United States
        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, 2007
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



Commission file number: 333-118259

____________________

CHINA SUN GROUP HIGH-TECH CO.

|______________________________________________________                               
|-------------------------------------------------------------------------------------
|(Exact name of small business issuer as
                    specified in its charter)





|Delaware                                                                           | 54-2142880                       
|---------------------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of
                    incorporation or organization) | (IRS Employer identification No.)



1 HUTAN STREET, ZHONGSHAN DISTRICTDALIAN, P. R. CHINA(Address of principal executive offices)

(86411) 8289-7752(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 o

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

Number of shares of common stock outstanding as of October 15, 2007:
        59,199,206

Number of shares of preferred stock outstanding as of October 15, 2007: None

Transitional Small Business Disclosure Format: 
        Yes  o No  
        x

---





CHINA SUN GROUP HIGH-TECH CO.
        FORM 10-QSB
        FOR THE QUARTER ENDED AUGUST 31, 2007

|PART I  | FINANCIAL INFORMATION                                                                                                                                             | Page
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|Item 1. | Financial Statements (unaudited)                                                                                                                                  | 1   
|        |                                                                                                                                                                   |     
|        | Condensed Consolidated Balance
                    Sheets as of August 31, 2007 and May 31,
                    2007                                              | 1   
|        |                                                                                                                                                                   |     
|        | Condensed Consolidated Statements of Operations and
                    Comprehensive Income for the three months ended August 31, 2007 and August 31, 2006       | 2   
|        |                                                                                                                                                                   |     
|        | Condensed Consolidated Statements of Cash Flows
                for the three months ended August 31, 2007 and August 31,
                    2006                | 3   
|        |                                                                                                                                                                   |     
|        | Condensed
                    Consolidated Statements of
                    Stockholders ’ Equity for the
                    three months ended August 31, 2007 | 4   
|        |                                                                                                                                                                   |     
|        | Notes to Condensed Consolidated Financial Statements                                                                                                              | 5   
|        |                                                                                                                                                                   |     
|Item 2. | Management's Discussion and Analysis or Plan of
                    Operation                                                                                     | 16  
|        |                                                                                                                                                                   |     
|Item 3. | Controls and Procedures                                                                                                                                           | 21  
|        |                                                                                                                                                                   |     
|PART II | OTHER INFORMATION                                                                                                                                                 | 22  
|        |                                                                                                                                                                   |     
|Item 4. | Submission of Matters to a Vote of Security Holders                                                                                                               | 22  
|        |                                                                                                                                                                   |     
|Item 6. | Exhibits                                                                                                                                                          | 23  
|        |                                                                                                                                                                   |     

---





Part I.
        Financial Information

|Item 1. |  | Financial
                    statements
|------- |  | ----------------------------------------

CHINA SUN GROUP HIGH-TECH
        CO.
        (Formerly Capital Resource Funding, Inc.)CONDENSED
        CONSOLIDATED
        BALANCE
        SHEETSAS
        OF AUGUST 31,
        2007 AND MAY
        31, 2007(Currency
        expressed in United States Dollars
        (“US$”), except for number of
        shares)



|                                                                                                                                                                                                                                                                                           |  |                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -----------------------------------
|                                                                                                                                                                                                                                                                                           |  | August 31,
                    2007
|                                                                                                                                                                                                                                                                                           |  | (unaudited)                        
|ASSETS                                                                                                                                                                                                                                                                                     |  |                                    
|Current
                    assets:                                                                                                                                                                                                                                                        |  |                                    
|Cash and cash
                    equivalents                                                                                                                                                                                                                                              |  | $                                  
|Accounts
                    receivable
                    , net                                                                                                                                                                                                                          |  |                                    
|Inventories                                                                                                                                                                                                                                                                                |  |                                    
|Deposits and
                    prepayments                                                                                                                                                                                                                                               |  |                                    
|                                                                                                                                                                                                                                                                                           |  |                                    
|Total current
                    assets                                                                                                                                                                                                                                                   |  |                                    
|                                                                                                                                                                                                                                                                                           |  |                                    
|                                                                                                                                                                                                                                                                                           |  |                                    
|Property, plant
                    and equipment, net                                                                                                                                                                                                                                     |  |                                    
|                                                                                                                                                                                                                                                                                           |  |                                    
|TOTAL
                    ASSETS                                                                                                                                                                                                                                                           |  | $                                  
|                                                                                                                                                                                                                                                                                           |  |                                    
|LIABILITIES
                    AND
                    STOCKHOLDERS’
                    EQUITY                                                                                                                                                                                           |  |                                    
|Current
                    liabilities
                    :                                                                                                                                                                                                                              |  |                                    
|Accounts payable,
                    trade                                                                                                                                                                                                                                                |  | $                                  
|Customers
                    deposits                                                                                                                                                                                                                                                     |  |                                    
|Value added tax
                    payable                                                                                                                                                                                                                                                |  |                                    
|Income tax
                    payable                                                                                                                                                                                                                                                     |  |                                    
|Other payables
                    and accrued liabilities                                                                                                                                                                                                                                 |  |                                    
|                                                                                                                                                                                                                                                                                           |  |                                    
|Total
                    liabilities                                                                                                                                                                                                                                                      |  |                                    
|                                                                                                                                                                                                                                                                                           |  |                                    
|                                                                                                                                                                                                                                                                                           |  |                                    
|MINORITY
                    INTEREST                                                                                                                                                                                                                                                      |  |                                    
|                                                                                                                                                                                                                                                                                           |  |                                    
|Stockholders’
                    equity:                                                                                                                                                                                                                                                  |  |                                    
|Convertible
                    preferred stock; $0.001 par value; 2,000,000 shares authorized; no shares
                    issued and outstanding as of August 31, 2007 and May 31, 2007                                                                                                |  |                                    
|Common stock,
                    $0.001 par value; 100,000,000
                    shares
                    authorized; 43,422,971
                    shares issued and
                    outstanding as of August 31, 2007
                    and May 31,
                    2007 |  |                                    
|Additional
                    paid-in capital                                                                                                                                                                                                                                             |  |                                    
|Accumulated other
                    comprehensive income                                                                                                                                                                                                                                 |  |                                    
|Retained earnings
                    (accumulated deficits)                                                                                                                                                                                                                               |  |                                    
|                                                                                                                                                                                                                                                                                           |  |                                    
|Total
                    stockholders’ equity                                                                                                                                                                                                                                             |  |                                    
|                                                                                                                                                                                                                                                                                           |  |                                    
|                                                                                                                                                                                                                                                                                           |  |                                    
|TOTAL
                    LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                             |  | $                                  



See accompanying notes to
        condensed consolidated financial statements.



1



---



CHINA SUN GROUP HIGH-TECH CO.(Formerly
        Capital Resource Funding, Inc.)
        CONDENSED CONSOLIDATED STATEMENTS OF
        OPERATIONS AND
        COMPREHENSIVE INCOME
        FOR THE THREE MONTHS ENDED AUGUST
        31, 2007 AND
        2006
        (Currency
        expressed in United States Dollars (“US$”), except for number of
        shares
        (unaudited)





|                                                                                                                                                                                                |  |   |       | Three
                    months
                    ended
                    August
                    31, |        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ----- | ------------------------------------------------------------------------------------------------------------- | -------
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|REVENUE,
                    NET                                                                                                                                                                |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|COST OF
                    REVENUES                                                                                                                                                            |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|GROSS
                    PROFIT                                                                                                                                                                |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|Operating
                    expenses:                                                                                                                                                         |  |   |       |                                                                                                               |        
|General and
                    administrative                                                                                                                                                  |  |   |       |                                                                                                               |        
|Research and
                    development                                                                                                                                                    |  |   |       |                                                                                                               |        
|Depreciation                                                                                                                                                                                    |  |   |       |                                                                                                               |        
|Total operating
                    expenses                                                                                                                                                    |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|INCOME
                    FROM
                    OPERATIONS                                                                                                                                  |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|Income tax
                    expense                                                                                                                                                          |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|INCOME
                    BEFORE
                    MINORITY
                    INTEREST                                                                                                     |  |   |       |                                                                                                               | 643,193
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|Minority
                    interest                                                                                                                                                           |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|NET
                    INCOME                                                                                                                                                                  |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|Other
                    comprehensive income:                                                                                                                                                 |  |   |       |                                                                                                               |        
|- Foreign
                    currency translation gain                                                                                                                                         |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|COMPREHENSIVE
                    INCOME                                                                                                                                                        |  |   |       |                                                                                                               |        
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|Net income per
                    common share –
                    basic and
                    diluted                                                                                     |  | $ | 0.010 |                                                                                                               | $      
|                                                                                                                                                                                                |  |   |       |                                                                                                               |        
|Weighted average
                    number of common shares

                    outstanding
                    during the period –
                    basic and
                    diluted |  |   |       |                                                                                                               |        



See accompanying notes to
        condensed consolidated financial statements.



