FIN 45 also
      requires the recognition of a liability by a guarantor at the inception of
      certain guarantees that are entered into or modified after December 31,
      2002.





In
      December 2002, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standard (SFAS) No. 148, *“Accounting
      for Stock-Based Compensation Transition and Disclosure”* —an
      amendment to SFAS No. 123 (SFAS No. 148), which provides alternative methods
      of
      transition for companies voluntarily planning on implementing the fair value
      recognition provisions of SFAS No. 123. SFAS No. 148 also revises the disclosure
      provisions of SFAS No. 123 to require more prominent disclosure of the method
      of
      accounting for stock-based compensation, and requiring disclosure of pro forma
      net income and earnings per share as if the fair value recognition provisions
      of
      SFAS No. 123 had been applied from the original effective date of SFAS No.
      123.


8
 *Index*


**CAPITAL
      RESOURCE FUNDING, INC**


**(FKA
      CAPITAL BUSINESS FUNDING, INC.)**


**(A
      DEVELOPMENT STAGE COMPANY)**


NOTES
      TO
      FINANCIAL STATEMENTS


FOR
      THE
      QUARTER ENDED AUGUST 31, 2005







NOTE
      A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)





Recent
      Accounting Pronouncements (CONT.)





In
      January 2003, Financial Accounting Standards Board issued FIN No. 46, *“Consolidation
      of Variable Interest Entities”* .
      FIN No.
      46 requires the consolidation of entities that cannot finance their activities
      without the support of other parties and that lack certain characteristics
      of a
      controlling interest, such as the ability to make decisions about the entity’s
      activities via voting rights or similar rights. The entity that consolidates
      the
      variable interest entity is the primary beneficiary of the entity’s activities.
      FIN No. 46 applies immediately to variable interest entities created after
      January 31, 2003, and must be applied in the first period beginning after June
      15, 2003 for entities in which an enterprise holds a variable interest entity
      that it acquired before February 1, 2003.





In
      January 2003, the EITF released Issue No. 00-21, (EITF 00-21), *“Revenue
      Arrangements with Multiple Deliveries”* ,
      which
      addressed certain aspects of the accounting by a vendor for arrangement under
      which it will perform multiple revenue-generating activities. Specifically,
      EITF
      00-21 addresses whether an arrangement contains more than one unit of accounting
      and the measurement and allocation to the separate units of accounting in the
      arrangement. EITF 00-21 is effective for revenue arrangements entered into
      in
      fiscal periods beginning after June 15, 2003. The adoption of this standard
      will
      not have an impact on the Company’s financial statements.





In
      May
      2003, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards (SFAS) No. 149, *“Amendment
      of Statement 133 on Derivative Instruments and Hedging
      Activities.”* SFAS No.
      149 amends and clarifies accounting for derivative instruments, including
      certain derivative instruments embedded in other contracts, and for hedging
      activities under SFAS No. 133. SFAS No. 149 is effective for contracts entered
      into or modified after June 30, 2003 and for hedging relationships designated
      after June 30, 2003. The Company does not believe that there will be any impact
      on its financial statements.





In
      May
      2003, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards (SFAS) No. 150, *“Accounting
      for Certain Financial Instruments with Characteristics of both Liabilities
      and
      Equity.”* SFAS No.
      150 establishes standards for how companies classify and measure certain
      financial with characteristics of both liabilities and equity. It requires
      companies to classify a financial instrument that is within its scope as a
      liability (or an asset in some characteristics). SFAS No. 150 is effective
      for
      financial instruments entered into or modified after May 31, 2003. The standard
      will not impact the Company’s financial statements.


9
 *Index*


**CAPITAL
      RESOURCE FUNDING, INC**


**(FKA
      CAPITAL BUSINESS FUNDING, INC.)**


**(A
      DEVELOPMENT STAGE COMPANY)**


NOTES
      TO
      FINANCIAL STATEMENTS


FOR
      THE
      QUARTER ENDED AUGUST 31, 2005







NOTE
      B—SUPPLEMENTAL CASH FLOW INFORMATION





Supplemental
      disclosures of cash flow information for the three months ended August 31,
      2005
      is summarized as follows:





Cash
      paid
      during the three months ended August 31, 2005 for interest and income
      taxes:




Income
      Taxes    $---


Interest     $371





NOTE
      C—SEGMENT REPORTING





In
      June
      1997, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 131, *“Disclosures
      about Segments of an Enterprise and Related Information.”* This
      statement requires companies to report information about operating segments
      in
      interim and annual financial statements. It also requires segment disclosures
      about products and services, geographic areas and major customers. The Company
      determined that it did not have any separately reportable operating segments
      as
      of August 31, 2005.





