UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.   20549









FORM
10-Q


(Mark
One)





[
      X ]
            QUARTERLY
      REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
quarterly period ended  August
31, 2008





[    ]
            TRANSITION
      REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from __________________ to
__________________





Commission
file number 000-53008








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








Nevada
            00-0000000(State
      or other jurisdiction of incorporation or
organization)
            (I.R.S.
      Employer Identification No.)#402 – 220 Summit Boulevard, Broomfield,
      Colorado
            80021(Address
      of principal executive offices)
            (Zip
      Code)303-250-8869
              (Registrant’s
      telephone number, including area code)2215 South West Marine Drive, Vancouver, British
      Columbia, V6P 6C1, Canada
              (Former name, former address and former fiscal
      year, if changed since last
report)





Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.


[
X ]
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.





Larger
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





APPLICABLE
ONLY TO CORPORATE ISSUERS





State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date.





Class
            Outstanding at October 14,
    2008common
      stock - $0.001 par value
            5,230,000





PART
I – FINANCIAL INFORMATION





Item
1.                      Financial
Statements.








KUSHI
RESOURCES INC.


(An
Exploration Stage Company)








INTERIM
FINANCIAL STATEMENTS








August
31, 2008





(Unaudited)













IndexBalance
      Sheets
            F-1Statements of Operations
            F-2Statements
      of Cash Flows
            F-3Notes to the
      Financial Statements
            F-4









Page
- 1





KUSHI
RESOURCES INC.
 (AN
EXPLORATION STAGE COMPANY)
 BALANCE SHEETS
   August
      31,
              
              
              February
      29,2008
              
              
              2008(Unaudited)ASSETSCurrent
      assets:Cash
              $
              205
              
              
              $
              1,916Total
      assets
              $
              205
              
              
              $
              1,916LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable
              $
              16,516
              
              
              $
              3,575Accrued
      administrative fees
              
              5,300
              
              
              
              3,180Accrued
      professional fees
              
              3,208
              
              
              
              7,159Due
      to related party
              
              27,940
              
              
              
              6,051Total
      liabilities
              
              52,964
              
              
              
              19,965Commitments
      and contingenciesStockholders'
      deficit:Common
      stock; authorized 75,000,000; $0.001 par value; 5,230,000issued
      and outstanding at August 31, 2008 and February 29, 2008
              
              5,230
              
              
              
              5,230Additional
      paid in capital
              
              51,270
              
              
              
              51,270Deficit
      accumulated during the exploration stage
              
              (109,259
              )
              
              
              (74,549
              )Total
      stockholders' deficit
              
              (52,759
              )
              
              
              (18,049
              )Total
      liabilities and stockholders' deficit
              $
              205
              
              
              $
              1,916





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








F
- 1





KUSHI
RESOURCES INC.
 (AN
EXPLORATION STAGE COMPANY)
 STATEMENTS OF OPERATIONS
 (UNAUDITED)
   FromThree
      Months Ended
              
              
              Six
      Months Ended
              
              
              October
      3, 2005August
      31,
              
              
              August
      31,
              
              
              (Inception)
      to2008
              
              
              2007
              
              
              2008
              
              
              2007
              
              
              August
      31, 2008Operating
      Expenses:Administrative
      fees
              $
              1,060
              
              
              $
              1,029
              
              
              $
              2,120
              
              
              $
              4,029
              
              
              $
              9,570Bank
      charges and interest
              
              (14
              )
              
              
              17
              
              
              
              6
              
              
              
              35
              
              
              
              617Donated
      rent
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              4,000Donated
      services
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              8,000Exploration
      and development costs
              
              -
              
              
              
              -
              
              
              
              12,452
              
              
              
              -
              
              
              
              22,044Professional
      fees
              
              5,671
              
              
              
              21,608
              
              
              
              18,519
              
              
              
              22,298
              
              
              
              61,590Regulatory
              
              538
              
              
              
              -
              
              
              
              1,613
              
              
              
              -
              
              
              
              3,438Net
      loss
              $
              (7,255
              )
              
              $
              (22,654
              )
              
              $
              (34,710
              )
              
              $
              (26,362
              )
              
              $
              (109,259
              )Net
      loss per share:Basic
      and diluted
              $
              (0.00
              )
              