2



---



CHINA SUN GROUP HIGH-TECH CO.
        (Formerly
        Capital Resource Funding, Inc.)
        CONDENSED
        CONSOLIDATED
        STATEMENTS OF CASH
        FLOWS
        FOR THE THREE MONTHS ENDED AUGUST
        31, 2007 AND
        2006
        (Currency
        expressed in United States Dollars (“US$”))
        (unaudited)



|                                                                                                                                                                                                |  | Three
                    months ended
                    August 31, |                          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------- | -------------------------
|                                                                                                                                                                                                |  | 2007                                                                  |                          
|                                                                                                                                                                                                |  |                                                                       |                          
|Cash flows
                    from operating activities:                                                                                                                                       |  |                                                                       |                          
|Net
                    income                                                                                                                                                                  |  | $                                                                     | 434,388                  
|Adjustments to
                    reconcile net income
                    to net cash
                    provided by (used in)
                    operating
                    activities: | 
|Depreciation                                                                                                                                                                                    |  |                                                                       | 92,697                   
|Minority
                    interest                                                                                                                                                           |  |                                                                       | 208,805                  
|Changes
                    in operating
                    assets and
                    liabilities:                                                                                        |  |                                                                       |                          
|Accounts
                    receivable, trade                                                                                                                                                  |  |                                                                       | 173,593                  
|Inventories                                                                                                                                                                                     |  |                                                                       | (8
                    09
|Deposits and
                    prepayments                                                                                                                                                    |  |                                                                       | (426,870                 
|Accounts payable,
                    trade                                                                                                                                                     |  |                                                                       | (322,254                 
|Customer
                    deposits                                                                                                                                                           |  |                                                                       | (686,467                 
|Value-added tax
                    payable                                                                                                                                                     |  |                                                                       | 551,040                  
|Income tax
                    payable                                                                                                                                                          |  |                                                                       | 343,624                  
|Other payables
                    and accrued liabilities                                                                                                                                      |  |                                                                       | 293,570                  
|Net cash provided
                    by (used in)
                    operating
                    activities                                                                                 |  |                                                                       | 661,317                  
|                                                                                                                                                                                                |  |                                                                       |                          
|Cash flows
                    from investing activities:                                                                                                                                       |  |                                                                       |                          
|Purchase of
                    plant and
                    equipment                                                                                                                         |  |                                                                       | -                        
|Net cash
                    used
                    in
                    investing
                    activities                                                                           |  |                                                                       | -                        
|                                                                                                                                                                                                |  |                                                                       |                          
|Cash flows
                    from financing activities:                                                                                                                                       |  |                                                                       |                          
|Advances from a
                    related party                                                                                                                                               |  |                                                                       | -                        
|Net cash provided
                    by financing activities                                                                                                                                   |  |                                                                       | -                        
|                                                                                                                                                                                                |  |                                                                       |                          
|Foreign
                    currency translation
                    adjustment                                                                                                                 |  |                                                                       | 7,459                    
|                                                                                                                                                                                                |  |                                                                       |                          
|NET
                    CHANGE
                    IN CASH AND
                    CASH EQUIVALENTS                                                                                             |  |                                                                       | 668,776                  
|                                                                                                                                                                                                |  |                                                                       |                          
|CASH AND CASH
                    EQUIVALENTS, BEGINNING OF
                    PERIOD                                                                                                          |  |                                                                       | 813,163                  
|                                                                                                                                                                                                |  |                                                                       |                          
|CASH AND CASH
                    EQUIVALENTS, END OF
                    PERIOD                                                                                                                |  | $                                                                     | 1,481,939                
|                                                                                                                                                                                                |  |                                                                       |                          
|SUPPLEMENTAL
                    DISCLOSURE OF CASH FLOW INFORMATION:                                                                                                                           | 
|Cash paid for
                    income taxes                                                                                                                                                  |  | $                                                                     | -                        
|Cash paid for
                    interest expenses                                                                                                                                             |  | $                                                                     | -                        
|                                                                                                                                                                                                |  |                                                                       |                          



See accompanying notes
        to condensed
        consolidated financial
        statements.



3



---



CHINA SUN GROUP HIGH-TECH
        CO.
        (Formerly Capital Resource Funding,
        Inc.)
        CONDENSED CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS’ EQUITY
        FOR THE THREE MONTHS ENDED
        AUGUST 31, 2007
        (Currency expressed in United States Dollars (“US$”), except for number of
        shares)
        unaudited)





|                                                                                                              |  | Convertible

                    preferred stock |  | Common stock |   |               |            |        |   |                                                                    |  |                                                                                                    |                               
|------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------ |  | ------------ | - | ------------- | ---------- | ------ | - | ------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------- | ------------------------------
|                                                                                                              |  | No. of shares                                    |  | Amount       |   | No. of shares |            | Amount |   | Additional
                    paid-in
                    capital |  | Accumulated
                    other
                    comprehensive
                    income |                               
|                                                                                                              |  |                                                  |  |              |   |               |            |        |   |                                                                    |  |                                                                                                    |                               
|Balance as of May
                    31, 2007                                                                |  | -                                                |  | $            | - |               | 43,422,971 |        | $ | 43,423                                                             |  | $                                                                                                  | 9
                    ,595,204
|                                                                                                              |  |                                                  |  |              |   |               |            |        |   |                                                                    |  |                                                                                                    |                               
|Net
                    income
                    for the
                    period                         |  | -                                                |  |              | - |               | -          |        |   | -                                                                  |  |                                                                                                    | -                             
|                                                                                                              |  |                                                  |  |              |   |               |            |        |   |                                                                    |  |                                                                                                    |                               
|Foreign currency
                    translation adjustment                                                   |  | -                                                |  |              | - |               | -          |        |   | -                                                                  |  |                                                                                                    | -                             
|Balance as
                    of
                    August
                    31,
                    2007 |  | -                                                |  | $            | - |               | 43,422,971 |        | $ | 43,423                                                             |  | $                                                                                                  | 9,595,204                     



See accompanying notes to
        condensed consolidated financial statements.



4



---



CHINA SUN GROUP HIGH-TECH
        CO.(Formerly
        Capital Resource Funding, Inc.)NOTES
        TO CONDENSED
        CONSOLIDATED
        FINANCIAL STATEMENTSFOR
        THE THREE
        MONTHS ENDED
        AUGUST 31, 2007
        AND
        2006
        (Currency expressed in United States Dollars (“US$”))(unaudited)





NOTE—1     BASIS OF PRESENTATION



The
        accompanying unaudited condensed consolidated financial statements have been prepared in
        accordance with both generally accepted accounting principles for interim financial
        information, and the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
        Accordingly,
        they do not include all of the information and footnotes required by generally accepted
        accounting principles for complete financial statements. The accompanying unaudited
        condensed consolidated financial statements reflect all adjustments (consisting of normal
        recurring accruals) that are, in the opinion of management, considered necessary for a fair
        presentation of the results for the interim periods presented. Interim results are not
        necessarily indicative of results for a full year.



The condensed
        consolidated
        financial
        statements and related disclosures have been prepared with the presumption that users of
        the interim financial information have read or have access to our annual audited
        consolidated financial statements for the preceding fiscal year. Accordingly, these
        condensed consolidated financial statements should be read in conjunction with the
        unaudited consolidated financial statements and the related notes thereto contained in our
        Annual Report on Form 10-KSB for the year ended May
        31,
        2007.

NOTE—2
        ORGANIZATION AND BUSINESS
        BACKGROUND



China Sun
        Group High-Tech Co. (the “Company” or “CSGH”) was organized under
        the laws of
        the State of
        North Carolina
        on February
        2, 2004 as a subchapter S-Corporation. On August 24, 2007, the Company was
        reincorporated
        to the State
        of Delaware
        and
        changed its
        name from “Capital Resource Funding, Inc.”
        to
        “China Sun Group High-Tech Co.”
        Also, the
        Company was authorized to change its par value from $0.00000005
        to
        $0.001
        per
        share.