NOTE
      D—COMMITMENTS





The
      Company is provided with its office facilities from its officers and majority
      shareholder, on a month-to-month basis for $500 per month.





NOTE E
      - GOING
      CONCERN





The
      Company has limited revenue of $542 and suffered a net loss from operations
      subsequent for the three months ended August 31, 2005 and it incurred a note
      payable in the amount of $59,435 as of August 31, 2005. With $1,624 in cash
      at
      August 31, 2005, the net working capital deficit of $58,394 as of August 31,
      2005. These factors raise substantial doubt about the Company’s ability to
      continue as a going concern.





The
      pertinent conditions and events giving rise to the assessment of substantial
      doubt about our ability to continue as a going concern for a period of time
      are
      addressed in the previous paragraph, where we describe two conditions that
      substantiate our going concern opinion: net loss and the incurrence of a note
      payable subsequent to year-end. The possible effects of such conditions are
      a
      lack of positive cash flow and the inability to repay the note as it comes
      due.
      These conditions are significant and there are no mitigating factors. There
      could be a possible discontinuance of operations in the event that our plan
      does
      not work.





Management’s
      plans in regard to this matter are to raise equity capital and seek strategic
      relationships and alliances in order to increase sales in an effort to generate
      positive cash flow and be able to repay the note as it comes due. Additionally,
      the Company will have to rely upon equity infusions from investors in order
      to
      improve liquidity and sustain operations. The financial statements do not
      include any adjustments that might result from the outcome of this
      uncertainty.




We
      deem
      all recorded assets to be recoverable and classification of liabilities to
      be
      proper.




10
 *Index*





**CAPITAL
      RESOURCE FUNDING, INC**


**(FKA
      CAPITAL BUSINESS FUNDING, INC.)**


**(A
      DEVELOPMENT STAGE COMPANY)**


NOTES
      TO
      FINANCIAL STATEMENTS


FOR
      THE
      QUARTER ENDED AUGUST 31, 2005







NOTE
      F
      - DEVELOPMENT STAGE COMPANY




The
      Company is in the development stage as of August 31, 2005 and, to date, has
      had
      no significant operations. Recovery of the Company’s assets is dependent on
      future events, the outcome of which is indeterminable. In addition, successful
      completion of the Company’s development program and its transition, ultimately,
      to attaining profitable operations is dependent upon obtaining adequate
      financing to fulfill its development activities and achieving a level of sales
      adequate to support the Company’s cost structure.






ITEM
      2.  MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





The
      discussion contained in this Form 10-QSB contains “forward-looking statements”
      that involve risk and uncertainties. These statements may be identified by
      the
      use of terminology such as “believes”, “expects”, “may”, or “should”, or
“anticipates”, or expressing this terminology negatively or similar expressions
      or by discussions of strategy. The cautionary statements made in this Form
      10-QSB should be read as being applicable to all related forward-looking
      statements wherever they appear in this Form 10-QSB. Our actual results could
      differ materially from those discussed in this Form 10-QSB. Important factors
      that could cause or contribute to such differences include those discussed
      under
      the caption entitled “risk factors,” as well as those discussed elsewhere in
      this Form 10-QSB.




OUR
      COMPANY




We
      were
      incorporated in North Carolina on February 2, 2004 to engage in the business
      of
      commercial finance brokerage and consulting. We are currently engaged and plan
      to continue in the commercial finance brokerage and consulting
      business.





We
      have
      acted and intend to continue to act as a broker for commercial finance
      transactions. The different types of commercial financing that we intend to
      broker are: Commercial Mortgages, Asset-Based Lines of Credit, Commercial
      Leasing, Accounts Receivable Financing (also known as “Factoring”) and Purchase
      Order Financing. To date, we have successfully brokered four financing
      transactions totaling $11,094 in fees, consisting of two mortgage transactions
      totaling $3,044, seven monthly broker fees for one factoring transaction and
      one
      broker fee in connection with a commercial lease transaction. Therefore, we
      have
      only received fees in connection with four closed transactions.




In
      performing all of these brokering services, we have and propose to represent
      our
      clients in all aspects of assisting with the assessment of funding needs and
      qualifications, and identifying and making presentations to the most suitable
      funding sources.




