---

UNITED STATESSECURITIES AND
EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended May 31, 2009

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

For the transition period from _____ to _____

COMMISSION FILE NUMBER000-53008

KUSHI RESOURCES INC.(Exact
name of registrant as specified in its charter)

|NEVADA                                                               | 98-0559606                         
|-------------------------------------------------------------------- | -----------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S Employer Identification No.)
|                                                                     |                                    
|Attn: Greg Corcoran, Apartados 0823-01488                            |                                    
|Panama City, Panama                                                  |                                    
|(Address of principal executive offices)                             | (Zip Code)                         

(702) 553-2776(Registrant's telephone number,
including area code)

N/A(Former name, former address and former
fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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.[ x ] Yes[ ] No

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (s. 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).[
] Yes[ ] No

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

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

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

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date: As of
July 7, 2009, the Registrant had 5,230,000 shares of common stockoutstanding.

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PART I - FINANCIAL INFORMATION

|ITEM 1. | FINANCIAL STATEMENTS.
|------- | ---------------------

The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations, cash flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the three months ended May 31, 2009 are
not necessarily indicative of the results that can be expected for the year
ending February 28, 2010.

As used in this Quarterly Report, the terms "we, "us, "our,
and Kushi mean Kushi Resources Inc. unless otherwise indicated. All dollar
amounts in this Quarterly Report are in U.S. dollars unless otherwise
stated.

2

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|KUSHI RESOURCES INC.          
|------------------------------
|(AN EXPLORATION STAGE COMPANY)
|BALANCE SHEETS                

|                                                                       |   | May 31,     |   |   | February 28, |  
|---------------------------------------------------------------------- | - | ----------- | - | - | ------------ | -
|                                                                       |   | 2009        |   |   | 2009         |  
|                                                                       |   | (unaudited) |   |   |              |  
|                                                                       |   |             |   |   |              |  
|ASSETS                                                                 |   |             |   |   |              |  
|Current assets:                                                        |   |             |   |   |              |  
|Cash                                                                   | $ | 531         |   | $ | 70           |  
|                                                                       |   |             |   |   |              |  
|Total assets                                                           | $ | 531         |   | $ | 70           |  
|                                                                       |   |             |   |   |              |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                  |   |             |   |   |              |  
|Current liabilities:                                                   |   |             |   |   |              |  
|Accounts payable                                                       | $ | 60,785      |   | $ | 42,558       |  
|Accrued administrative fees                                            |   | 3,000       |   |   | 3,150        |  
|Advances payable                                                       |   | 27,678      |   |   | 27,365       |  
|Due
      to related party                                             |   | 1,025       |   |   | 381          |  
|                                                                       |   |             |   |   |              |  
|Total
      liabilities                                                |   | 92,488      |   |   | 73,454       |  
|Commitments and contingencies                                          |   |             |   |   |              |  
|Stockholders' deficit:                                                 |   |             |   |   |              |  
|Common stock; authorized
      75,000,000; $0.001 par value; 5,230,000 |   |             |   |   |              |  
|issued
      and outstanding at May 31, 2009 and February 28, 2009     |   | 5,230       |   |   | 5,230        |  
|Additional paid in capital                                             |   | 51,270      |   |   | 51,270       |  
|Deficit
      accumulated during the exploration stage                 |   | (148,457    | ) |   | (129,884     | )
|                                                                       |   |             |   |   |              |  
|Total
      stockholders' deficit                                      |   | (91,957     | ) |   | (73,384      | )
|                                                                       |   |             |   |   |              |  
|Total
      liabilities and stockholders' deficit                      | $ | 531         |   | $ | 70           |  

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

F-1

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|KUSHI RESOURCES INC.          
|------------------------------
|(AN EXPLORATION STAGE COMPANY)
|STATEMENTS OF OPERATIONS      
|(UNAUDITED)                   

|                                               |   |                    |   |   |                 |   |   | From           | 
|---------------------------------------------- | - | ------------------ | - | - | --------------- | - | - | -------------- | 
|                                               |   | Three Months Ended |   |   | October 3, 2005 |  
|                                               |   | May 31,            |   |   | May 31,         |   |   | (Inception) to | 
|                                               |   | 2009               |   |   | 2008            |   |   | May 31, 2009   | 
|                                               |   |                    |   |   |                 |   |   |                | 
|Operating Expenses:                            |   |                    |   |   |                 |   |   |                | 
|                                               |   |                    |   |   |                 |   |   |                | 
|Administrative fees                            | $ | 3,000              |   | $ | 1,060           |   | $ | 18,850         | 
|Bank charges and interest                      |   | 77                 |   |   | 20              |   |   | 1,025          | 
|Donated rent                                   |   | -                  |   |   | -               |   |   | 4,000          | 
|Donated services                               |   | -                  |   |   | -               |   |   | 8,000          | 
|Exploration and development
      costs        |   | -                  |   |   | 12,452          |   |   | 21,240         | 
|Office                                         |   | 60                 |   |   | -               |   |   | 60             | 
|Professional fees                              |   | 15,386             |   |   | 12,848          |   |   | 89,262         | 
|Regulatory                                     |   | 50                 |   |   | 1,075           |   |   | 6,020          | 
|                                               |   |                    |   |   |                 |   |   |                | 
|Net
      loss                                 | $ | 18,573             |   | $ | 27,455          |   | $ | 148,457        | 
|                                               |   |                    |   |   |                 |   |   |                | 
|Net loss per share:                            |   |                    |   |   |                 |   |   |                | 
|Basic and diluted                              |   | (0.00              | ) |   | (0.01           | ) |   |                | 
|                                               |   |                    |   |   |                 |   |   |                | 
|Weighted average number of shares outstanding: |   |                    |   |   |                 |   |   |                | 
|Basic
      and diluted                        |   | 5,230,000          |   |   | 5,230,000       |   |   |                | 

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

F-2

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|KUSHI RESOURCES INC.          
|------------------------------
|(AN EXPLORATION STAGE COMPANY)
|STATEMENTS OF CASH FLOWS      
|UNAUDITED                     

|                                                          |   |                    |   |   |             |   |   | From            |  
|--------------------------------------------------------- | - | ------------------ | - | - | ----------- | - | - | --------------- | -
|                                                          |   |                    |   |   |             |   |   | October 3, 2005 |  
|                                                          |   | Three Months Ended |   |   | (Inception) |  
|                                                          |   | May 31,            |   |   | May 31,     |   |   | to May 31,      |  
|                                                          |   | 2009               |   |   | 2008        |   |   | 2009            |  
|                                                          |   |                    |   |   |             |   |   |                 |  
|Cash flow from operating activities:                      |   |                    |   |   |             |   |   |                 |  
|Net loss                                                  | $ | (18,573            | ) | $ | (27,455     | ) | $ | (148,457        | )
|Adjustments to reconcile net loss to net cash             |   |                    |   |   |             |   |   |                 |  
|used in operating activities:                             |   |                    |   |   |             |   |   |                 |  
|Donated rent and services                                 |   | -                  |   |   | -           |   |   | 12,000          |  
|Changes
      in operating assets and liabilities:        |   |                    |   |   |             |   |   |                 |  
|Accounts payable                                          |   | 18,227             |   |   | 27,878      |   |   | 60,785          |  
|Accrued administrative fees                               |   | (150               | ) |   | 1,060       |   |   | 3,000           |  
|Accrued professional fees                                 |   | -                  |   |   | (2,578      | ) |   | -               |  
|Advances payable                                          |   | 313                |   |   | -           |   |   | 27,678          |  
|Due to related party                                      |   | 644                |   |   | (37         | ) |   | 1,025           |  
|                                                          |   |                    |   |   |             |   |   |                 |  
|Net cash provided by (used in) operating
      activities |   | 461                |   |   | (1,132      | ) |   | (43,969         | )
|                                                          |   |                    |   |   |             |   |   |                 |  
|Cash flows from financing activities                      |   |                    |   |   |             |   |   |                 |  
|Cash from issuance of common stock                        |   | -                  |   |   | -           |   |   | 49,750          |  
|Cash paid on cancellation of common
      stock           |   | -                  |   |   | -           |   |   | (5,250          | )
|                                                          |   |                    |   |   |             |   |   |                 |  
|Net cash provided by financing activities                 |   | -                  |   |   | -           |   |   | 44,500          |  
|                                                          |   |                    |   |   |             |   |   |                 |  
|Increase (decrease) in cash during the period             |   | 461                |   |   | (1,132      | ) |   | 531             |  
|                                                          |   |                    |   |   |             |   |   |                 |  
|Cash, beginning of period                                 |   | 70                 |   |   | 1,916       |   |   | -               |  
|                                                          |   |                    |   |   |             |   |   |                 |  
|Cash, end of period                                       | $ | 531                |   | $ | 784         |   | $ | 531             |  
|                                                          |   |                    |   |   |             |   |   |                 |  
|Supplemental disclosure of cash flow information:         |   |                    |   |   |             |   |   |                 |  
|Cash paid during the period                               |   |                    |   |   |             |   |   |                 |  
|Taxes                                                     | $ | -                  |   | $ | -           |   | $ | -               |  
|Interest                                                  | $ | -                  |   | $ | -           |   | $ | -               |  