On February
        28, 2007, the
        Company
        completed a stock exchange transaction
        with Da Lian
        Xin Yang High-Tech Development Co., Ltd.
        (“Sun
        Group”).
        Sun Group was
        incorporated as a limited liability company in the People’s Republic of China
        (“PRC”) on
        August 8,
        2000
        with its
        principal place of business in Da Lian City, Liaoning
        Province, the
        PRC. Upon completion of the exchange, Sun Group became a majority-owned subsidiary of
        CSGH and
        the former owners of
        Sun Group then owned 93% of the issued and outstanding
        shares of the Company.



The stock
        exchange transaction has been accounted for as a reverse acquisition and recapitalization
        of the CSGH
        whereby Sun
        Group is deemed to be the accounting acquirer (legal acquiree) and CSGH
        to be the
        accounting acquiree (legal acquirer). The accompanying condensed consolidated financial
        statements are in substance those of Sun Group, with the assets and liabilities, and
        revenues and expenses, of CSGH
        being
        included effective from the date of the stock exchange transaction. CSGH
        is deemed to
        be a continuation of the business
        of Sun Group.
        Accordingly, the accompanying condensed consolidated financial statements include the
        following:



(1)    the
        balance sheet consists of the net assets of the accounting acquirer at historical cost and
        the net assets of the accounting acquiree at historical cost;
        and



5

---

CHINA SUN GROUP HIGH-TECH
        CO.(Formerly
        Capital Resource Funding, Inc.)NOTES
        TO CONDENSED
        CONSOLIDATED
        FINANCIAL STATEMENTSFOR
        THE THREE
        MONTHS ENDED
        AUGUST 31, 2007
        AND
        2006
        (Currency expressed in United States Dollars (“US$”))(unaudited)





(2)     the
        financial position, results of operations, and cash flows of the accounting acquirer for
        all periods presented as if the recapitalization had occurred at the
           beginning of the earliest period presented
        and the
        operations of the accounting acquiree from the date of stock exchange
        transaction.



CSGH
        and Sun
        Group
        are
        hereinafter referred to as (the
        “Company”).



The Company,
        through its
        subsidiary,
        Sun Group,
        principally
        engages
        in the
        production and sales
        of cobaltosic
        oxide, which is the primary raw material used in lithium ion rechargeable
        batteries.

NOTE—3
        SUMMARY OF SIGNIFICANT
        ACCOUNTING POLICIES



The
        accompanying condensed consolidated financial statements reflect the application of certain
        significant accounting policies as described in this note and elsewhere in the accompanying
        condensed consolidated financial statements and notes.

| | l | Use of
                    estimates
| | - | ------------------------------------

In preparing
        these consolidated financial statements, management makes estimates and assumptions that
        affect the reported amounts of assets and liabilities in the balance sheets and revenues
        and expenses during the period reported. Actual results may differ from these
        estimates.

| | l | Basis
                    of
                    consolidation
| | - | --------------------------------------------------------------

The unaudited
        condensed consolidated financial statements include the financial statements of CSGH
        and its
        subsidiary, Sun Group.
        All significant inter-company balances and transactions within the Company
        and
        its
        subsidiary
        have been eliminated upon consolidation.

| | l | Revenue
                    recognition
| | - | ---------------------------------------

Revenue is
        recognized
        when products
        are delivered to customers. Provisions for discounts and rebates to customers, estimated
        returns and allowances, and other adjustments are provided for in the same period the
        related sales are recorded. In instances where products are configured to customer
        requirements, revenue is recorded upon the successful completion of the Company’s
        final test procedures and the customer’s acceptance.



The Company
        is subject to Valued Added Tax (“VAT”) which is levied on the majority of the
        products of Sun Group at the rate of 17% on the invoiced value of sales. Output VAT is
        borne by customers in addition to the invoiced value of sales and input VAT is borne by the
        Company in addition to the invoiced value of purchases to the extent not refunded for
        export sales.



Starting
        April 1,
        2006, the
        Company commenced the production and sales of cobaltosic oxide
        in the
        PRC.



6



---

CHINA SUN GROUP HIGH-TECH
        CO.(Formerly
        Capital Resource Funding, Inc.)NOTES
        TO CONDENSED
        CONSOLIDATED
        FINANCIAL STATEMENTSFOR
        THE THREE
        MONTHS ENDED
        AUGUST 31, 2007
        AND
        2006
        (Currency expressed in United States Dollars (“US$”))(unaudited)





| | l | Cost of
                    revenue
| | - | -----------------------------------

Cost of
        revenue primarily includes the purchase of raw materials, direct labor and manufacturing
        overhead.

| | l | Shipping
                    and handling costs
| | - | -----------------------------------------------

Shipping and handling costs,
        associated with the distribution of products to customers, are recorded in costs of revenue
        and are recognized when the related product is shipped to the customer. The Company
        incurred $1,964 and
        $Nil for the periods
        ended August
        31, 2007 and 2006,
        respectively.

| | l | Cash and cash
                    equivalents
| | - | ---------------------------------------------

Cash and cash
        equivalents are carried at cost and represent cash on hand, demand deposits placed with
        banks or other financial institutions and all highly liquid investments with an original
        maturity of three months or less as of the purchase date of such investments.

| | l | Accounts
                    receivable
| | - | ---------------------------------------

Accounts
        receivable are recorded at the invoiced amount and do not bear interest. The Company
        extends unsecured credit to its customers in the ordinary course of business but mitigates
        the associated risks by performing credit checks and actively pursuing past due accounts.
        An allowance for doubtful accounts is established and determined based on
        managements’ assessment of known requirements, aging of receivables, payment history,
        the customers’ current credit worthiness and the economic environment. As of
        August 31,
        2007,
        an allowance
        for doubtful accounts of $782,813
        was
        provided.

| | l | Property,
                    plant and
                    equipment, net
| | - | --------------------------------------------------------------------------

Property,
        plant
        and equipment
        are stated at cost less accumulated depreciation and accumulated impairment losses, if any.
        Depreciation is calculated on the straight-line basis over the following expected useful
        lives from the date on which they become fully operational and after taking into account
        their estimated residual values:





|                                        | Depreciable
                    life |  | Residual
                    value
|--------------------------------------- | ------------------------------------ |  | ----------------------------------
|Building                                | 40
                    years         |  | 5%                                
|Plant and
                    machinery | 5-40
                    years       |  | 5%                                
|Office
                    equipment    | 5
                    years          |  | 5%                                
|Motor
                    vehicle       | 5
                    years          |  | 5%                                



Expenditure
        for maintenance and repairs is expensed as incurred.



7

---

CHINA SUN GROUP HIGH-TECH
        CO.(Formerly
        Capital Resource Funding, Inc.)NOTES
        TO CONDENSED
        CONSOLIDATED
        FINANCIAL STATEMENTSFOR
        THE THREE
        MONTHS ENDED
        AUGUST 31, 2007
        AND
        2006
        (Currency expressed in United States Dollars (“US$”))(unaudited)





| | l | Valuation of
                    long-lived assets
| | - | --------------------------------------------------

Long-lived assets primarily
        include property and equipment. In accordance with SFAS No. 144,
        “Accounting
        for the Impairment or Disposal of Long-Lived
        Assets,” the
        Company periodically reviews long-lived assets for impairment whenever events or changes in
        business circumstances indicate that the carrying amount of the assets may not be fully
        recoverable or that the useful lives are no longer appropriate. Each impairment test is
        based on a comparison of the undiscounted cash flows to the recorded value of the asset. If
        an impairment is indicated, the asset is written down to its estimated fair value based on
        a discounted cash flow analysis. Determining the fair value of long-lived assets includes
        significant judgment by management, and different judgments could yield different results.
        There has been no impairment as of August
        31, 2007.

| | l | Comprehensive
                    income
| | - | ----------------------------------------

SFAS
        No. 130,
        “Reporting
        Comprehensive Income”
        establishes
        standards for reporting and display of comprehensive income, its components and accumulated
        balances. Comprehensive income as defined includes all changes in equity during the
        period
        from
        non-owner sources. Accumulated comprehensive income
        consists
        of
        changes in
        unrealized gains and losses on foreign currency translation. This comprehensive income is
        not included in the computation of income tax expense or benefit.

| | l | Income
                    taxes
| | - | --------------------------------

The
        Company
        accounts for
        income taxes in interim periods as required by Accounting Principles Board Opinion No.
        28,
        “Interim
        Financial Reporting”
        and as
        interpreted by FASB Interpretation No. 18,
        “Accounting
        for Income Taxes in Interim
        Periods.”
        The
        Company
        has
        determined an estimated annual effective tax rate. The rate will be revised, if necessary,
        as of the end of each successive interim period during the Company’s fiscal year to
        the Company’s best current estimate. The estimated annual effective tax rate is
        applied to the year-to-date ordinary income (or loss) at the end of the interim
        period.