              $
              (0.00
              )
              
              $
              (0.01
              )
              
              $
              (0.01
              )Weighted
      average number of shares outstanding:Basic
      and diluted
              
              5,230,000
              
              
              
              5,230,000
              
              
              
              5,230,000
              
              
              
              5,230,000





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







F
- 2





KUSHI
RESOURCES INC.
 (AN
EXPLORATION STAGE COMPANY) STATEMENTS OF CASH FLOWS
 (UNAUDITED)
  Six
      Months
              
              
              From
      October 3,Ended
      August 31,
              
              
              2005
      (Inception)2008
              
              
              2007
              
              
              to
      August 31, 2008Cash
      flow from operating activities:Net
      loss
              $
              (34,710
              )
              
              $
              (26,362
              )
              
              $
              (109,259
              )Adjustments
      to reconcile net loss to net cash(used
      in) provided by operating activities:Donated
      rent and services
              
              -
              
              
              
              -
              
              
              
              12,000Changes
      in operating assets and liabilities:
              
              
              
              
              
              
              
              
              
              -Accounts
      receivable
              
              -
              
              
              
              (311
              )
              
              
              -Accounts
      payable
              
              12,941
              
              
              
              2,500
              
              
              
              16,516Accrued
      administrative fees
              
              2,120
              
              
              
              -
              
              
              
              5,300Accrued
      exploration fees
              
              -
              
              
              
              (2,500
              )
              
              
              -Accrued
      professional fees
              
              (3,951
              )
              
              
              10,860
              
              
              
              3,208Due
      to related party
              
              21,889
              
              
              
              -
              
              
              
              27,940Net
      cash used in operating activities
              
              (1,711
              )
              
              
              (15,813
              )
              
              
              (44,295
              )Cash
      flows from financing activitiesCash
      from issuance of common stock
              
              -
              
              
              
              -
              
              
              
              49,750Cash
      paid on cancellation of common stock
              
              -
              
              
              
              -
              
              
              
              (5,250
              )Net
      cash provided by financing activities
              
              -
              
              
              
              -
              
              
              
              44,500(Decrease)
      increase in cash during the period
              
              (1,711
              )
              
              
              (15,813
              )
              
              
              205Cash,
      beginning of period
              
              1,916
              
              
              
              38,657
              
              
              
              -Cash,
      end of period
              $
              205
              
              
              $
              22,844
              
              
              $
              205Supplemental
      disclosure of cash flow information:Cash
      paid during the periodTaxes
              $
              -
              
              
              $
              -
              
              
              $
              -Interest
              $
              -
              
              
              $
              -
              
              
              $
              -





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





F
- 3


KUSHI RESOURCES
INC.


(AN
EXPLORATION STAGE COMPANY)


NOTES TO THE FINANCIAL STATEMENTS


AUGUST
31, 2008


(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
our mean 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 29, 2008.  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
and six months ended August 31, 2008 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 29, 2008 included in the
Company’s report on Form 10-KSB.





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Recent
Accounting Pronouncements




On March
1, 2008, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 157 (SFAS 157), Fair Value
Measurements.  SFAS 157 relates to financial assets and
financial liabilities.  In February 2008, the Financial Accounting
Standards Board (FASB) issued FASB Staff Position (FSP) No. FAS 157-2, Effective Date of FASB Statement No.
157, which delayed the effective date of SFAS 157 for all nonfinancial
assets and nonfinancial liabilities, except those that are recognized or
disclosed at fair value in the financial statements on at least an annual basis,
until January 1, 2009 for calendar year-end entities.  Also in
February 2008, the FASB issued FSP No. FAS 157-1, Application of FASB Statement No.
157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address
Fair Value Measurements for Purposes of Lease Classification or Measurement
under Statement 13, which states that SFAS No. 13, Accounting for Leases, (SFAS
13) and other accounting pronouncements that address fair value measurements for
purposes of lease classification or measurement under SFAS 13 are excluded from
the provisions of SFAS 157, except for assets and liabilities related to leases
assumed in a business combination that are required to be measured at fair value
under SFAS No. 141, Business
Combinations, (SFAS 141) or SFAS No. 141 (revised 2007), Business Combinations, (SFAS
141(R)).