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

F-3

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|MAY 31, 2009                     
|(Unaudited)                      

NOTE 1  ORGANIZATION AND BASIS OF PRESENTATION

Nature of Operations

Kushi Resources Inc. (Kushi) was incorporated on October 3, 2005,
  under the laws of the State of Nevada. Kushis principal business is the
  acquisition and exploration of mineral resources in northern British Columbia,
  Canada. Kushi has not presently determined whether its properties contain mineral
  reserves that are economically recoverable. Kushi has not commenced significant
  operations and is considered an Exploration Stage Company, as defined by SEC
  Industry Guide 7, and follows Statement of Financial Accounting Standard (SFAS)
  No.7 Accounting and Reporting by Development Stage Enterprises,
  where applicable. In these notes, the terms Company, we, us or ourmean
  Kushi.

Basis of Presentation

The unaudited financial statements included herein have been
  prepared in accordance with accounting principles generally accepted in the
  United States for interim financial information and with the instructions to
  Form 10-Q and Article 8 of Regulation S-X. They do not include all information
  and notes required by generally accepted accounting principles for complete
  financial statements. However, except as disclosed herein, there has been no
  material changes in the information disclosed in the notes to the financial
  statements included in the Annual report on Form 10-KSB of Kushi Resources Inc.
  for the year ended February 28, 2009. In the opinion of management, all adjustments
  considered necessary for a fair presentation have been included, and are of
  a normal recurring nature. Operating results for the three months ended May
  31, 2009 are not necessarily indicative of the results that may be expected
  for any other interim period or the entire year. For further information, these
  unaudited financial statements and the related notes should be read in conjunction
  with the Companys audited financial statements for the year ended February
  28, 2009 included in the Companys report on Form 10-K.

Exploration Stage

These unaudited financial statements and related notes are presented
  in accordance with accounting principles generally accepted in the United States
  of America. The Company has not produced any revenues from its principal business
  and is an exploration stage company as defined by Statement of Financial Accounting
  Standard (SFAS) No. 7.

The Company is in the early exploration stage. In an exploration
  stage company, management devotes most of its time to conducting exploratory
  work and developing its business. These unaudited financial statements have
  been prepared on a going concern basis, which implies the Company will continue
  to realize its assets and discharge its liabilities in the normal course of
  business. The Company has never paid any dividends and is unlikely to pay dividends
  or generate earnings in the immediate or foreseeable future. The Companys
  continuation as a going concern and its ability to emerge from the exploration
  stage with any planned principal business activity is dependent upon the continued
  financial support of its shareholders and its ability to obtain the necessary
  equity financing and attain profitable operations.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

For purposes of the balance sheet and statement of cash flows,
  the Company considers all amounts on deposit with financial institutions and
  highly liquid investments with maturities of 90 days or less to be cash equivalents.
  At May 31, 2009, the Company did not have any cash equivalents.

F-4

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|MAY 31, 2009                     
|(Unaudited)                      

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign Currency Translation

The Companys functional and reporting currency is the United
  States dollar. Monetary assets and liabilities denominated in foreign currencies
  are translated in accordance with SFAS No. 52 Foreign Currency Translation,
  using the exchange rate prevailing at the balance sheet date. Gains and losses
  arising on settlement of foreign currency denominated transactions or balances
  are included in the determination of income. Foreign currency transactions are
  primarily undertaken in Canadian dollars. During the quarter ended May 31, 2009
  The Company incurred approximately $1,100 in foreign currency losses that were
  included in professional fees. The Company has not to the date of these unaudited
  financial statements, entered into derivative instruments to offset the impact
  of foreign currency fluctuations.

Comprehensive Income (Loss)

Comprehensive Income (loss) reflects changes in equity that results
  from transactions and economic events from non-owner sources. At May 31, 2009
  and February 28, 2009, the Company has no items that represent a comprehensive
  income (loss) and, therefore, has not included a schedule of comprehensive income
  (loss) in these unaudited financial statements.

Mineral Property Costs

The Company has been in the exploration stage since its inception
  on October 3, 2005 and has not yet realized any revenues from its planned operations.
  It is primarily engaged in the acquisition and exploration of mining properties.
  Mineral property exploration costs are expensed as incurred. Mineral property
  acquisition costs are initially capitalized when incurred using the guidance
  in the Emerging Issues Task Force (EITF) 04-02, Whether Mineral Rights are
  Tangible or Intangible Assets.The Company assesses the carrying costs for
  impairment under SFAS No. 144, Accounting for Impairment or Disposal of Long
  Lived Assets at each fiscal quarter end. An impairment is recognized when
  the sum of the expected undiscounted future cash flows is less than the carrying
  amount of the mineral property. Impairment losses, if any, are measured as the
  excess of the carrying amount of the mineral property over its estimated fair
  value.

When it has been determined that a mineral property can be economically
  developed as a result of establishing proven and probable reserves, the costs
  then incurred to develop such property, are capitalized. Such costs will be
  amortized using the units-of-production method over the estimated life of the
  probable reserves. If mineral properties are subsequently abandoned or impaired,
  any capitalized costs will be charged to operations.

Asset Retirement Obligations

SFAS No. 143 (SFAS 143), Accounting for Asset Retirement Obligations
  addresses financial accounting and reporting for obligations associated with
  the retirement of tangible long-lived assets and the associated asset retirement
  costs. Specifically, SFAS 143 requires that the fair value of a liability for
  an asset retirement obligation be recognized in the period in which it is incurred
  if a reasonable estimate of fair value can be made. In addition, the asset retirement
  cost is capitalized as part of the assets carrying value and subsequently
  allocated to expense over the assets useful life. At May 31, 2009, the
  Company did not have any asset retirement obligations.

F-5

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|MAY 31, 2009                     
|(Unaudited)                      

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial Instruments

Foreign Exchange Risk

The Company is subject to foreign exchange risk for transactions
  denominated in foreign currencies. Foreign currency risk arises from the fluctuation
  of foreign exchange rates and the degree of volatility of these rates relative
  to the United States dollar. The Company does not believe that it has any material
  risk due to foreign currency exchange.

Fair Value of Financial Instruments

The Companys financial instruments include cash, accounts
  payable, accrued administrative fees and accrued professional fees. The fair
  value of these financial instruments approximate their carrying values due to
  their short maturities.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to
  significant concentrations of credit risk consist principally of cash deposits.
  At May 31, 2009 and February 28, 2009, the Company had approximately $530 and
  $70, respectively in cash that was not insured. This cash is on deposit with
  a major chartered Canadian bank. As part of its cash management process, the
  Company performs periodic evaluations of the relative credit standing of this
  financial institution. The Company has not experienced any losses in cash balances
  and does not believe it is exposed to any significant credit risk on its cash.