The Company also accounts for
        income tax using SFAS No. 109
        “Accounting for
        Income
        Taxes,
        ”
        which requires the asset and
        liability approach for financial accounting and reporting for income taxes. Under this
        approach, deferred income taxes are provided for the estimated future tax effects
        attributable to temporary differences between financial statement carrying amounts of
        assets and liabilities and their respective tax bases, and for the expected future tax
        benefits from loss carry-forwards and provisions, if any. Deferred tax assets and
        liabilities are measured using the enacted tax rates expected in the periods of recovery or
        reversal and the effect from a change in tax rates is recognized in the consolidated
        statement of operations and comprehensive income in the period of enactment. A valuation
        allowance is provided to reduce the amount of deferred tax assets if it is considered more
        likely than not that some portion of, or all of the deferred tax assets will not be
        realized.

| | l | Net income per
                    share
| | - | ----------------------------------------

The Company calculates net
        income per share in
        accordance with SFAS No. 128,
        “Earnings per
        Share.
        ”
        Basic income per share is
        computed by dividing the net income by the weighted-average number of common shares
        outstanding during the period. Diluted income per share is computed
        similar to basic income per
        share except that the denominator is increased to include the number of additional common
        shares that would have been outstanding if the potential common stock equivalents had been
        issued and if the additional common shares were dilutive.



8

---

CHINA SUN GROUP HIGH-TECH
        CO.(Formerly
        Capital Resource Funding, Inc.)NOTES
        TO CONDENSED
        CONSOLIDATED
        FINANCIAL STATEMENTSFOR
        THE THREE
        MONTHS ENDED
        AUGUST 31, 2007
        AND
        2006
        (Currency expressed in United States Dollars (“US$”))(unaudited)





| | l | Foreign
                    currencies translation
| | - | --------------------------------------------------

The reporting
        currency of CSGH
        is the United
        States dollar (“U.S. dollars”). Transactions denominated in currencies other
        than U.S. dollar are calculated at the average
        rate for the
        period. Monetary assets and liabilities denominated in currencies other than U.S. dollar
        are translated into U.S. dollar at the rates of exchange ruling at the balance sheet date.
        The resulting exchange differences are recorded in the other expenses in the consolidated
        statement of operations
        and
        comprehensive income.



CSGH’s
        subsidiary, Sun Group maintains its books and records in its local currency, the Renminbi
        Yuan (“RMB”), which is the primary currency of the economic environment in
        which its operations are conducted. In general, for consolidation purposes, CSGH translates
        the subsidiary’s assets and liabilities into U.S. dollars using the applicable
        exchange rates prevailing at the balance sheet date, and the statement of operations is
        translated at average exchange rates during the reporting period. Adjustments resulting
        from the translation of the subsidiary’s financial statements are recorded as
        accumulated other comprehensive income.

| | l | Related
                    parties
| | - | -----------------------------------

Parties,
        which can be a corporation
        or
        individual,
        are
        considered to be related if the Company
        has the
        ability, directly or indirectly, to control the other party
        or exercise
        significant influence over the other party
        in making
        financial and operating decisions. Companies are also considered to be related if they are
        subject to common control or common significant influence.

| | l | Segment
                    reporting
| | - | -------------------------------------

SFAS No.
        131
        “Disclosures
        about Segments of an Enterprise and Related Information”
        establishes
        standards for reporting information about operating segments on a basis consistent with the
        Company’s internal organization structure as well as information about geographical
        areas, business segments and major customers in the financial statements.
        The Company
        operates one reportable business segment.

| | l | Fair value of
                    financial instruments
| | - | -------------------------------------------------------

The Company
        values its financial instruments as required by SFAS No. 107,
        “
        Disclosures
        about Fair Value of Financial
        Instruments.”
        The estimated
        fair value amounts have been determined by the Company, using available market information
        and appropriate valuation methodologies. The estimates presented herein are not necessarily
        indicative of amounts that the Company could realize
        in a current
        market exchange.



The
        Company’s financial instruments
        primarily
        include
        cash
        and cash
        equivalents, accounts receivable, deposits and prepayments, accounts payable, customers
        deposit, other payables and accrued liabilities, VAT payable and income tax
        payable.



As of the
        balance
        sheet date,
        the estimated
        fair values
        of financial instruments were not materially different from their carrying values as
        presented due to short maturities of these instruments.



9

---

CHINA SUN GROUP HIGH-TECH
        CO.(Formerly
        Capital Resource Funding, Inc.)NOTES
        TO CONDENSED
        CONSOLIDATED
        FINANCIAL STATEMENTSFOR
        THE THREE
        MONTHS ENDED
        AUGUST 31, 2007
        AND
        2006
        (Currency expressed in United States Dollars (“US$”))(unaudited)





| | l | Recently issued
                    accounting standards
| | - | --------------------------------------------------------

In September 2006, the FASB
        issued SFAS No. 157,
        "Fair Value
        Measurement"
        ("SFAS 157") which defines fair value, establishes a framework for measuring fair value in
        generally accepted accounting principles and expands the disclosures about fair value
        measurement. This Statement was developed to provide guidance for consistency and
        comparability in fair value measurements and disclosures and applies under other accounting
        pronouncements that require or permit fair value measurements. This Statement is effective
        for financial statements issued for fiscal years beginning after November 15, 2007 and
        interim periods within those fiscal years. This Statement is not expected to have a
        material impact on the Company's consolidated financial statements.

In February 2007, the FASB
        issued Statement of Financial Accounting Standards No. 159,
        "The Fair Value Option for
        Financial Assets and Financial Liabilities"
        ("SFAS 159").
        
        This Statement provides
        companies with an option to report selected financial assets and liabilities at fair value.
        The Standard's objective is to reduce both the complexity in accounting for financial
        instruments and the volatility in earnings caused by measuring related assets and
        liabilities differently. SFAS 159 also establishes presentation and disclosure requirements
        designed to facilitate comparisons between companies that choose different measurement
        attributes for similar types of assets and liabilities. This Statement is effective as of
        the beginning of an entity's first fiscal year beginning after November 15, 2007. Early
        adoption is permitted if the Company makes the choice in the first 120 days of that fiscal
        year and also elects to apply the provisions of SFAS 157. The Company does not expect SFAS
        159 to have a material impact on its consolidated financial statements.

NOTE—4     ACCOUNTS
        RECEIVABLE
        , NET



The majority of the
        Company’s sales are on open credit
        terms and in accordance with
        terms specified in the contracts governing the relevant transactions.
        The Company
        evaluates the need of an
        allowance for doubtful accounts based on specifically identified amounts that management
        believes to be uncollectible. If actual collections experience changes, revisions to the
        allowance may be required. Based upon the aforementioned criteria, the allowance for
        doubtful accounts of $782,813
        was
        provided as of
        August 31, 2007.

|                                                          | As of                               |          
|--------------------------------------------------------- | ----------------------------------- | ---------
|                                                          | August 31,
                    2007 |          
|                                                          |                                     |          
|                                                          |                                     |          
|Accounts
                    receivable, gross            | $                                   | 5,394,047
|                                                          |                                     |          
|Less: allowance
                    for doubtful accounts |                                     | (782,813 
|Accounts
                    receivable, net              | $                                   | 4,611,234



Subsequent to August 31,
        2007, $3,476,649 of
        accounts receivable was settled with the Company.





10



---



CHINA SUN GROUP HIGH-TECH CO.(Formerly
        Capital Resource Funding, Inc.)NOTES
        TO CONDENSED
        CONSOLIDATED
        FINANCIAL STATEMENTSFOR
        THE THREE
        MONTHS ENDED
        AUGUST 31, 2007
        AND
        2006
        (Currency expressed in United States Dollars (“US$”))(unaudited)





**NOTE**—5     DEPOSITS AND PREPAYMENTS



As of August 31, 2007, the
        balance represented
        the purchase deposits paid for raw materials.