SFAS 157
defines fair value, establishes a framework for measuring fair value in
accounting principles generally accepted in the United States of America (GAAP),
and expands disclosures about fair value measurements.  The provisions
of this standard apply to other accounting pronouncements that require or permit
fair value measurements and are to be applied prospectively with limited
exceptions.  The adoption of SFAS 157, as it relates to financial
assets and financial liabilities, had no impact on the Company’s financial
statements.











F
- 4


KUSHI RESOURCES
INC.


(AN
EXPLORATION STAGE COMPANY)


NOTES
TO THE FINANCIAL STATEMENTS


AUGUST
31, 2008


(UNAUDITED)





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





Recent
Accounting Pronouncements, continued







SFAS 157
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date.  This standard is now the single source in GAAP
for the definition of fair value, except for the fair value of leased property
as defined in SFAS 13.  SFAS 157 establishes a fair value hierarchy
that distinguishes between (1) market participant assumptions developed based on
market data obtained from independent sources (observable inputs) and (2) an
entity’s own assumptions about market participant assumptions developed based on
the best information available in the circumstances (unobservable
inputs).  The fair value hierarchy consists of three broad levels,
which gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3).  The three levels of the fair value
hierarchy under SFAS 157 are described below:




&
            Level
      1 - Unadjusted quoted prices in active markets that are accessible at the
      measurement date for identical, unrestricted assets or
      liabilities.




&
            Level
      2 - Inputs other than quoted prices included within Level 1 that are
      observable for the asset or liability, either directly or indirectly,
      including quoted prices for similar assets or liabilities in active
      markets; quoted prices for identical or similar assets or liabilities in
      markets that are not active; inputs other than quoted prices that are
      observable for the asset or liability (e.g., interest rates); and inputs
      that are derived principally from or corroborated by observable market
      data by correlation or other means.




&
            Level
      3 - Inputs that are both significant to the fair value measurement and
      unobservable.





In
February 2007, the FASB issued SFAS No. 159 (SFAS 159), The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement No.
115.  SFAS 159 permits measurement of certain financial assets
and financial liabilities at fair value.  If the fair value option is
elected, the unrealized gains and losses are reported in earnings at each
reporting date.  Generally, the fair value option may be elected on an
instrument-by-instrument basis, as long as it is applied to the instrument in
its entirety.  The fair value option election is irrevocable, unless a
new election date occurs.  SFAS 159 was effective for the Company on
March 1, 2008.  The adoption of SFAS 159 did not have a material
impact on the Company’s financial statements as the Company did not elect the
fair value option for any of its financial assets or liabilities.





In June
2007, the Emerging Issues Task Force (EITF) of the FASB reached a consensus on
Issue No. 07-3, Accounting for
Nonrefundable Advance Payments for Goods or Services Received for Use in Future
Research and Development Activities(EITF 07-3).  EITF 07-3
requires that non-refundable advance payments for goods or services that will be
used or rendered for future research and development activities must be deferred
and capitalized.  As the related goods are delivered or the services
are performed, or when the goods or services are no longer expected to be
provided, the deferred amounts must be recognized as an expense.  This
issue is effective for financial statements issued for fiscal years beginning
after December 15, 2007 and earlier application is not
permitted.  This consensus is to be applied prospectively for new
contracts entered into on or after the effective date.  The Company
adopted EITF 07-03 on March 1, 2008.  The adoption of EITF 07-03 did
not have a material effect on our financial statements.





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.  We
do not expect the adoption of FSP APB 14-1 to have a material impact on our
financial statements.





F
- 5


KUSHI RESOURCES
INC.


(AN
EXPLORATION STAGE COMPANY)


NOTES
TO THE FINANCIAL STATEMENTS


AUGUST
31, 2008


(UNAUDITED)





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





Recent
Accounting Pronouncements, continued





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.  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.  We do not expect the adoption
of SFAS 163 to 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 Company is currently
evaluating the requirements of FSP No. EITF 03-6-1 and the impact that its
adoption will have on its 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 Company is currently evaluating the impact
that adoption of EITF 07-5 will have on its financial statements.








F
- 6


KUSHI RESOURCES
INC.