Accounting Estimates

The preparation of these unaudited financial statements in conformity
  with accounting principles generally accepted in the United States of America
  requires management to make estimates and assumptions that affect the reported
  amounts of assets and liabilities and disclosure of contingent assets and liabilities
  at the date of these unaudited financial statements and the reported amounts
  of revenues and expenses during the reporting period. Actual results could differ
  from those estimates.

The Companys financial statements are based on a number
  of estimates, including an accrual for estimated administrative fees.

Basic and Diluted Net (Loss) Per Common Share (EPS)

Basic net (loss) per share is computed by dividing the net (loss)
  attributable to the common stockholders by the weighted average number of common
  shares outstanding during the reporting period. Diluted net income per common
  share includes the potential dilution that could occur upon exercise of the
  options and warrants to acquire common stock computed using the treasury stock
  method which assumes that the increase in the number of shares is reduced by
  the number of shares which could have been repurchased by the Company with the
  proceeds from the exercise of the options and warrants (which were assumed to
  have been made at the average market price of the common shares during the reporting
  period).

At May 31, 2009 and February 28, 2009, the Company had issued
  5,230,000 common shares and had no outstanding options or warrants.

F-6

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|MAY 31, 2009                     
|(Unaudited)                      

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock-Based Compensation

In December 2004, the Financial Accounting Standards Board (FASB)
  issued SFAS No. 123(R), Share-Based Payment (SFAS 123(R)), which is a
  revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS
  123(R) was effective for public companies for the first fiscal year beginning
  after June 15, 2005, supersedes Accounting Principles Board Opinion No. 25 (APB
  25), Accounting for Stock Issued to Employees, and amends SFAS 95, Statement
  of Cash Flows. SFAS 123(R) eliminates the option to use APB 25s intrinsic
  value method of accounting and requires recording expense for stock compensation
  based on a fair value based method.

The adoption of SFAS 123(R) did not have a material effect on
  the Companys financial condition or results of operations because since
  inception the Company has not entered into any share-based transactions.

Recent Accounting Pronouncements

In March 2008, the FASB, affirmed the consensus of FASB Staff
  Position (FSP) Accounting Principles Board Opinion No. 14-1 (APB 14-1), Accounting
  for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
  (Including Partial Cash Settlement), which applies to all convertible debt
  instruments that have a net settlement feature; which means that such
  convertible debt instruments, by their terms, may be settled either wholly or
  partially in cash upon conversion. FSP APB 14-1 requires issuers of convertible
  debt instruments that may be settled wholly or partially in cash upon conversion
  to separately account for the liability and equity components in a manner reflective
  of the issuers nonconvertible debt borrowing rate. Previous guidance provided
  for accounting for this type of convertible debt instrument entirely as debt.
  FSP APB 14-1 is effective for financial statements issued for fiscal years beginning
  after December 15, 2008 and interim periods within those fiscal years. The adoption
  of FSP APB 14-1 did not have a material impact on our financial statements.

In May, 2008, FASB issued SFAS No. 162, The Hierarchy of Generally
  Accepted Accounting Principles(SFAS 162). SFAS 162 identifies the sources
  of accounting principles and the framework for selecting the principles used
  in the preparation of financial statements of nongovernmental entities that
  are presented in conformity with generally accepted accounting principles (GAAP)
  in the United States (the GAAP hierarchy). SFAS 162 is effective 60 days following
  the U.S. Securities and Exchange Commissions (SECs) approval of
  the Public Company Accounting Oversight Board amendments to AU Section 411,
  The Meaning of Present Fairly in Conformity With Generally Accepted Accounting
  Principles. The Company is currently reviewing the effect, if any, the proposed
  guidance will have on its financial statement disclosures.

In May, 2008, FASB issued SFAS No. 163, Accounting for Financial
  Guarantee Insurance Contractsan interpretation of FASB Statement No. 60.
  Diversity exists in practice in accounting for financial guarantee insurance
  contracts by insurance enterprises under FASB Statement No. 60, Accounting
  and Reporting by Insurance Enterprises.That diversity results in inconsistencies
  in the recognition and measurement of claim liabilities because of differing
  views about when a loss has been incurred under FASB Statement No. 5, Accounting
  for Contingencies.This Statement requires that an insurance enterprise
  recognize a claim liability prior to an event of default (insured event) when
  there is evidence that credit deterioration has occurred in an insured financial
  obligation. This Statement also clarifies how Statement 60 applies to financial
  guarantee insurance contracts, including the recognition and measurement to
  be used to account for premium revenue and claim liabilities. Those clarifications
  will increase comparability in financial reporting of financial guarantee insurance
  contracts by insurance enterprises.

F-7

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|MAY 31, 2009                     
|(Unaudited)                      

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Recent Accounting Pronouncements, continued

This Statement requires expanded disclosures about financial
  guarantee insurance contracts. The accounting and disclosure requirements of
  the Statement will improve the quality of information provided to users of financial
  statements. SFAS 163 will be effective for financial statements issued for fiscal
  years beginning after December 15, 2008, and interim periods within those fiscal
  years; disclosure requirements in paragraphs 30(g) and 31 are effective for
  the first period (including interim periods) beginning after May 23, 2008. The
  adoption of SFAS 163 did not have a significant impact on our financial statements.

On June 16, 2008, the FASB issued FASB Staff Position No. EITF
  03-6-1 (FSP No. EITF 03-6-1), Determining Whether Instruments Granted in
  Share-Based Payment Transactions Are Participating Securities,to address
  the question of whether instruments granted in share-based payment transactions
  are participating securities prior to vesting. FSP EITF 03-6-1 indicates that
  unvested share-based payment awards that contain rights to dividend payments
  should be included in earnings per share calculations. The guidance will be
  effective for fiscal years beginning after December 15, 2008. The adoption of
  FSP No. EITF 03-6-1 did not have a significant impact on the Companys
  results of operations and financial position.

In June 2008, the FASB issued EITF Issue 07-5 (EITF 07-5), Determining
  whether an Instrument (or Embedded Feature) is indexed to an Entitys Own
  Stock. EITF No. 07-5 is effective for financial statements issued for fiscal
  years beginning after December 15, 2008, and interim periods within those fiscal
  years. Early application is not permitted. Paragraph 11(a) of SFAS No. 133 Accounting
  for Derivatives and Hedging Activities,specifies that a contract that would
  otherwise meet the definition of a derivative but is both (a) indexed to the
  Companys own stock and (b) classified in stockholders equity in
  the statement of financial position would not be considered a derivative financial
  instrument. EITF 07-5 provides a new two-step model to be applied in determining
  whether a financial instrument or an embedded feature is indexed to an issuers
  own stock and thus able to qualify for the SFAS No. 133 paragraph 11(a) scope
  exception. The adoption of EITF 07-5 did not have a significant impact on the
  Companys financial statements.

In June 2008, the FASB released a proposed SFAS, Disclosure
  of Certain Loss Contingencies, an amendment of FASB Statements No. 5 and 141)
  (the proposed Statement), for a comment period that ended during August
  2008. The proposed Statement would (a) expand the population of loss contingencies
  that are required to be disclosed, (b) require disclosure of specific quantitative
  and qualitative information about those loss contingencies, (c) require a tabular
  reconciliation of recognized loss contingencies and (d) provide an exemption
  from disclosing certain required information if disclosing that information
  would be prejudicial to an entity's position in a dispute. The proposed Statement
  would be effective for financial statements issued for fiscal years ending after
  December 15, 2008, and for interim and annual periods in subsequent fiscal years.
  When and if the proposed Statement is approved in final form by FASB, the Company
  will evaluate whether the adoption of the proposed Statement will have any material
  impact on its financial position and results of operations.

In December 2008, the FASB issued FSP No. FAS 132(R)-1, Employers
  Disclosures about Postretirement Benefit Plan Assets.The FSP requires new
  disclosures on investment policies and strategies, categories of plan assets,
  fair value measurements of plan assets, and significant concentrations of risk,
  and is effective for fiscal years ending after December 15, 2009, with earlier
  application permitted. This pronouncement has no effect on the companys
  financial reporting at this time.