NOTE—6PROPERTY,
        PLANT AND
        EQUIPMENT, NET



Property, plant
        and equipment, net consisted
        of:



|                                                                           | As of                               |           
|-------------------------------------------------------------------------- | ----------------------------------- | ----------
|                                                                           | August 31,
                    2007 |           
|                                                                           |                                     |           
|Building                                                                   | $                                   | 6,308,373 
|Plant and
                    machinery                                    |                                     | 4,889,431 
|Office
                    equipment                                       |                                     | 155,042   
|Motor
                    vehicle                                          |                                     | 34,509    
|Foreign exchange
                    adjustment                            |                                     | 660,577   
|                                                                           |                                     | 12,047,932
|                                                                           |                                     |           
|Less: accumulated
                    depreciation                         |                                     | (707,629  
|Less: foreign
                    exchange adjustment                      |                                     | (17,156   
|Property,
                    plant and
                    equipment, net | $                                   | 11,323,147



Depreciation expense for the
        three months
        ended August 31,
        2007 and 2006
        was $92,697
        and $86,517,
        respectively.

NOTE—7 
        OTHER PAYABLES AND ACCRUED
        LIABILITIES



Other payables and accrued
        liabilities consisted
        of:



|                                               | As of                              
|---------------------------------------------- | -----------------------------------
|                                               | August 31,
                    2007
|                                               |                                    
|Government levies
                    payable  | $                                  
|Rental
                    payable             |                                    
|Salary and
                    welfare payable |                                    
|Accrued
                    expenses           |                                    
|                                               | $                                  





11



---



CHINA SUN GROUP HIGH-TECH CO.(Formerly
        Capital Resource Funding, Inc.)NOTES
        TO CONDENSED
        CONSOLIDATED
        FINANCIAL STATEMENTSFOR
        THE THREE
        MONTHS ENDED
        AUGUST 31, 2007
        AND
        2006
        (Currency expressed in United States Dollars (“US$”))(unaudited)





NOTE—8MINORITY
        INTEREST



In connection with the stock
        exchange transaction, as described
        in Note 2, the Company
        granted to Sun Group’s 30%-minority
        owners a
        two (2) year option for the
        subscription and purchase of an
        additional 10,000,000
        newly issuable shares
        of common stock of CSGH
        in exchange for RMB
        38,100,000, equivalent to 30% of the registered capital of Sun Group.



Proforma financial
        information



The following are summarized
        pro forma results of operations for the three months
        ended August 31, 2007
        and 2006. In preparing this
        proforma information we assumed that the exercise
        of the
        option for the subscription
        and purchase of an additional 10,000,000 newly issuable shares of common stock of
        CSGH had occurred as
        of June 1, 2006. These pro forma results have been prepared for comparative purposes
        only and do not
        purport to be indications of the result of operations which actually would have resulted
        had the exercise of the option
        occurred as of
        June
        1, 2006.



|                                                                                                                                                                   | Three
                    months
                    ended
                    August
                    31,
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                   | 2007                                                                                                         
|                                                                                                                                                                   |                                                                                                              
|Net income
                    attributable to holders of common stock                                                                                             | $                                                                                                            
|Weighted average
                    common
                    shares
                    outstanding –
                    basic and
                    diluted |                                                                                                              
|Net income per
                    common share –
                    basic and
                    diluted                                                        | $                                                                                                            



NOTE—9
        INCOME
        TAXES



The Company is registered in
        the United States of America and has operations in
        two tax jurisdictions:
        the United States of America and the PRC. The operations in the United States of
        America has incurred net operating losses for income tax purposes. The Company generated
        substantially all of its net income from its PRC operations through the Sun Group, its subsidiary and has recorded an income
        tax provision for the period ended August 31, 2007.

The components of income
        (loss) before income taxes and minority interest separating U.S. and PRC
        operations are as follows:



|                                                                                                             | Three
                    months
                    ended
                    August
                    31,
|------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------
|                                                                                                             | 2007                                                                                                         
|                                                                                                             |                                                                                                              
|Loss subject to
                    U.S. operations                                                          | $                                                                                                            
|Income subject to
                    PRC operations                                                         |                                                                                                              
|Income before
                    income taxes
                    and minority
                    interest | $                                                                                                            



United States of
        America

The Company is registered in
        the State of Delaware
        and is subject to the tax
        laws of the United States of America.



12



---



CHINA SUN GROUP HIGH-TECH CO.(Formerly
        Capital Resource Funding, Inc.)NOTES
        TO CONDENSED
        CONSOLIDATED
        FINANCIAL STATEMENTSFOR
        THE THREE
        MONTHS ENDED
        AUGUST 31, 2007
        AND
        2006
        (Currency expressed in United States Dollars (“US$”))(unaudited)





As of August
        31, 2007, the Company's
        U.S. operations
        incurred
        $52,823
        of net operating losses
        available for federal tax purposes, which are available to offset future taxable income.
        The net operating loss carry forwards begin to expire in 2027. The Company has provided for
        a full valuation allowance for any future tax benefits from the net operating loss
        carryforwards as the management believes it is more likely than not that these assets will
        not be realized in the future.

The PRC

The Company’s PRC
        subsidiary, Sun Group, is
        subject to the Enterprise
        Income Tax governed by the Income Tax Law of the People’s Republic of China, at a
        statutory rate of 33%, which is comprised of a
        30% national income tax and
        3% local income tax.

The reconciliation of income
        tax rate to the effective income tax rate based on income
        before income taxes and
        minority interest of PRC operations
        for the period
        ended August
        31, 2007 and 2006 are as
        follows:

|                                                                                                             | Three
                    months
                    ended
                    August
                    31, |          
|------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------- | ---------
|                                                                                                             | 2007                                                                                                          |          
|                                                                                                             |                                                                                                               |          
|Income before
                    income taxes
                    and minority
                    interest | $                                                                                                             | 1,039,640
|Income tax
                    rate                                                                          |                                                                                                               | 33%      
|                                                                                                             |                                                                                                               | 343,081  
|Add: items not
                    deductible to taxes                                                       |                                                                                                               |          
|- Provision and
                    accrued expenses                                                         |                                                                                                               | 543      
|Income tax
                    expenses                                                                      | $                                                                                                             | 343,624  



The following table sets
        forth the significant components of the aggregate net deferred tax assets of the Company as
        of August 31, 2007 and
        2006:

|                                                       | Three
                    months
                    ended
                    August
                    31,
|------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------
|                                                       | 2007                                                                                                         
|                                                       |                                                                                                              
|Deferred tax
                    assets:               |                                                                                                              
|- Net operating
                    loss carryforwards | $                                                                                                            
|Less: valuation
                    allowance          |                                                                                                              
|Deferred tax
                    assets                | $                                                                                                            



As of August
        31, 2007 and 2006, a
        valuation allowance of $18,488
        and
        Nil
        was provided to the deferred
        tax assets due to the uncertainty surrounding their realization.

13

---

CHINA SUN GROUP HIGH-TECH
        CO.(Formerly
        Capital Resource Funding, Inc.)NOTES
        TO CONDENSED
        CONSOLIDATED
        FINANCIAL STATEMENTSFOR
        THE THREE
        MONTHS ENDED
        AUGUST 31, 2007
        AND
        2006
        (Currency expressed in United States Dollars (“US$”))(unaudited)





NOTE—10
        CAPITAL
        TRANSACTIONS



On August 24,
        2006, the Company
        was
        authorized to change the par value of its preferred and common stock from
        $0.00000005
        per share to
        $0.001 per share. In connection with the change in
        par value of preferred and common stock described
        above, all prior transactions involving common stock with a par value of $0.00000005
        have been
        restated to reflect the new par value of $0.001 in the accompanying financial
        statements.



As of August 31, 2007, the
        number of outstanding
        shares
        of the Company’s common
        stock was
        43,422,971.



NOTE—11
        
        CONCENTRATIONS AND
        RISKS



100% of the
        Company’s assets were located in the PRC and 100% of the Company’s revenues
        were generated from customers
        located in
        the PRC.