(AN
EXPLORATION STAGE COMPANY)


NOTES
TO THE FINANCIAL STATEMENTS


AUGUST
31, 2008


(UNAUDITED)





NOTE
2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





Recent
Accounting Pronouncements, continued





In June
2008, 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.





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 August 31, 2008, the Company
had a working capital deficit of $52,759 and accumulated losses of $109,259
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 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 financial
statements.





NOTE
4 - RELATED PARTY TRANSACTIONS





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





At August
31, 2008 and February 29, 2008 the Company was indebted to its President in the
amounts of $27,940 and $6,051 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 $1,500  (CDN$1,643) on or before
January  30, 2009 and approximately $3,100 (CDN$3,285) 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 $1,546 (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.





During
the six months ended August 31, 2008, the Company spent $12,452 on exploration
expenditures which have not been submitted to the Government of British Columbia
for approval.  The exploration expenditures have to be submitted to
the Government of British Columbia by April 21, 2009, and, if approved will be
applied against future minimum payments.





F
- 7


KUSHI RESOURCES
INC.


(AN
EXPLORATION STAGE COMPANY)


NOTES
TO THE FINANCIAL STATEMENTS


AUGUST
31, 2008


(UNAUDITED)





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 its 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 the President.





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
- 8








Item
2.  Management’s Discussion and Analysis of Financial Condition and
Results of Operation.





The
following discussion and analysis should be read in conjunction with the
financial statements and notes thereto as filed in our Annual Report on Form
10-KSB for the year ended February 29, 2008, as well as the financial statements
and notes contained herein.





Forward
Looking Statements





Some of
the information in this quarterly report on Form 10-Q contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933,
Section 21E of the Private Securities Litigation Reform Act of
1995.  All statements other than statements of historical facts
included in this report, including, without limitation, statements regarding our
future financial position, business strategy, budgets, projected costs and plans
and objectives for future operations, are forward-looking
statements.  These statements express, or are based on, our
expectations about future events.  Forward-looking statements give our
current expectations or forecasts of future events.  Forward-looking
statements generally can be identified by the use of forward looking terminology
such as “may,” “will,” “expect,” “intend,” “project,” “estimate,” “anticipate,”
“believe” or “continue” or the negative thereof or similar
terminology.





Although
any forward-looking statements contained in this Form 10-Q or otherwise
expressed by or on behalf of us are, to our knowledge and judgment, believed to
be reasonable, there can be no assurances that any of these expectations will
prove correct or that any of the actions that are planned will be
taken.  Forward-looking statements involve and can be affected by
inaccurate assumptions or by known and unknown risks and uncertainties which may
cause our actual performance and financial results in future periods to differ
materially from any projection, estimate or forecasted result. Important factors
that could cause actual results to differ materially from expected results
include those discussed under the caption “Risk Factors” in our annual report on
Form 10-KSB for the year ended February 29, 2008.  Any of these
factors could cause our actual results to differ materially from the results
implied by these or any other forward-looking statements made by us or on our
behalf.  We cannot assure you that our future results will meet our
expectations.  When you consider these forward-looking statements, you
should keep in mind these factors.  All subsequent written and oral
forward-looking statements attributable to us, or persons acting on our behalf,
are expressly qualified in their entirety by these factors.  Our
forward-looking statements speak only as of the date made.  We assume
no duty to update or revise its forward-looking statements based on changes in
internal estimates or expectations or otherwise.





General





Our
principal business is the acquisition and exploration of mineral resources in
northern British Columbia, Canada.  We have not presently determined
whether our properties contain mineral reserves that are economically
recoverable.  We have not commenced significant operations and are
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. We have no operations
and if our mineral claims are not successfully developed we will not earn any
revenues.





Kushi
Resources Inc. means “we”, “us” or “our” and will be referred to as such
throughout the balance of this document.





The
inclusion of supplementary analytical and related information herein may require
us to make appropriate estimates and assumptions to enable us to fairly present,
in all material respects, our analysis of trends and expectations with respect
to our results of operations and financial position taken as a
whole.