F-8

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|MAY 31, 2009                     
|(Unaudited)                      

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Recent Accounting Pronouncements, continued

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1,
  Interim Disclosures about Fair Value of Financial Instruments.The FSP
  amends SFAS No. 107, Disclosures about Fair Value of Financial Instrumentsand Accounting Principles Board (APB) Opinion No. 28, Interim
  Financial Reporting, to require disclosures about the fair value of financial
  instruments during interim reporting periods. The FSP is effective for interim
  and annual periods ending after June 15, 2009, which is August 31, 2009 for
  the Company. This pronouncement has no effect on the Companys financial
  reporting at this time.

In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2,
  Recognition and Presentation of Other-Than-Temporary Impairments.The
  FSP amends the other-than-temporary impairment guidance for debt securities
  to make the guidance more operational and to improve the presentation and disclosure
  of other-than-temporary impairments on debt and equity securities. The FSP is
  effective for interim and annual periods ending after June 15, 2009, which is
  August 31, 2009 for the Company. The FSP is not anticipated to have a material
  impact on the Companys consolidated financial statements.

In April 2009, the FASB issued FSP No. FAS 157-4, Determining
  Fair Value When the Volume and Level of Activity for the Asset or Liability
  Have Significantly Decreased and Identifying Transactions That Are Not Orderly. The FSP provides additional guidance for estimating fair value
  when the market activity for an asset or liability has declined significantly.
  The FSP is effective for interim and annual periods ending after June 15, 2009,
  which is August 31, 2009 for the Company. The FSP is not anticipated to have
a material impact on the Companys consolidated financial statements.

NOTE 3  GOING CONCERN

These unaudited financial statements have been prepared on a
  going concern basis, which implies the Company will continue to realize its
  assets and discharge its liabilities in the normal course of business. The Company
  has not generated any revenues since inception and has never paid any dividends
  and is unlikely to pay dividends or generate earnings in the immediate or foreseeable
  future. The continuation of the Company as a going concern is dependent upon
  the continued financial support from its shareholders, the ability of the Company
  to obtain necessary equity financing to continue operations, and the attainment
  of profitable operations. The Companys ability to achieve and maintain
  profitability and positive cash flows is dependent upon its ability to locate
  profitable mineral properties, generate revenues from its mineral production
  and control production costs. Based upon current plans, the Company expects
  to incur operating losses in future periods. At May 31, 2009, the Company had
  a working capital deficit of $91,957 and accumulated losses of $148,457 since
  inception. These factors raise substantial doubt regarding the Companys
  ability to continue as a going concern. There is no assurance that the Company
  will be able to generate revenues in the future. These unaudited financial statements
  do not give any effect to any adjustments that would be necessary should the
  Company be unable to continue as a going concern and therefore be required to
  realize its assets and discharge its liabilities in other than the normal course
  of business and at amounts different from those reflected in the accompanying
  unaudited financial statements.

NOTE 4 - RELATED PARTY TRANSACTIONS

All of the Companys mineral claims are registered in the
  name of a former president of the Company and pursuant to a trust agreement
  are held in trust on behalf of the Company (see Note 5).

F-9

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|MAY 31, 2009                     
|(Unaudited)                      

At May 31, 2009 and February 28, 2009 the Company was indebted
  to its president in the amounts of $1,025 and $381, respectively

NOTE 5 - UNPROVED MINERAL PROPERTIES

On January 30, 2006, the Company staked a mineral claim near
  Atlin, British Columbia, Canada, comprising an area of 410.65 hectares. The
  Company is required to incur approximately $2,600 (CDN$2,997) on or before January
  30, 2010 and each year thereafter in exploration expenditures or pay the equivalent
  sum in cash in lieu of work, in order to retain title to the claims. In January
  2008, the Company paid $1,635 (CDN$1,643) in cash to the Province of British
  Columbia, in lieu of work, to retain title to the claims until January 30, 2009
  and on January 5, 2009, the Company registered $12,000 CDN in exploration work
  performed on its unproved mineral properties with the Government of British
  Columbia, which extend the Companys title to the claims until January
  30, 2012.

NOTE 6 - COMMON STOCK

On November 28, 2005, the Company issued 3,000,000 common shares
  at $0.001 per share for cash of $3,000 to a former president.

On January 30, 2006, the Company issued 1,900,000 common shares
  at $0.01 per share for cash of $19,000.

On February 28, 2006, the Company issued 450,000 common shares
  at $0.05 per share for cash of $22,500. 25,000 of these common shares were issued
  to relatives of a former president of the Company.

On November 10, 2006, the Company purchased and removed from
  the issued and outstanding 75,000 and 30,000 common shares at their original
  sale price of $0.05 and $0.01 respectively, per share. No gain or loss was recognized
  on this transaction.

On November 10, 2006, the Company purchased and cancelled 120,000
  common shares at their original sale price of $0.01 per share. No gain or loss
  was recognized on this transaction.

On November 10, 2006, the Company issued 105,000 common shares
  at $0.05 per share for proceeds of $5,250.

F-10

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

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form
10-Q constitute "forward-looking statements." These statements, identified by
words such as plan, "anticipate," "believe," "estimate," "should," "expect"
and similar expressions include our expectations and objectives regarding our
future financial position, operating results and business strategy. These
statements reflect the current views of management with respect to future events
and are subject to risks, uncertainties and other factors that may cause our
actual results, performance or achievements, or industry results, to be
materially different from those described in the forward-looking statements.
Such risks and uncertainties include those set forth under the caption Part II
 Item 1A. Risk Factors and elsewhere in this Quarterly Report. We do not
intend to update the forward-looking information to reflect actual results or
changes in the factors affecting such forward-looking information. We advise you
to carefully review the reports and documents, particularly our Annual Reports,
our Quarterly Reports and our Current Reports we file from time to time with the
United States Securities and Exchange Commission (the SEC). Copies of all of
our filings with the SEC may be accessed by visiting the SEC site
(http://www.sec.gov) and performing a search of our electronic filings.

INTRODUCTION

The following discussion and analysis summarizes our plan of
operation for the next twelve months, our results of operations for the three
months ended May 31, 2009, and changes in our financial condition from February
28, 2009. This discussion should be read in conjunction with the Managements
Discussion and Analysis of Financial Condition and Results of Operations
included in our Annual Report on Form 10-K for the fiscal year ended February
28, 2009 filed with the SEC on June 10, 2009.

OVERVIEW

We were incorporated on October 3, 2005 under the laws of the
State of Nevada.

We are an exploration stage company engaged in the acquisition
and exploration of mineral properties. We currently own a 100% undivided
interest in a mineral property that we call the Bee Peak Claim. The Bee Peak
Claim consists of approximately 410.65 hectares and is located in the Atlin
mining district of northwest British Columbia, Canada.

We have not generated any revenues from our mineral exploration
activities. There is no assurance that a commercially viable mineral deposit
exists on the Bee Peak Claim. Further exploration will be required before an
evaluation as to the economic feasibility of the Bee Peak Claim can be
determined. The Bee Peak Claim is without known reserves and management is
intending to proceed with a three-phase mineral exploration program as
recommended by our consulting geological technician, as described below.

RECENT CORPORATE DEVELOPMENTS

On June 18, 2009, Kelly T. Hickel was appointed to our board of
directors. Kelly T. Hickel was Chairman of Paradise Music & Entertainment,
Inc. (PDSE.pk) from February 2001 until June 2006. Previously, Mr. Hickel was
President of Miniscribe Corp., a Fortune 500 disk drive manufacturer, from 1989
to 1990. Mr. Hickel helped conduct a 363B sale to Maxtor from bankruptcy. He was
the President of the Maxwell Technology Information Systems Group from 1993
until 1997. Mr. Hickel was, recently, Chairman and Chief Restructuring Office of
The Tyree Company in Farmingdale, New York. He is Managing Director of The
Turnaround Group, LLC and Strategic Growth Associates, a Denver-based advisory
firm, CEO of

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Environmental Testing Laboratories, Inc., Chairman and CEO of
United EcoEnergy, Inc. (UEEC) and Chairman of the Advisory Committee for Leaddog
Capital Partners, Inc. Mr. Hickel has arranged a number of private and public
company financings and financial restructuring over the years. Mr. Hickel is a
graduate of Indiana University, with a Bachelors of Science, and has attended
coursework at Columbia University.