(a)     Major
        customers



For the
        three
        months ended
        August 31, 2007, the customers who account for 10% or more of revenues of the
        Company
        are presented
        as follows:



|                               |  | Revenues |           | Percentage

                    of
                    revenues |     | Trade
                    accounts

                    receivable
|------------------------------ |  | -------- | --------- | --------------------------------------------------------------- | --- | ------------------------------------------------------------------
|                               |  |          |           |                                                                 |     |                                                                   
|Customer
                    A |  | $        | 2,056,669 |                                                                 | 55% |                                                                   
|Customer
                    B |  |          | 1,182,216 |                                                                 | 32% |                                                                   
|Customer
                    C |  |          | 409,517   |                                                                 | 11% |                                                                   
|Total:                         |  | $        | 3,648,402 |                                                                 | 98% |                                                                   



For the
        three
        months ended
        August 31, 2006, the customers who account for 10% or more of revenues of the
        Company
        are presented
        as follows:



|                               |  | Revenues |           | Percentage
                    of revenues |     | Trade
                    accounts

                    receivable
|------------------------------ |  | -------- | --------- | ------------------------------------------ | --- | ------------------------------------------------------------------
|                               |  |          |           |                                            |     |                                                                   
|Customer
                    D |  | $        | 1,270,616 |                                            | 99% |                                                                   



(b)
        
        Major
        vendors

For the
        three
        months ended
        August 31, 2007, the vendors
        who account
        for 10% or more of purchases
        of the
        Company
        are presented
        as follows:







14

---

CHINA SUN GROUP HIGH-TECH
        CO.(Formerly
        Capital Resource Funding, Inc.)NOTES
        TO CONDENSED
        CONSOLIDATED
        FINANCIAL STATEMENTSFOR
        THE THREE
        MONTHS ENDED
        AUGUST 31, 2007
        AND
        2006
        (Currency expressed in United States Dollars (“US$”))(unaudited)







|                             |  | Purchases |           | Percentage
                    of purchases |     | Accounts

                    payable
|---------------------------- |  | --------- | --------- | ------------------------------------------- | --- | -------------------------------------
|                             |  |           |           |                                             |     |                                      
|Vendor
                    A |  | $         | 1,726,298 |                                             | 93% |                                      



For the
        three
        months ended
        August 31
        , 2006, the
        vendors
        who account
        for 10% or more of purchases
        of the
        Company
        are presented
        as follows:

|                             |  | Purchases |         | Percentage
                    of purchases |      | Accounts

                    payable
|---------------------------- |  | --------- | ------- | ------------------------------------------- | ---- | -------------------------------------
|                             |  |           |         |                                             |      |                                      
|Vendor
                    B |  | $         | 591,084 |                                             | 100% |                                      



(c)     Credit
        risk

Financial instruments that
        potentially subject the Company to
        significant
        concentrations of credit risk
        consist principally of cash and trade accounts receivable. The Company performs ongoing
        credit evaluations of its customers' financial condition, but does not require collateral
        to support such receivables.

NOTE—12
        COMMITMENT



1.    The
        Company leased an
        office premise under a non-cancelable operating lease agreement
        for a period of eight
        years, due
        July 25, 2010. The annual
        lease payment is $6,582.



2.    On
        June 9, 2007, the Company’s subsidiary, Sun Group entered into an African Mining
        Project Contract of Cooperation (the “Purchase Agreement”) with Shengbao Group
        and South African Shengbao Mining Enterprises (“Shengbao”). Pursuant to the
        Purchase Agreement, Sun Group is obliged
        to purchase the prospecting
        and mining rights of a cobalt ore mine
        for a purchase price
        of $2 million
        over
        a term of 15 years. As of
        August 31, 2007, the Company had the capital commitment of $2 million in the
        purchase of the
        prospecting and mining rights which was contracted for but not provided in the financial
        statements.





15

---



|Item 2. |  | Management's
                    Discussion and Analysis or Plan of Operation
|------- |  | -----------------------------------------------------------------------------

Cautionary Notice Regarding Forward-Looking
        Statements

We make certain forward-looking statements in this report.
        Statements concerning our future operations, prospects, strategies, financial condition,
        future economic performance (including growth and earnings), demand for our services, and
        other statements of our plans, beliefs, or expectations, including the statements contained
        under the captions "Risk Factors," "Management's Discussion and Analysis or Plan of
        Operation," "Description of Business," as well as captions elsewhere in this document, are
        forward-looking statements. In some cases these statements are identifiable through the use
        of words such as "anticipate," "believe," "estimate," "expect," "intend," "plan,"
        "project," "target," "can,""could," "may," "should," "will," "would," and similar
        expressions. We intend such forward-looking statements to be covered by the safe harbor
        provisions contained in Section 27A of the Securities Act of 1933, as amended (the
        "Securities Act") and in Section 21E of the Securities Exchange Act of 1934, as amended
        (the "Exchange Act"). The forward-looking statements we make are not guarantees of future
        performance and are subject to various assumptions, risks, and other factors that could
        cause actual results to differ materially from those suggested by these forward-looking
        statements. Because such statements are subject to risks and uncertainties, actual results
        may differ materially from those expressed or implied by the forward-looking statements.
        Indeed, it is likely that some of our assumptions will prove to be incorrect. Our actual
        results and financial position will vary from those projected or implied in the
        forward-looking statements and the variances may be material. You are cautioned not to
        place undue reliance on such forward-looking statements. These risks and uncertainties,
        together with the other risks described from time to time in reports and documents that we
        file with the SEC should be considered in evaluating forward-looking statements.

The nature of our business makes predicting the future trends
        of our revenues, expenses, and net income difficult. Thus, our ability to predict results
        or the actual effect of our future plans or strategies is inherently uncertain. The risks
        and uncertainties involved in our business could affect the matters referred to in any
        forward-looking statements and it is possible that our actual results may differ materially
        from the anticipated results indicated in these forward-looking statements. Important
        factors that could cause actual results to differ from those in the forward-looking
        statements include, without limitation, the factors discussed above in the section entitled
        "Risk Factors" and the following:

| | • |  | the effect of political, economic, and market
                    conditions and geopolitical events;
| | - |  | -----------------------------------------------------------------------------------------------------



| | • |  | legislative and regulatory changes that affect
                    our business;
| | - |  | --------------------------------------------------------------------------------



| | • |  | the availability of funds and working
                    capital;
| | - |  | ------------------------------------------------------------------



| | • |  | the actions and initiatives of current and
                    potential competitors;
| | - |  | -------------------------------------------------------------------------------------



| | • |  | investor sentiment; and
| | - |  | -----------------------



| | • |  | our reputation.
| | - |  | ---------------

We do not undertake any responsibility to publicly release
        any revisions to these forward-looking statements to take into account events or
        circumstances that occur after the date of this report. Additionally, we do not undertake
        any responsibility to update you on the occurrence of any unanticipated events which may
        cause actual results to differ from those expressed or implied by any forward-looking
        statements.

The following discussion and analysis should be read in
        conjunction with our consolidated financial statements and the related notes thereto as
        filed with the SEC and other financial information contained elsewhere in this
        Report.

16

---

Overview

We were incorporated in North Carolina on February 2, 2004
        and have since undergone a change in business. In February 2007 acquired a 70% ownership
        interest in Da Lian Xin Yang High-Tech Development Co. Ltd., a corporation organized and
        existing under the laws of the Peoples' Republic of China ("DLX"), through a share exchange
        which was consummated on February 28, 2007. In August 2007, our shareholders approved the
        reincorporation to the State of Delaware and our name change from Capital Resource Funding,
        Inc. to China Sun Group High-Tech Co. Currently, our
        only operations are conducted through DLX, who engages in the business of manufacturing and
        selling cobaltosic oxide products. These products are primarily manufactured, marketed, and
        sold in China.

Through DLX, China Sun Group High-Tech Co.
        produces anode materials used in lithium ion batteries.
        Lithium ion batteries continue to gain in popularity due to their versatility, high energy
        density and capacity, high voltage, compact size, light weight, and excellent energy
        retention characteristics. They are used in mobile phones, PDAs, laptops, and digital
        cameras, as well as electric automobiles and solar and wind energy storage units. DLX
        primarily produces cobaltosic oxide and lithium cobalt oxide and also engages in the
        research and development of new technologies to be used in the lithium ion battery
        market.

According to
        the China Battery Industry Association, which conducts research of and puts forth reports
        on the battery industry, DLX has the second largest cobalt series production capacity in
        China. Through its R&D group, DLX owns a proprietary series of nanometer technologies
        that supply state-of-the-art components for advanced lithium ion batteries. Leveraging its
        technological leadership in China, its high-quality product line and its scalable
        production capacity, DLX plans to create a fully integrated supply chain from the primary
        manufacturing of cobalt ore to finished products, which include lithium ion
        batteries.

We recently received preliminary
        accreditation from the State Intellectual Property Office of the People's Republic of China
        of certain of our equipment that we use in our cobaltosic oxide and lithium cobalt oxide
        production process. Meeting the State’s production standards are important to
        securing our technological leadership position in China. The accreditation of the equipment
        and the associated production process enables us to provide our customers with exact
        specifications, along with superior quality control, throughout the production
        process.