11
 *Index*





Results
      of Operations.





Revenue.





We
      recorded revenue of $542 for the three months ended August 31, 2005, versus
      revenue of $4,040 for the same period ended in August 31, 2004. Sales
      consisted of commissions earned on funded loans as follows:





·
            Broker
                fee in connection with factoring of accounts receivable generated
                $542.





All
      sales
      transactions were with unrelated parties.





Expenses.





Total
      expenses for the three months ended August 31, 2005 were $587, versus expenses
      of $10,819 for the same period ended in August 31, 2004. The decrease of $10,232
      was primarily due to no expenses related to the fair value of rent contributed
      by our President and the website development in the quarter ended August 31,
      2005. The expenses for the three months ended August 31, 2005 were attributable
      to miscellaneous
      and sundry costs





We
      expect
      increases in expenses through the year 2005 as we move toward developing our
      business plan and registering our common stock. In addition, we expect
      professional fees to increase to around $30,000 per annum for compliance with
      the reporting requirements of the Securities Exchange Act of 1934, as amended.
      We also expect rent, phone, travel and web-hosting to increase to $12,800 per
      annum, internet advertising to increase to $36,000 per annum, and salaries
      to
      increase to $40,000 per annum.





We
      do not
      have any lease agreements for our facilities and do not currently have any
      employment agreements.





Income
      Taxes





We
      did
      not have any federal or state income tax expense for the three months ended
      August 31, 2005 due to the accumulated loss.




Income/
      Losses.





Net
      loss
      for the three months ended August 31, 2005 was $416, or less than $.01 per
      share, versus the net loss of $6,868, or less than $.01 per share, for the
      same
      period ended August 31, 2004. The net loss for the three months ended August
      31,
      2005 was due to the limited revenues from commissions and limited operations.
      We
      expect to continue to incur losses at least through the fiscal year 2005, partly
      attributable to the fair value of expected services to be received. In addition,
      there can be no assurance that we will achieve or maintain profitability or
      that
      our revenue growth can be sustained in the future.




Impact
      of
      Inflation.





We
      believe that inflation has had a negligible effect on operations since
      inception. We believe that we can offset inflationary increases in the cost
      of
      operations by increasing sales and improving operating
      efficiencies.




12
 *Index*





Liquidity
      and Capital Resources.





Cash
      flows used in operations for the three months ended August 31, 2005 were $416,
      versus cash flow of $6,868 used in operations for the same period ended August
      31, 2004. Cash flows were primarily attributable to a net loss for both quarters
      ended in August 31, 2005 and 2004. Cash received for commissions and broker
      fees
      for the three months ended August 31, 2005 was $542. Cash paid for various
      fees
      and expenses during this same period of time was $958, including the interest
      expenses of $371.





There
      was
      no cash flow from financing activities for the three months ended August 31,
      2005, versus the cash flow of $4,042 provided by financing activities for the
      same period ended August 31, 2004. Cash flows for the three months ended August
      31, 2004 included proceeds from the sale of 10,000,000 shares of our common
      stock to our President for $100 in cash pursuant to a private offering exemption
      from registration under Section 4(2) of the Securities Act of 1933, as amended.
      Proceeds were used towards general business expenses. It also included $3,942
      in
      contributions of capital, related to services and expenses paid personally
      by
      the officer.





There
      were no cash flows from investing activities for the both quarters ended August
      31, 2005 and 2004.





Overall,
      we have funded our cash needs for the three months ended August 31, 2005 with
      one equity transaction with our President as described above and from a
      borrowing from a note payable. If we are unable to receive additional cash
      from
      our President, we may need to rely on financing from outside sources through
      debt or equity transactions. Our officer is under no legal obligation to provide
      us with capital infusions. As described above under Liquidity and Capital
      Resources for the three months ended August 31, 2005, our cash flow and cash
      needs for the future are significant. Cash flow for the three months ended
      August 31, 2005 has decreased and our cash needs have increased as a result
      of
      our results of operations during the period.





Failure
      to obtain such financing could have a material adverse effect on our operations
      and financial condition. This could include an inability to do sufficient
      advertising for the services we provide, which would make us less competitive
      in
      the marketplace. We could also find it more difficult to enter into strategic
      joint venture relationships with third parties. Finally, it would most likely
      delay the implementation of our business plan. An alternative plan of operation
      in the event of a failure to obtain financing would be to continue operations
      as
      currently configured, with the result being little, if any, projected growth.
      Another alternative would be to enter into a joint venture with a brokerage
      firm
      that has working capital available, albeit on less favorable terms than had
      we
      obtained financing, for the development of our business plan.