PLAN OF OPERATION

Our plan of operation is to conduct mineral exploration
activities on the Bee Peak Claim in order to assess whether the property
contains mineral reserves that are capable of commercial extraction. Our
exploration program is designed to explore for commercially viable deposits of
copper, silver and gold. We have not, nor has any predecessor, identified any
commercially exploitable reserves of these minerals on our mineral claim.

We received a geological evaluation report on the Bee Peak
Claim titled Report on the Bee Peak Claim prepared by Stephen G. Diakow, a
geological technician, on December 28, 2006. In his geological report, Mr.
Diakow recommended that a three phase continuing exploration program be
conducted as follows:

Phase
    Exploration Program
    Approximate Cost*
    StatusOne
    Prospecting, Trenching and
      Sampling and Helicopter-Supported Magnetic Survey
    $22,000
    Completed Helicopter-
      Supported Magnetic Survey at a cost of $11,648. The balance of
      this phase is expected to be completed in June 2010.Two
    Coverage of the area with VLF-EM and
      magnetometer surveys
    between $55,000 and $130,000
    Dependent upon the results of Phase One.Three
    Geological mapping and
      sampling
    between $175,000 and $215,000
    Dependent upon the results of
      Phase Two.Total Estimated Cost
    between $250,000 and $365,000


We commenced Phase One of our exploration program by conducting
a helicopter-supported magnetic survey on our Bee Peak Claim. The magnetic
survey has shown this area to have medium to weak exploration potential,
especially in the area of the north facing slope of the Bee Peak. Mr. David G.
Mark, the author of report titled Geophysical Report on a Helicopter Supported
Magnetic Survey on the Bee Peak Property (the Survey Report), has recommended
that we conduct further prospecting and sampling in the area. Following
prospecting and sampling, Mr. Mark has recommended that we follow up with a MMI
soil geochemistry and geophysical surveys such as IP resistivity, especially in
the area of the known showings and in those areas where magnetic lineations
cross each other.

Over the next twelve months, we anticipate that we will incur
the following expenses:

Category
    Planned Expenditures Over The Next 12 Months (US$)Legal and Accounting Fees
    $47,200Regulatory and
      Other Operating Expenses
    $7,000Mineral Property Exploration Expenses
    $12,150TOTAL
    $66,350


4

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Our total expenditures over the next twelve months are
anticipated to be approximately $66,350. Our cash on hand as of May 31, 2009 was
$531 and we had a working capital deficit of $91,957. We do not have sufficient
cash on hand to meet our ongoing operating costs and to pay the anticipated
costs of our three-phase exploration program. As such, we will require
additional financing to fund our operations for the next twelve months. We
currently do not have any arrangements for additional financing.

RESULTS OF OPERATIONS

|Three Months Summary |   |              |   |   |              |   |  |            | 
|-------------------- | - | ------------ | - | - | ------------ | - |  | ---------- | 
|                     |   | Three Months |   |   | Three Months |   |  | Percentage | 
|                     |   | Ended        |   |   | Ended        |   |  | Increase / | 
|                     |   | May 31, 2009 |   |   | May 31, 2008 |   |  | (Decrease) | 
|Revenue              | $ | -            |   | $ | -            |   |  | n/a        | 
|Expenses             |   | (18,573      | ) |   | (27,455      | ) |  | (32.4)%    | 
|Net Loss             | $ | (18,573      | ) | $ | (27,455      | ) |  | (32.4)%    | 

Revenue

We have not generated any operating revenues since inception.
To date, our activities have been financed through the proceeds from the sale of
our common stock and funds advanced by our former President and a shareholder.
Due to the nature of our business we do not expect to have operating revenues
within the next year.

Operating Costs and Expenses

Our operating expenses for the three months ended May 31, 2009
and 2008 consisted of the following:

|                            |   | Three Months |  |   | Three Months |  |  | Percentage | 
|--------------------------- | - | ------------ |  | - | ------------ |  |  | ---------- | 
|                            |   | Ended        |  |   | Ended        |  |  | Increase / | 
|                            |   | May 31, 2009 |  |   | May 31, 2008 |  |  | (Decrease) | 
|Administrative Fees         | $ | 3,000        |  | $ | 1,060        |  |  | 183%       | 
|Bank Charges and Interest   |   | 77           |  |   | 20           |  |  | 285%       | 
|Exploration and Development |   | -            |  |   | 12,452       |  |  | (100)%     | 
|Office                      |   | 60           |  |   | -            |  |  | n/a%       | 
|Professional Fees           |   | 15,386       |  |   | 12,848       |  |  | 19.8%      | 
|Regulatory                  |   | 50           |  |   | 1,075        |  |  | (95.3)%    | 
|Total Operating Expenses    | $ | 18,573       |  | $ | 27,455       |  |  | (32.4)%    | 

Our operating expenses decreased by $8,882 or 32.4% from
$27,455 for the three months ended May 31, 2008 to $18,573 for the three months
ended May 31, 2009. This decrease in operating expenses was primarily due to a
decrease in our exploration and development costs due to a lack of working
capital. This decrease was partially offset by an increase in professional fees
which were higher during the three months ended May 31, 2009 due to the costs in
connection with meeting our reporting obligations under the Exchange Act.

Over the next twelve months, we do not anticipate generating
any revenue and we expect our operating expenses to be approximately $65,950,
primarily due to increases in costs associated with the outsourcing of our
administration and accounting services and completing the balance of Phase One
of our exploration program. We plan to continue to fund Phase One of our mineral
exploration program and our operations through equity financing from the sale of
our shares of common stock, private advances or through the sale of a part
interest or joint venture in the Bee Peak Claim. We do not have any financing
arranged and cannot provide any assurance that we will be able to raise
sufficient funding from

5

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the sale of our shares of common stock, that we will receive
private advances or that we will be able to sell a part interest or joint
venture the Bee Peak Claim.

LIQUIDITY AND CAPITAL RESOURCES

|Working Capital                   |   |              |   |   |                   |   |  |            | 
|--------------------------------- | - | ------------ | - | - | ----------------- | - |  | ---------- | 
|                                  |   |              |   |   |                   |   |  | Percentage | 
|                                  |   | At           |   |   | At                |   |  | Increase / | 
|                                  |   | May 31, 2009 |   |   | February 28, 2009 |   |  | (Decrease) | 
|Current Assets                    | $ | 531          |   | $ | 70                |   |  | 658.6%     | 
|Current Liabilities               |   | (92,488      | ) |   | (73,454           | ) |  | 25.9%      | 
|Working Capital Surplus (Deficit) | $ | (91,957      | ) | $ | (73,384           | ) |  | 25.3%      | 

|Cash Flows                                    |   |                            |  |   |        |  
|--------------------------------------------- | - | -------------------------- |  | - | ------ | -
|                                              |   | Three Months Ended May 31, | 
|                                              |   | 2009                       |  |   | 2008   |  
|Cash Flows (Used In) Operating Activities     | $ | 461                        |  | $ | (1,132 | )
|Cash Flows (Used In) Investing Activities     |   | -                          |  |   | -      |  
|Cash Flows From Financing Activities          |   | -                          |  |   | -      |  
|Net Increase (Decrease) In Cash During Period | $ | 461                        |  | $ | (1,132 | )

As at May 31, 2009, we had cash of $531 and positive cash flow
from operations of $461. To date, we have funded our operations with cash that
we received from the sale of our common stock and advances from our former
President and from a shareholder.

We had a working capital deficit of $91,957 as of May 31, 2009
compared to a working capital deficit of $73,384 as of February 28, 2009. The
increase in our working capital deficit is attributable to: (i) an increase in
accounts payable due to our lack of capital to meet our ongoing expenditures;
and (ii) an increase in advances payable from advances from a shareholder.