In addition, during the fiscal year 2007,
        our executive management team completed the
        well-known training and consultation program Six Sigma Management.
        Many companies around the world are adopting this process improvement and quality
        management methodology in an effort to increase efficiencies, reduce cost, and strengthen
        customer relationships across the enterprise.

Highlights from the Quarter Ended August 31,
        2007

On June 9, 2007, DLX entered into an African Mining Project
        Contract of Cooperation (the “Purchase Agreement”) with Shengbao Group, and
        South African Shengbao Mining Enterprises (together referred to as “Shengbao”),
        pursuant to which DLX purchased the prospecting and mining rights of a cobalt ore mine that
        is owned by Shengbao in the Congo area, Africa. The parties agreed that the purchase price
        would be US$2,000,000 and that DLX would give Shengbao 20% of its monthly ore production
        each month for the payment of the purchase price. Pursuant to the Purchase Agreement,
        Shengbao will provide DLX a mine of approximately 35 sq. km in the Congo area to prospect
        and mine. DLX would provide the necessary funding, equipment and engineering staff for the
        mining and will produce no less than twenty (20) tons of ore per day. With regard to any
        cobalt ore mined, DLX will own eighty percent (80%) and Shengbao twenty percent
        (20%).  If no cobalt ore is mined from the specified mine, DLX is not obligated to
        make any payments to Shengbao.

In August 2007, the
        Embassy of the Congo Government visited us in China to discuss DLX's mining and production facility in Africa. The
        Embassy indicated their strong support of DLX’s business
        presence in the Congo.

17

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During the quarter ended August 31, 2007, we
        continued to serve six leading battery producers in China. They are: Hunan Shanshan
        Advanced Material; CITIC Guoan Mengguli Corporation; Hunan Reshine New Material Co., Ltd.;
        Changzhou PowerGenie Materials Co., Ltd.; Xiamen TungstenCo., Ltd.; and Beijing Easpring
        Material Technology Co., Ltd. We have also gained new customers, which include Zhejiang
        Tianhong Energy Technology Co., Ltd., Zhejiang Wanma Battery Co., Ltd., Guangzhou Huaneng
        Battery Co., Ltd. and Shenzhen Sunristar Electronics Co., Ltd.

Internationally, DLX approached several
        potential customers who have shown an interest in its product
        line including: Tanaka,Honjo, HLST, Sanyo, Sony, Panasonic, Nihonkagakusangyo, Maxell,
        LG,Samsung, SK, Hanhua and Light & Future.

Through our R&D group,
        we have successfully acquired nanometer
        technologies to create the following three series of nanometer metal products:



| | 1. | Nanometer Simple Metal
                    Substance. The sizes
                    of these substances vary between 10-100nm and are mainly applied to martial,
                    chem-industrial, pharmaceutical, and electronic industries. They are used as an
                    efficient catalyst, antiseptic, combustion-supporting agent and electrode
                    material.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | 2. | Nanometer Compound Metal
                    Substance. The sizes
                    of these substances vary between 10-70nm and are mainly applied in industries
                    such as airplane manufacture and auto manufacture. These substances are used
                    for sterilization and are both energy-saving and extend the durability of
                    rubber.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Nanometer Metal
                    Alloy. These are used
                    in the plastic and lubricant oil industries; have high tensile strength and
                    abrasion resistance and have good sturdiness and oil and chemical
                    resistance.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Along with our
        strategic partnership with Northeastern University, located in China, we are currently
        conducting trials of new ternary materials, which are combinations of source anode
        materials, as an alternative to using cobalt exclusively in lithium ion component
        production.

In August 2007, we reincorporated from North
        Carolina to Delaware and changed our name to China Sun Group High-Tech Co. The par value of
        common stock of China Sun Group High-Tech Co. also changed from $0.00000005 to $0.001 per
        share.

New Financial Accounting
        Pronouncements

In September 2006, the FASB
        issued SFAS No. 157, "Fair Value Measurement" ("SFAS 157") which defines fair value,
        establishes a framework for measuring fair value in generally accepted accounting
        principles and expands the disclosures about fair value measurement. This Statement was
        developed to provide guidance for consistency and comparability in fair value measurements
        and disclosures and applies under other accounting pronouncements that require or permit
        fair value measurements. This Statement is effective for financial statements issued for
        fiscal years beginning after November 15, 2007 and interim periods within those fiscal
        years. This Statement is not expected to have a material impact on our
        consolidated financial statements.

In February 2007, the FASB
        issued Statement of Financial Accounting Standards No. 159, "The Fair Value Option for
        Financial Assets and Financial Liabilities" ("SFAS 159").   This Statement provides
        companies with an option to report selected financial assets and liabilities at fair value.
        The Standard's objective is to reduce both the complexity in accounting for financial
        instruments and the volatility in earnings caused by measuring related assets and
        liabilities differently. SFAS 159 also establishes presentation and disclosure requirements
        designed to facilitate comparisons between companies that choose different measurement
        attributes for similar types of assets and liabilities. This Statement is effective as of
        the beginning of an entity's first fiscal year beginning after November 15, 2007. Early
        adoption is permitted if we make the choice in the first 120 days of that fiscal year and
        also elects to apply the provisions of SFAS 157. We do not expect SFAS 159 to have a
        material impact on its consolidated financial statements.

18

---

Results of
        Operations

Three Months Ended August
        31, 2007 Compared to the Three Months Ended August 31, 2006

Net Revenues

Net
        revenues for the three months ended August 31, 2007 totaled $3,735,837, compared to
        $1,284,093 for the three months ended August 31, 2006.
        This represents an increase of $2,451,744 for the
        three months ended August 31, 2007, respectively. The increase resulted from increased
        customer demand and sales.

Cost of Revenue

Cost
        of revenues for the three months ended August 31, 2007 totaled $2,453,216, compared to
        $779,350 for the three months ended August 31, 2006.
        This represents an increase of $1,635,866 for the
        three months ended August 31, 2007. The increase
        resulted directly from increased
        production.

General and Administrative Expense

General
        and administrative expenses for the three months ended August 31, 2007 totaled $178,234,
        compared to $93,465 for the three months ended August
        31, 2006. This represents an increase of $84,769 for
        the three months ended August 31, 2007. The increase resulted from the hiring of additional
        personnel and the setup of a U.S. office.

Research and Development Expense

Research
        and development expense for the three months ended August 31, 2007 totaled $24,873,
        compared to $11,475 for the three months ended August
        31, 2006. This represents an increase of
        $13,398 for the three months ended August 31, 2007.
        The increase resulted from the hiring of additional research and development
        personnel.

Depreciation Expense

Depreciation
        expense for the three months ended August 31, 2007 totaled $92,697, compared to $86,517for
        the three months ended August 31, 2006. This represents an increase of $6,180
        for the three months ended August 31, 2007. The increase
        resulted from the additional of plant and equipment.

Income (Loss) From Operations

Income
        from operations for the three months
        ended August 31, 2007 totaled $986,817, compared to
        $293,286 for the three months ended August 31, 2006.
        This represents an increase of $693,531 for the three
        months ended August 31, 2007. The increase resulted primarily from the increase in
        revenues.

Minority Interest

The
        minority interest for the three months ended August 31, 2007 totaled
        $208,805.

19

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Foreign Currency Translation Gain

The
        foreign currency translation gain for the three months ended August 31, 2007 totaled
        $664,209 as compared to a gain of $254,142
        for the three months ended August 31, 2006. This represents
        an increase of $574,618 for the three months ended
        August 31, 2007. The increases resulted from the increase in the Renminbi against the U.S.
        dollar. This updated Renminbi valuation of DLX’s assets and liabilities resulted in
        this gain.

Liquidity and Capital Resources

During
        the three months ended August 31, 2007, net cash
        generated from operating activities was $661,317 compared to net cash used of $481,163
        for the same period in 2006. This increase resulted primarily from positive cash flows from operations for the period ended August 31, 2007 were due primarily to the growth in
sales revenues with the decrease in accounts receivable by $173,593 and the increase in value-added tax payable
by $551,040, income tax payable by $343,624, other payable and accrued liabilities by $293,570, partially offset
by the increase in deposits and prepayments by $426,870 and the decrease in accounts payable by $322,254 and
customer deposits by $686,467 in this period. Negative cash flows from operations for the same period in 2006
were due primarily to the increase in accounts receivable by $1,229,825, partially offset by the increase in
accounts payable by $242,239, value-added tax payable by $85,987 and income tax payable by $91,938 in this period.