We
      had
      cash on hand of only $1,624 and a working capital deficit of $58,394 as of
      August 31, 2005. In
      that
      regard, we have drawn-down $20,600 from our unsecured lines of credit, leaving
      $4,300 of available credit. In connection therewith, monthly debt service
      amounts to $50 on an interest only payment to the bank. In
      addition to the line of credit, we may need to seek additional outside sources
      of funding, such as equity or debt placements. We will also rely on the
      existence of our projected revenue from our business operations, if any. A
      lack
      of significant revenues during the remainder of 2004 will significantly affect
      our cash position and move us towards a position where the raising of additional
      funds through equity or debt financing will have to be necessary. Our current
      level of operations would require capital of approximately $1,000 to sustain
      operations through fiscal year 2005 and approximately $35,000 per year
      thereafter. Any modifications to our business plans, such the hiring of
      additional employees and the principal making a full-time commitment to the
      business, which would require the payment of his salary and expenses, may
      require additional capital for us to operate. There can be no assurance that
      additional capital will be available to us when needed or available on terms
      favorable to us.





Neither
      Mr. Koran, nor any other person or entity is liable for, surety or otherwise
      provides a guarantee for our line of credit with First Citizens
      Bank.




13
 *Index*





On
      a
      long-term basis, liquidity is dependent on continuation and expansion of
      operations, receipt of revenues, and additional infusions of capital and debt
      financing. We are considering launching a local advertising campaign. Our
      current capital and revenues are insufficient to fund such marketing. If we
      choose to launch such a campaign, we will require substantially more capital.
      If
      necessary, we will raise this capital through an additional stock offering.
      However, there can be no assurance that we will be able to obtain additional
      equity or debt financing in the future, if at all. If we are unable to raise
      additional capital, our growth potential will be adversely affected and we
      will
      have to significantly modify our plans. For example, if we unable to raise
      sufficient capital to develop our business plan, we may need to:





§
            Seek
                projects that are less in value or that may be projected to be less
                profitable, or


§
            Seek
                business that is outside our immediate area to bring some revenue
                to
                us.





Demand
      for the products and services will be dependent on, among other things, market
      acceptance of our services, the commercial finance brokering market in general,
      and general economic conditions, which are cyclical in nature. Inasmuch as
      a
      major portion of our activities is the receipt of revenues from commissions
      earned, our business operations may be adversely affected by our competitors
      and
      prolonged recession periods.





Our
      success will be dependent upon implementing our plan of operations and the
      risks
      associated with our business plan. We operate a small commercial finance
      brokerage business in the Charlotte, North Carolina area. We see a need to
      strengthen our position in these markets. We are considering expanding our
      operations through aggressively marketing our services. We project that we
      may
      become profitable on a self-sustaining basis in 24-36 months. However, there
      can
      be no assurances that we will ever become profitable on a self-sustaining
      basis.





Our
      cash
      on hand as of the latest balance sheet date is insufficient to fund our
      operations and our expectations of cash inflows will not meet our cash
      requirements for the next twelve months. This is reflecting in the “going
      concern” opinion that has been issued by our auditor. We intend to raise cash
      through additional debt and equity financings, however, there is no assurance
      that we will be successful in this regard.




Critical
      Accounting Policies and Estimates





We
      have
      identified the following policies as critical to our business operations and
      the
      understanding of our results of operations. This listing is not a comprehensive
      list of all of our accounting policies. In many cases, the accounting treatment
      of a particular transaction is specifically dictated by accounting principles
      generally accepted in the United States, with no need for management's judgment
      in their application. There are also areas in which management's judgment in
      selecting any available alternative would not produce a materially different
      result. However, certain of our accounting policies are particularly important
      to the portrayal of our financial position and results of operations and may
      require the application of significant judgment by our management; as a result,
      they are subject to an inherent degree of uncertainty. In applying those
      policies, our management uses its judgment to determine the appropriate
      assumptions to be used in the determination of certain estimates. Those
      estimates are based on our historical experience, our observance of trends
      in
      the industry, and information available from other outside sources, as
      appropriate. For a more detailed discussion on the application of these and
      other accounting policies, see "Note 1 - Summary of significant account
      policies" in our financial statements and related notes on Form 10-K. Our
      critical accounting policies and estimates are as follows:





Revenue
      Recognition





The
      Company’s revenue is derived primarily from brokering income which ranges from
      one time origination fees to on-going monthly commissions paid for the life
      of
      the financing. For purposes of one-time origination fees, revenue is recognized
      as earned when each loan deal is finalized. For purposes of on-going monthly
      commissions paid for the life of the financing, revenue is recognized as earned
      based on the total of the gross monthly financing fees generated.