Going Concern

Due to lack of operating history and our present inability to
generate revenues, there currently exists substantial doubt about our ability to
continue as a going concern. Even if we complete our current exploration program
and we are successful in identifying a mineral deposit, we will have to spend
substantial funds on further drilling and engineering studies before we will
know if we have a commercially viable mineral deposit or reserve.

The notes to the accompanying financial statements have been
prepared on a going concern basis, which implies that we will continue to
realize our assets and discharge our liabilities in the normal course of
business. We have not generated any revenues since inception and have never paid
any dividends and are unlikely to pay dividends or generate earnings in the
immediate or foreseeable future. Our continuation as a going concern is
dependent upon the continued financial support from our shareholders, our
ability to obtain necessary equity financing to continue operations, and the
attainment of profitable operations. Our ability to achieve and maintain
profitability and positive cash flows is dependent upon our ability to locate
profitable mineral properties, generate revenues from our mineral production and
control production costs. Based upon current plans, we expect to incur operating
losses in future periods. At May 31, 2009, we had a working capital deficit of
$91,957 and accumulated losses of $148,457 since inception. These factors raise
substantial doubt regarding our ability to continue as a going concern. There is
no assurance that we will be able to generate revenues in the future.

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Financing Requirements

We expect to continue to incur substantial losses as we
continue the development of our business. Since our inception, we have funded
operations through common stock issuances, related party loans, and the support
of creditors in order to meet our strategic objectives. Our management believes
that sufficient funding will be available to meet our business objectives,
including anticipated cash needs for working capital, and are currently
evaluating several financing options. However, there can be no assurance that we
will be able to obtain sufficient funds to continue the development of and, if
successful, to commence the sale of, our products.

We do not have any financing agreement in place, and there is
no assurance that we will be able to obtain additional financing if and when
required. We anticipate that additional financing may come in the form of sales
of additional shares of our common stock which may result in dilution to our
current shareholders.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenue or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to our stockholders.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with
generally accepted accounting principles requires our management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Our management routinely makes judgments and estimates about the effects of
matters that are inherently uncertain.

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations. Our significant accounting policies are
disclosed in the notes to our unaudited financial statements included in this
Quarterly Report on Form 10-Q.

Foreign Currency Translation

Our functional and reporting currency is the United States
dollar. Monetary assets and liabilities denominated in foreign currencies are
translated in accordance with SFAS No. 52 Foreign Currency Translation,
using the exchange rate prevailing at the balance sheet date. Gains and losses
arising on settlement of foreign currency denominated transactions or balances
are included in the determination of income. Foreign currency transactions are
primarily undertaken in Canadian dollars. During the quarter ended May 31, 2009,
we incurred approximately $1,100 in foreign currency losses that were included
in professional fees. We have not entered into derivative instruments to offset
the impact of foreign currency fluctuations.

Mineral Property Costs

We have been in the exploration stage since our inception on
October 3, 2005 and have not yet realized any revenues from our planned
operations. We are primarily engaged in the acquisition and exploration of
mining properties. Mineral property exploration costs are expensed as incurred.
Mineral property acquisition costs are initially capitalized when incurred using
the guidance in the Emerging Issues Task Force (EITF) 04-02, Whether Mineral
Rights are Tangible or Intangible Assets.We assess the carrying

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costs for impairment under SFAS No. 144, Accounting for
Impairment or Disposal of Long Lived Assetsat each fiscal quarter end. An
impairment is recognized when the sum of the expected undiscounted future cash
flows is less than the carrying amount of the mineral property. Impairment
losses, if any, are measured as the excess of the carrying amount of the mineral
property over its estimated fair value.

When it has been determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves,
the costs then incurred to develop such property, are capitalized. Such costs
will be amortized using the units-of-production method over the estimated life
of the probable reserves. If mineral properties are subsequently abandoned or
impaired, any capitalized costs will be charged to operations.

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

Not Applicable.

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

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of May 31, 2009 (the Evaluation Date). This evaluation was
carried out under the supervision and with the participation of our Chief
Executive and Financial Officer. Based upon that evaluation, our Chief Executive
and Financial Officer concluded that our disclosure controls and procedures were
effective as of the Evaluation Date.

Disclosure controls and procedures are those controls and
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act are recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive and Financial Officer,
to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

There were no changes in our internal control over financial
reporting that occurred during the fiscal quarter ended May 31, 2009 that have
materially affected, or that are reasonably likely to materially affect, our
internal control over financial reporting.

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PART II - OTHER INFORMATION

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

We are not a party to any other legal proceedings and, to our
knowledge; no other legal proceedings are pending, threatened or
contemplated.

|ITEM 1A. | RISK FACTORS.
|-------- | -------------

The following are some of the important factors that could
affect our financial performance or could cause actual results to differ
materially from estimates contained in our forward-looking statements. We may
encounter risks in addition to those described below. Additional risks and
uncertainties not currently known to us, or that we currently deem to be
immaterial, may also impair or adversely affect our business, financial
condition or results of operation.

If we do not obtain additional financing, our business will
fail.

As of May 31, 2009, we had cash on hand of $531 and we have not
earned any revenue since our inception. Our current operating funds are not
sufficient to meet our current obligations and the anticipated costs of our
exploration program. As such, we will require additional financing to fund our
operations for the next twelve months. We currently do not have any arrangements
for financing and we may not be able to obtain financing when required.
Obtaining additional financing would be subject to a number of factors outside
of our control, including the results from our exploration program, and any
unanticipated problems relating to our mineral exploration activities, including
environmental assessments and additional costs and expenses that may exceed our
current estimates. These factors may make the timing, amount, terms or
conditions of additional financing unavailable to us in which case our business
will fail.

We have yet to earn revenue and, because our ability to
sustain our operations is dependent on our ability to raise financing, our
accountants believe that there is substantial doubt about our ability to
continue as a going concern.

Because we have only recently commenced business operations, we
expect to incur substantial losses for the foreseeable future. We have never
earned any revenues and we have never been profitable. Prior to completing our
exploration program for the Bee Peak Claim, we will likely incur increased
operating expenses without realizing any revenues. This could cause our business
to fail.

We have accrued net losses of $148,457 for the period from our
inception on October 3, 2005 to May 31, 2009, and have no revenues to date. Our
future is dependent upon our ability to obtain financing and upon future
profitable operations from the development of our mineral claim. These factors
raise substantial doubt that we will be able to continue as a going concern. Our
independent auditors, Madsen & Associates CPAs, Inc., in their audit report
included in our Annual Report on Form 10-K filed with the SEC on June 10, 2009,
have expressed substantial doubt about our ability to continue as a going
concern given our accumulated losses. This opinion could materially limit our
ability to raise additional funds by issuing new debt or equity securities or
otherwise. If we fail to raise sufficient capital, we will not be able to
complete our business plan.

Because of the unique difficulties and uncertainties
inherent in mineral exploration ventures, we face a high risk of business
failure.

Investors should be aware of the difficulties normally
encountered by new mineral exploration companies and the high rate of failure of
such enterprises. The likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that

9

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may exceed current estimates. The Bee Peak Claim does not
contain a known body of commercial ore and, therefore, any program conducted on
the Bee Peak Claim would be an exploratory search of ore. There is no certainty
that any expenditures made in the exploration of the Bee Peak Claim will result
in discoveries of commercial quantities of ore. Most exploration projects do not
result in the discovery of commercially mineable deposits of ore. Problems such
as unusual or unexpected formations and other conditions are involved in mineral
exploration and often result in unsuccessful exploration efforts. If the results
of our exploration program do not reveal viable commercial mineralization, we
may decide to abandon our claim and acquire new claims for new exploration. The
acquisition of additional claims will be dependent upon our possessing capital
resources at the time in order to purchase such claims. If no funding is
available, we may be forced to abandon our operations.

Access to the Bee Peak Claim may be restricted by inclement
weather during the year, which may delay our proposed mineral exploration
programs and any future mining efforts.