During
        the three months ended August 31, 2007, net cash used
        for investing activities was $0 as compared to
        $4,252 for the same period in 2006. This decrease resulted because we did not purchase any property,
        plant, or equipment during the three months ended August 31, 2007.

During
        the three months ended August 31, 2007, net cash
        generated from financing activities was $0 compared to
        $644,452 for the same period in 2006. This decrease
        resulted due to our lack of financing activities during the three months ended August 31,
        2007.

As of August 31, 2007, we have cash and cash equivalents of $1,481,939. This represents an increase of $668,776,
or 45.13% as compared to $813,163 on May 31, 2007. This increase is mainly due to the collection of accounts
receivable from new customers and partial settlement of a stale receivable during the three months ended August
31, 2007. The credit term for major customers is generally for a period of 3 to 6 months.  We seek to maintain
strict control over our outstanding receivables.  Overdue balances are reviewed to determine the establishment of
the allowance for doubtful accounts regularly by our senior management.

Income Taxes

Income
        tax expense for the three months ended August 31, 2007
        was $343,624, compared to $96,785 for the three months ended
        August 31, 2006. This represents an increase of $246,839
        for the three months ended August 31, 2007. The increase
        resulted primarily from the increase in income from operations.

Export Sales

Revenues
        from sales to customers located outside of the United States accounted for almost
        all of our net sales for three months ended August 31,
        2007.

Trends

Currently,
        many companies in the cobalt product industry are looking to directly own cobalt producing
        mines which will provide direct access and supply to cobalt ore, the primary raw material
        in the cobalt product industry. In June 2007, we acquired certain rights to a cobalt mine
        in Africa. This acquisition will help us avoid export limitations imposed by the Congo,
        reduce freight expenses, and help ensure a stable supply of cobalt
        ore.

We
        are not aware of any trends, events or uncertainties that have or are reasonably likely to
        have a material impact on our short-term or long-term liquidity.

Inflation

We
        believe that inflation has not had a material or significant impact on our revenue or our
        results of operations.

Material Commitments for Capital Expenditures

Currently,
        we own the prospecting and mining rights of a cobalt mine in Congo. We plan to start the
        construction of a processing plant in Congo in the third quarter of the 2008 fiscal year.
        We anticipate that the construction of the plant will cost approximately $2,000,000 to
        $3,000,000.

20



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General

During
        2007, we plan to expand our research and development facilities by establishing an
        electro-chemistry testing center. This center will conduct research in increasing the
        quality of our current products and anode materials used in lithium ion batteries, in
        general. We also plan to fully equip our on-site inspection center with equipment and
        specialized personnel. Our future plans also include establishing a processing factory on
        our property located at the Dalian High-Tech Park Ganjingzi Zone in
        China.

We
        do not believe that the funds available to us and those generated from revenues are
        adequate to meet our operating and/or capital needs for the rest of fiscal 2007. We will
        begin evaluating various sources of capital to meet our growth requirements. Such sources
        will include debt financings, the issuance of equity securities, and entrance into other
        financing arrangements. There can be no assurance, however, that any of the contemplated
        financing arrangements described herein will be available and, if available, can be
        obtained on terms favorable to us.

Contractual Obligations and Commitments

We
        leased an office
        premise under
        a non-cancelable
        operating lease agreement
        for a period of
        eight
        years, due
        July
        25,
        2010.
        The annual lease payment is
        $6,582.

On
        June 9, 2007, our subsidiary, Sun Group entered into
        an African Mining Project Contract of Cooperation with Shengbao Group and South African
        Shengbao Mining
        Enterprises.
        Pursuant to
        th
        is
        Purchase Agreement,
        we are obliged
        to
        purchase the prospecting and mining rights of a cobalt ore
        mine for a purchase
        price of $2 million in a term of 15 years. As of August 31, 2007,
        we
        had
        a
        capital commitment of $2
        million in connection with such
        prospecting and mining
        rights, but these were
        not
        included
        in the financial
        statements.

Off Balance Sheet Arrangements

None.

|Item 3. |  | Controls and
                    Procedures.
|------- |  | --------------------------------------------

As
        of the end of the period covered by this report, our management, with the participation of
        our Principal Executive Officer, Wang Bin, and our Principal Financial and Accounting
        Officer, Ming Fen Liu, evaluated the effectiveness of the design and operation of our
        disclosure controls and procedures, which are those controls and other procedures of an
        issuer that are designed to ensure that information required to be disclosed by the us, in
        the reports we file under the Exchange Act of 1934, as amended (the "Exchange Act"), are
        recorded, processed, summarized and reported, within the time periods specified in the
        Securities and Exchange Commission's rules and forms. These disclosure controls and
        procedures may include, controls and procedures designed to ensure that information
        required to be disclosed by us in the reports that we file or submit under the Exchange Act
        are accumulated and communicated to the our management, including our Principal Executive
        Officer and Principal Financial and Accounting Officer, as appropriate to allow timely
        decisions regarding required disclosure. Based on this evaluation, our management concluded
        that as of August 31, 2007 our disclosure controls and procedures were
        effective.

During
        the quarter ended August 31, 2007, there were no changes in our internal control over
        financial reporting that has materially affected, or is reasonably likely to materially
        affect our internal control over financial reporting.

21

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Part II. Other
        Information



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

At
        our 2007 Annual Meeting of Shareholders held on August
        17, 2007, the following matters were voted upon and adopted by the votes
        indicated:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |            |  |         
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | --------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | For        |  | Withheld
|To elect seven (7) individuals to serve as
                    our Board of Directors until the next annual meeting of
                    shareholders and until their successors are elected and
                    qualified.(1)                                                                                                                                                                                                                                                                                    |  |            |  |         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |            |  |         
|Bin Wang                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | 35,465,446 |  | 213,000 
|Zhi Li                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | 35,469,446 |  | 209,000 
|Jiao Wang                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 35,469,446 |  | 209,000 
|Fudong Sui                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | 35,462,446 |  | 216,000 
|Gang Li                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | 35,469,446 |  | 209,000 
|Yefei Liu                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 35,462,446 |  | 216,000 
|Fuqiu Ren                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 36,455,446 |  | 223,000 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |            |  |         
|To approve the corporate name change from
                    “Capital Resource Funding, Inc.” to “China Sun Group
                    High-Tech Co.”                                                                                                                                                                                                                                                                                                                                                                   |  | 35,678,446 |  | -       
|To approve the reincorporation of the Company in
                    the State of Delaware , which would be
                    effected under an Agreement and Plan of Merger by and between the Company and
                    China Sun Group High-Tech Co, a Delaware corporation and a wholly-owned
                    subsidiary of the Company, pursuant to which the Company will merge with and
                    into China Sun (the “Merger”) and China Sun will survive the
                    Merger. |  | 35,674,446 |  | -       
|To ratify the selection by the Board of Directors
                    of Zhong Yi (Hong Kong) C.P.A. Company Ltd. to be the independent registered
                    public accountants with respect to the audit of the Company's financial
                    statements for the fiscal year ended May 31, 2008                                                                                                                                                                                                    |  | 35,678,446 |  | -       

|(1) |  | The following were elected to serve as directors
                    at the Annual Meeting of Shareholders: Bin Wang, Zhi Li, Jiao Wang, Fudong Sui,
                    Gang Li, Yefei Liu, and Fuqiu Ren.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There
        were no non-votes with respect to the election of the
        Board members, the corporate name change, the reincorporation to the State of
        Delaware, and the ratification of Zhong Yi (Hong Kong)
        C.P.A. Company Ltd.

22

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|Item 6. |  | Exhibits and Reports on
                    Form 8-K
|------- |  | ----------------------------------------------------

(a)
        Exhibits

|31.1 |  | Certification Required Under
                    Section 302 of Sarbanes-Oxley Act of 2002 *
|---- |  | --------------------------------------------------------------------------------------------



|31.2 |  | Certification Required Under
                    Section 302 of Sarbanes-Oxley Act of 2002 *
|---- |  | --------------------------------------------------------------------------------------------



|32 |  | Certification Required Under
                    Section 906 of Sarbanes-Oxley Act of 2002 *
|-- |  | --------------------------------------------------------------------------------------------



*
        Filed herewith.

23

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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.

|Date: October 15, 2007 | CHINA SUN GROUP HIGH-TECH CO.
                    By: 
                    /s/ Bin
                    Wang
                           Name:
                    Bin Wang
                           Title: President, Chief Executive
                    Officer and Chairman
|---------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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