14
 *Index*





Impairment
      of Long-Lived Assets





The
      Company evaluates the recoverability of its fixed assets and other assets in
      accordance with Statement of Financial Accounting Standards No. 144,
“ *Accounting
      for the Impairment or Disposal of Long-Lived Assets” (“SFAS
      144’).* SFAS 144
      requires recognition of impairment of long-lived assets in the event the net
      book value of such assets exceeds its expected cash flows, it is considered
      to
      be impaired and is written down to fair value, which is determined based on
      either discounted future cash flows or appraised values. The Company adopted
      the
      statement on inception. No impairments of these types of assets were recognized
      during the three month ended August 31, 2005 based upon a management review
      of
      such assets.





ITEM
      3.  CONTROLS
      AND PROCEDURES





Quarterly
      Evaluation of Controls





As
      of the
      end of the period covered by this quarterly report on Form 10-QSB, we evaluated
      the effectiveness of the design and operation of (i) our disclosure controls
      and
      procedures ("Disclosure Controls"), and (ii) our internal control over financial
      reporting ("Internal Controls"). This evaluation ("Evaluation") was performed
      by
      our Chief Executive Officer, David R. Koran (“CEO”) and by our Chief Financial
      Officer, Laura Koran, (“CFO”). In this section, we present the conclusions of
      our CEO based on and as of the date of the Evaluation, (i) with respect to
      the
      effectiveness of our Disclosure Controls, and (ii) with respect to any change
      in
      our Internal Controls that occurred during the most recent fiscal quarter that
      has materially affected, or is reasonably likely to materially affect our
      Internal Controls.





CEO
      and
      CFO Certifications





Attached
      to this quarterly report, as Exhibits 31.1 and 31.2, are certain certifications
      of the CEO and CFO, which are required in accordance with the Exchange Act
      and
      the Commission's rules implementing such section (the "Rule 13a-14(a)/15d-14(a)
      Certifications"). This section of the quarterly report contains the information
      concerning the Evaluation referred to in the Rule 13a-14(a)/15d-14(a)
      Certifications. This information should be read in conjunction with the Rule
      13a-14(a)/15d-14(a) Certifications for a more complete understanding of the
      topic presented.




Disclosure
      Controls and Internal Controls





Disclosure
      Controls are procedures designed with the objective of ensuring that information
      required to be disclosed in our reports filed with the Commission under the
      Exchange Act, such as this quarterly report, is recorded, processed, summarized
      and reported within the time period specified in the Commission's rules and
      forms. Disclosure Controls are also designed with the objective of ensuring
      that
      material information relating to the Company is made known to the CEO and the
      CFO by others, particularly during the period in which the applicable report
      is
      being prepared. Internal Controls, on the other hand, are procedures which
      are
      designed with the objective of providing reasonable assurance that (i) our
      transactions are properly authorized, (ii) our assets are safeguarded against
      unauthorized or improper use, and (iii) our transactions are properly recorded
      and reported, all to permit the preparation of complete and accurate financial
      statements in conformity with accounting principals generally accepted in the
      United States.




15
 *Index*





Limitations
      on the Effectiveness of Controls





Our
      management does not expect that our Disclosure Controls or our Internal Controls
      will prevent all error and all fraud. A control system, no matter how well
      developed and operated, can provide only reasonable, but not absolute assurance
      that the objectives of the control system are met. Further, the design of the
      control system must reflect the fact that there are resource constraints, and
      the benefits of controls must be considered relative to their costs. Because
      of
      the inherent limitations in all control systems, no evaluation of controls
      can
      provide absolute assurance that all control issues and instances so of fraud,
      if
      any, within the Company have been detected. These inherent limitations include
      the realities that judgments in decision -making can be faulty, and that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the control. The design of a system
      of controls also is based in part upon certain assumptions about the likelihood
      of future events, and there can be no assurance that any design will succeed
      in
      achieving its stated objectives under all potential future conditions. Over
      time, control may become inadequate because of changes in conditions, or because
      the degree of compliance with the policies or procedures may deteriorate.
      Because of the inherent limitations in a cost-effective control system,
      misstatements due to error or fraud may occur and not be detected.