Access to the Bee Peak Claim is restricted to the period
between May 1 and October 15 of each year due to snow in the area. As a result,
any attempts to visit, test, or explore the Bee Peak Claim are largely limited
to these few months of the year when weather permits such activities. These
limitations can result in significant delays in exploration efforts, as well as
mining and production if commercial amounts of minerals are found. Such delays
could also result in our inability to meet deadlines for exploration
expenditures as defined by the Province of British Columbia. This could cause
our business to fail and the loss of investors' entire investment.

We have no mineral reserves. If we do not find a mineral
reserve or if we cannot complete the exploration of the mineral reserve, either
because we do not have the money to do it or because it will not be economically
feasible to do it, we will have to cease operations and investors will lose
their investment.

Mineral exploration is highly speculative. It involves many
risks and is often non-productive. Even if we are able to find mineral reserves
on our property, our production capability is subject to further risks
including:

- costs of bringing the property into production including exploration work,
  preparation of production feasibility studies, and construction of production
  facilities, all of which we have not budgeted for;
- availability and costs of financing;
- ongoing costs of production; and
- environmental compliance regulations and restraints.

The marketability of any minerals acquired or discovered may be
affected by numerous factors which are beyond our control and which cannot be
accurately predicted, such as market fluctuations, the lack of milling
facilities and processing equipment near the Bee Peak Claim, and such other
factors as government regulations, including regulations relating to allowable
production, importing and exporting of minerals, and environmental
protection.

Given the above noted risks, the chances of finding reserves on
our mineral property are remote and funds expended on exploration will likely be
lost.

Because of the speculative nature of exploration of mineral
properties, there is a substantial risk that our business will fail.

The search for valuable minerals as a business is extremely
risky. We cannot provide investors with any assurance that our Bee Peak Claim
contains commercially exploitable reserves of base or precious minerals.
Exploration for minerals is a speculative venture necessarily involving
substantial risk. The expenditures to be made by us in the exploration of the
Bee Peak Claim may not result in the discovery of commercial quantities of
minerals. Problems such as unusual or unexpected formations and other conditions
are involved in mineral exploration and often result in unsuccessful exploration
efforts. In such

10

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a case, we would be unable to complete our business plan and
investors could lose their entire investment.

We face significant competition in the mineral exploration
industry.

We compete with other mining and exploration companies
possessing greater financial resources and technical facilities than us in
connection with the acquisition of mineral exploration claims and other precious
metals prospects and in connection with the recruitment and retention of
qualified personnel. There is significant competition for the limited number of
mineral acquisition opportunities and, as a result, we may be unable to acquire
an interest in attractive mineral exploration properties on terms we consider
acceptable on a continuing basis.

Compliance with health, safety and environmental regulations
may impose burdensome costs and if compliance is not achieved our business and
reputation may be detrimentally impacted.

The nature of the industries in which we operate means that our
activities are highly monitored by health, safety and environmental groups. As
regulatory standards and expectations are constantly developing, we may be
exposed to increased litigation, compliance costs and unforeseen environmental
remediation expenses.

The search for valuable minerals involves numerous hazards. As
a result, we may become subject to liability for such hazards, including
pollution, cave-ins and other hazards against which we cannot insure or against
which we may elect not to insure. The payment of such liabilities may have a
material adverse effect on our financial position.

We may continue to be exposed to increased operational costs
due to the costs and lost workers time associated with the health and
well-being of our workforce on our project areas. Despite our best efforts and
best intentions, there remains a risk that health, safety and/or environmental
incidents or accidents may occur which may negatively impact our reputation and
freedom or license to operate.

Market factors in the mining industry are out of our
control, and as a result, we may not be able to market any minerals that may be
found on the Bee Peak Claim.

The mining industry, in general, is intensely competitive and
management can provide no assurance that even if minerals are discovered on the
Bee Peak Claim that a ready market will exist from the sale of any ore found.
Numerous factors beyond our control may affect the marketability of minerals.
These factors include market fluctuations, the proximity and capacity of natural
resource markets and processing equipment, government regulations, including
regulations relating to prices, taxes, royalties, land tenure, land use,
importing and exporting of minerals and environmental protection. The exact
effect of these factors cannot be accurately predicted, but the combination of
these factors may result in not receiving an adequate return on invested capital
and investors may lose their entire investment.

As we undertake exploration of our mineral claim, we will be
subject to compliance with government regulation that may increase the
anticipated cost of our exploration program.

There are several governmental regulations that materially
restrict mineral exploration. We will be subject to the laws of the Province of
British Columbia as we carry out our exploration program. We may be required to
obtain work permits, post bonds and perform remediation work for any physical
disturbance to the land in order to comply with these laws. If we enter the
production phase, the cost of complying with permit and regulatory environment
laws will be greater because the impact on the project area is greater. Permits
and regulations will control all aspects of the production program if the
project continues to that stage. Examples of regulatory requirements
include:

| | (i)  | Water discharge will have to meet drinking water
      standards;      
| | ---- | -----------------------------------------------------------------------
| |      |                                                                        
| | (ii) | Dust generation will have to be minimal or otherwise
      re-mediated;

11

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| | (iii) | Dumping of material on the surface will have to be
      re-contoured and re-vegetated with natural vegetation;                                 
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                 
| | (iv)  | An assessment of all material to be left on the surface
      will need to be environmentally benign;                                           
| |       |                                                                                                                                                 
| | (v)   | Ground water will have to be monitored for any potential
      contaminants;                                                                    
| |       |                                                                                                                                                 
| | (vi)  | The socio-economic impact of the project will have to be
      evaluated and if deemed negative, will have to be remediated;
and                
| |       |                                                                                                                                                 
| | (vii) | There will have to be an impact report of the work on the
      local fauna and flora including a study of potentially endangered
      species.

Our annual cost of compliance with the Mineral Tenure Act is
currently approximately $3,010 (CDN$3,285) per year. There is a risk that new
regulations could increase our costs of doing business and prevent us from
carrying out our exploration program. We will also have to sustain the cost of
reclamation and environmental remediation for all exploration work undertaken.
Both reclamation and environmental remediation refer to putting disturbed ground
back as close to its original state as possible. Other potential pollution or
damage must be cleaned up and renewed along standard guidelines outlined in the
usual permits. Reclamation is the process of bringing the land back to its
natural state after completion of exploration activities. Environmental
remediation refers to the physical activity of taking steps to remediate, or
remedy, any environmental damage caused. The amount of these costs is not known
at this time as we do not know the extent of the exploration program that will
be undertaken beyond completion of the recommended work program. If remediation
costs exceed our cash reserves we may be unable to complete our exploration
program and have to abandon our operations.

Our failure to make required payments or expenditures could
cause us to lose title to the mineral claim.

In the Province of British Columbia, the recorded holder of a
mineral claim is required to perform a minimum amount of exploration work on a
claim or make payment in the equivalent sum in lieu of work. The fee is $4.00
CDN per hectare (approximately $3.66 US per hectare) in the first three years
and $8.00 CDN per hectare (approximately $7.33 US per hectare) in subsequent
years plus a $0.40 CDN per hectare (approximately $0.37 US per hectare)
recording fee annually. Our mineral claim consists of 410.65 hectares. As such,
the minimum exploration expenditures and/or filing fee required to maintain the
Bee Peak Claim in good standing is $3,010 (CDN$3,285) per year. Our claim is in
good standing until January 30, 2012. Following the expiry date, if we fail to
incur the minimum exploration expenditures or make any of the required payments
in lieu thereof, we could lose title to the Bee Peak Claim.

If we do not obtain clear title to the mineral claim, our
business may fail.

Under British Columbia law, title to British Columbia mineral
claim can only be held by individuals, British Columbia corporations or foreign
corporations extra-provincially registered in British Columbia. Since we are a
Nevada corporation and we are not extra-provincially registered in British
Columbia, we are not legally allowed to hold claims in British Columbia.
Accordingly, our mineral claim is being held in trust for us by our former
director, Rajan Rai. If we confirm economically viable mineral deposits on our
mineral claim, we will incorporate a British Columbia subsidiary to hold title
to the mineral claim and Mr. Rai will transfer the claim to the subsidiary.
Until we can confirm mineral deposits, Mr. Rai will hold the claim in trust for
us. However, there could be situations such as the death of the titleholder that
could hinder us from obtaining a registered title to the mineral claim. If we
are unable to obtain a registered title to the mineral claim, our business will
be adversely affected.