Scope
      of
      the Evaluation





The
      CEO
      and CFO's evaluation of our Disclosure Controls and Internal Controls included
      a
      review of the controls' (i) objectives, (ii) design, (iii) implementation,
      and
      (iv) the effect of the controls on the information generated for use in this
      quarterly report. In the course of the Evaluation, the CEO and CFO sought to
      identify data errors, control problems, acts of fraud, and they sought to
      confirm that appropriate corrective action, including process improvements,
      was
      being undertaken. This type of evaluation is done on a quarterly basis so that
      the conclusions concerning the effectiveness of our controls can be reported
      in
      our quarterly reports on Form 10-QSB and annual reports on Form 10-KSB. The
      overall goals of these various evaluation activities are to monitor our
      Disclosure Controls and our Internal Controls, and to make modifications if
      and
      as necessary. Our external auditors also review Internal Controls in connection
      with their audit and review activities. Our intent in this regard is that the
      Disclosure Controls and the Internal Controls will be maintained as dynamic
      systems that change (including improvements and corrections) as conditions
      warrant.




Among
      other matters, we sought in our Evaluation to determine whether there were
      any
      significant deficiencies or material weaknesses in our Internal Controls, which
      are reasonably likely to adversely affect our ability to record, process,
      summarize and report financial information, or whether we had identified any
      acts of fraud, whether or not material, involving management or other employees
      who have a significant role in our Internal Controls. This information was
      important for both the Evaluation, generally, and because the Rule
      13a-14(a)/15d-14(a) Certifications, Item 5, require that the CEO and CFO
      disclose that information to our Board (audit committee), and to our independent
      auditors, and to report on related matters in this section of the quarterly
      report. In the professional auditing literature, "significant deficiencies"
      are
      referred to as "reportable conditions". These are control issues that could
      have
      significant adverse affect on the ability to record, process, summarize and
      report financial data in the financial statements. A "material weakness" is
      defined in the auditing literature as a particularly serious reportable
      condition where the internal control does not reduce, to a relatively low level,
      the risk that misstatement cause by error or fraud may occur in amounts that
      would be material in relation to the financial statements and not be detected
      within a timely period by employee in the normal course of performing their
      assigned functions. We also sought to deal with other controls matters in the
      Evaluation, and in each case, if a problem was identified, we considered what
      revisions, improvements and/or corrections to make in accordance with our
      ongoing procedures.


Conclusions





Based
      upon the Evaluation, our disclosure controls and procedures are designed to
      provide reasonable assurance of achieving our objectives. Our CEO and CFO have
      concluded that our disclosure controls and procedures are effective at that
      reasonable assurance level to ensure that material information relating to
      the
      Company is made known to management, including the CEO and CFO, particularly
      during the period when our periodic reports are being prepared, and that our
      Internal Controls are effective at that assurance level to provide reasonable
      assurance that our financial statements are fairly presented inconformity with
      accounting principals generally accepted in the United States. Additionally,
      there has been no change in our Internal Controls that occurred during our
      most
      recent fiscal quarter that has materially affected, or is reasonably likely
      to
      affect, our Internal Controls.




16
 *Index*





PART
      II. OTHER
      INFORMATION





Item
      1.
      Legal Proceedings





None.





Item
      2.
      Changes in Securities





None.




Item
      3.
      Defaults Upon Senior Securities





None.





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





None.





Item
      5.
      OtherInformation





None.





Item
      6.
      Exhibits and Reports on Form 8-K





(a)
      Exhibits





31.1
      CEO Certification pursuant to Section 302


31.2
      CFO Certification pursuant to Section 302


32.1
      CEO Certification pursuant to Section 906


32.2
      CFO Certification pursuant to Section 906








(b)
      Reports on Form 8-K





None.




17
 *Index*





SIGNATURES





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
      caused this report to be signed on its behalf by the undersigned, thereunto
      duly
      authorized.





CAPITAL
                RESOURCE FUNDING, INC.
              (Registrant)Date: October
                19, 2005
            By:
            /s/ David
              R. KoranDavid R. Koran
              President







18