12

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Aboriginal land claims may negatively impact our
operations.

We are not aware of any outstanding aboriginal land claims on
the area of the Bee Peak Claim; however, it is possible that an aboriginal land
claim could be made in the future. British Columbia government policy at this
time is to consult with all potentially affected aboriginal bands and other
stakeholders in the area of any potential mining. Should we encounter a
situation where an aboriginal person or group claims an interest in our mineral
claims, we may be unable to provide compensation to the affected party in order
to continue with our mineral exploration work, or if such an option is not
available, we may have to relinquish our interest in these claims. In either
case, the costs and/or losses could be greater than our financial capacity, and
our business would fail.

We may not be able to attract and retain qualified personnel
necessary for the implementation of our business strategy and mineral
exploration program.

Our future success depends largely upon the continued service
of our sole executive officer. Our future success also depends on our ability
to attract, retain and motivate qualified personnel when needed. Key personnel
represent a significant asset, and the competition for qualified personnel is
intense in the mineral exploration industry.

We may have particular difficulty attracting and retaining key
personnel in the initial phases of our mineral exploration program. We do not
currently maintain key person life insurance on our directors and sole executive officer.
The loss of one or more of our key employees or our inability to attract, retain
and motivate qualified personnel could negatively impact our ability to complete
our mineral exploration program.

Because our sole executive officer does not have formal
training specific to the technicalities of mineral exploration, there is a
higher risk that our business will fail.

Greg Corcoran, our sole executive officer and a director, does
not have any formal training as a geologist or in the technical aspects of
management of a mineral exploration company. With no direct training or
experience in these areas, our management may not be fully aware of the specific
requirements related to working within this industry. Our management's decisions
and choices may not take into account standard engineering or managerial
approaches mineral exploration companies commonly use. Consequently, our
operations, earnings, and ultimate financial success could suffer irreparable
harm due to management's lack of experience in this industry.

As our business assets and our sole executive officer  are located outside of the United States, investors may be limited in
their ability to enforce civil actions against our assets or our sole executive
officer and director.

Our business assets are located in Canada and our sole  executive officer is a resident of Panama. Consequently, it may be difficult
for United States investors to effect service of process within the United
States upon our assets or our sole executive officer, or to realize
in the United States upon judgments of United States courts predicated upon
civil liabilities under U.S. Federal Securities Laws. A judgment of a U.S. court
predicated solely upon such civil liabilities may not be enforceable in Canada
or Panama by a Canadian or Panamanian court if the U.S. court in which the
judgment was obtained did not have jurisdiction, as determined by the Canadian
or Panamanian court, in the matter. There is substantial doubt whether an
original action could be brought successfully in Canada or Panama against any of
our assets or our sole executive officer  predicated solely upon
such civil liabilities.

Because our sole executive officer and a director, Greg
Corcoran, owns 57.4% of our outstanding common stock, investors may find that
corporate decisions controlled by Mr. Corcoran are inconsistent with the
interests of other stockholders.

Greg Corcoran, our sole executive officer and a director,
controls 57.4% of issued and outstanding shares of our common stock.
Accordingly, in accordance with our Articles of Incorporation and Bylaws, Mr.

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Corcoran is able to control who is elected to our board of
directors and thus could act, or could have the power to act, as our management.
Since Mr. Corcoran is not simply a passive investor but is also one of our
active executives, his interests as an executive may, at times, be adverse to
those of passive investors. Where those conflicts exist, our shareholders will
be dependent upon Mr. Corcoran exercising, in a manner fair to all of our
shareholders, his fiduciary duties as an officer or as a member of our board of
directors. Also, due to his stock ownership position, Mr. Corcoran will have:
(i) the ability to control the outcome of most corporate actions requiring
stockholder approval, including amendments to our Articles of Incorporation;
(ii) the ability to control corporate combinations or similar transactions that
might benefit minority stockholders which may be rejected by Mr. Corcoran to
their detriment, and (iii) control over transactions between him and the
Company.

We may conduct further offerings in the future in which case
your shareholdings will be diluted.

Since our inception, we have relied on such equity sales of our
common stock to fund our operations. We may conduct further equity offerings in
the future to finance our current projects or to finance subsequent projects
that we decide to undertake. If common stock is issued in return for additional
funds, the price per share could be lower than that paid by our current
stockholders. We anticipate continuing to rely on equity sales of our common
stock in order to fund our business operations. If we issue additional stock,
stockholders percentage interest in us will be diluted. The result of this could
reduce the value of investors' stock.

Because our stock is a penny stock, shareholders will be
more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or quotation
system.

Because our securities constitute penny stocks within the
meaning of the rules, the rules apply to us and to our securities. The rules may
further affect the ability of owners of shares to sell our securities in any
market that might develop for them. As long as the trading price of our common
stock is less than $5.00 per share, the common stock will be subject to rule
15g-9 under the Exchange Act. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock, to deliver a standardized risk
disclosure document prepared by the SEC, that:

|1. | contains a description of the nature and level of risk in
      the market for penny stocks in both public offerings and secondary
      trading;                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                          
|2. | contains a description of the brokers or dealers duties
      to the customer and of the rights and remedies available to the customer
      with respect to a violation to such duties or other requirements of
      securities laws;
|   |                                                                                                                                                                                                                                          
|3. | contains a brief, clear, narrative description of a
      dealer market, including bid and ask prices for penny stocks and the
      significance of the spread between the bid and ask price;                                           
|   |                                                                                                                                                                                                                                          
|4. | contains a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                       
|   |                                                                                                                                                                                                                                          
|5. | defines significant terms in the disclosure document or
      in the conduct of trading in penny stocks; and                                                                                                                             
|   |                                                                                                                                                                                                                                          
|6. | contains such other information and is in such form,
      including language, type, size and format, as the SEC shall require by
      rule or regulation.                                                                              

14

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The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for our stock.

|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND
      USE OF PROCEEDS.
|------- | ------------------------------------------------------------------

None.

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

None.

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

None.

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

None.

|ITEM 6. | EXHIBITS.
|------- | ---------

The following exhibits are either provided with this Quarterly
Report or are incorporated herein by reference:

|Exhibit |                                                                                                                                                                                                       
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                                
|3.1     | Articles of Incorporation.(1)                                                                                                                                                                         
|3.2     | Bylaws.(1)                                                                                                                                                                                            
|10.1    | Bare Trust Agreement
        dated January 30, 2006 executed by Rajan Rai as Trustee.(1)                                                                                                              
|14.1    | Code of Ethics.(1)                                                                                                                                                                                    
|14.2    | Code of Ethics,
        as amended.(2)                                                                                                                                                                
|31.1    | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to Section
    302 of the Sarbanes-Oxley Act of 2002.                                                           
|32.1    | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to 18
        U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.

|(1) | Previously filed as an Exhibit to our Registration
      Statement on Form SB-2, as amended, originally filed with the SEC on
      October 12, 2007.        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Previously filed as an exhibit to our Annual Report on
      Form 10-K for the fiscal year ended February 28, 2009 filed with the SEC
      on June 10, 2009.

15

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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.

|      |               |  |     | KUSHI RESOURCES INC.                                           
|----- | ------------- |  | --- | ---------------------------------------------------------------
|      |               |  |     |                                                                
|      |               |  |     |                                                                
|      |               |  |     |                                                                
|Date: | July 10, 2009 |  | By: | /s/
      Greg Corcoran                                        
|      |               |  |     | GREG CORCORAN                                                  
|      |               |  |     | Chief Executive Officer, Chief Financial
      Officer         
|      |               |  |     | President, Secretary and Treasurer                             
|      |               |  |     | (Principal Executive Officer, Principal
      Financial Officer
|      |               |  |     | and Principal Accounting Officer)                              

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