Critical
Accounting Policies and Estimates





An
appreciation of our critical accounting policies is necessary to understand our
financial results.  These policies may require that we make difficult
and subjective judgments regarding uncertainties, and as a result, such
estimates may significantly impact our financial results.  The
precision of these estimates and the likelihood of future changes depend on a
number of underlying variables and a range of possible
outcomes.  Other than our accounting for mineral property costs, our
critical accounting policies do not involve the choice between alternative
methods of accounting.  We have applied our critical accounting
policies and estimation methods consistently.





Page
- 10


A summary
of our significant accounting policies is included in our Annual Report on Form
10-KSB for the fiscal year ended February 29, 2008.  Significant
accounting policies which either affect us or have been developed since February
29, 2008, are summarized below.





Financial
Instruments





Foreign
Exchange Risk





We are
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.  We do not believe that we have any material
risk due to foreign currency exchange.





Concentration
of Credit Risk





Financial
instruments that potentially subject us to significant concentrations of credit
risk consist principally of cash deposits.  At August 31, 2008 and
February 29, 2008, we had approximately $200 and $1,900, respectively in cash
that was not insured.  This cash is on deposit with a major chartered
Canadian bank.  As part of our cash management process, we perform
periodic evaluations of the relative credit standing of this financial
institution.  We have not experienced any losses in cash balances and
we do not believe we are exposed to any significant credit risk on our
cash.





Unproved
Mineral Property Costs





We have
been in the exploration stage since 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.  We expense mineral property exploration costs as they are
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 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.  During the six months ended August 31, 2008 and 2007, we
expensed $12,452 and $0 respectively, in exploration and development
costs.





Once we
have 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, will be 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 August 31, 2008, we did not
have any asset retirement obligations.








Page
- 11








Recent
Accounting Pronouncements





Refer to
Note 2, of our Notes to the Financial Statements filed in our Form 10-KSB, for a
discussion of our recent accounting standards and pronouncements.  The
following accounting pronouncements were issued or adopted subsequent to
February 29, 2008:




On March
1, 2008, we adopted Statement of Financial Accounting Standards (SFAS) No. 157
(SFAS 157), Fair Value
Measurements.  SFAS 157 relates to financial assets and
financial liabilities.  In February 2008, the Financial Accounting
Standards Board (FASB) issued FASB Staff Position (FSP) No. FAS 157-2, Effective Date of FASB Statement No.
157, which delayed the effective date of SFAS 157 for all nonfinancial
assets and nonfinancial liabilities, except those that are recognized or
disclosed at fair value in the financial statements on at least an annual basis,
until January 1, 2009 for calendar year-end entities.  Also in
February 2008, the FASB issued FSP No. FAS 157-1, Application of FASB Statement No.
157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address
Fair Value Measurements for Purposes of Lease Classification or Measurement
under Statement 13, which states that SFAS No. 13, Accounting for Leases, (SFAS
13) and other accounting pronouncements that address fair value measurements for
purposes of lease classification or measurement under SFAS 13 are excluded from
the provisions of SFAS 157, except for assets and liabilities related to leases
assumed in a business combination that are required to be measured at fair value
under SFAS No. 141, Business
Combinations, (SFAS 141) or SFAS No. 141 (revised 2007), Business Combinations, (SFAS
141(R)).





SFAS 157
defines fair value, establishes a framework for measuring fair value in
accounting principles generally accepted in the United States of America (GAAP),
and expands disclosures about fair value measurements.  The provisions
of this standard apply to other accounting pronouncements that require or permit
fair value measurements and are to be applied prospectively with limited
exceptions.  The adoption of SFAS 157, as it relates to financial
assets and financial liabilities had no impact on our financial
statements.





SFAS 157
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date.  This standard is now the single source in GAAP
for the definition of fair value, except for the fair value of leased property
as defined in SFAS 13. SFAS 157 establishes a fair value hierarchy that
distinguishes between (1) market participant assumptions developed based on
market data obtained from independent sources (observable inputs) and (2) an
entity’s own assumptions about market participant assumptions developed based on
the best information available in the circumstances (unobservable
inputs).  The fair value hierarchy consists of three broad levels,
which gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3).  The three levels of the fair value
hierarchy under SFAS 157 are described below:




&
            Level
      1 - Unadjusted quoted prices in active markets that are accessible at the
      measurement date for identical, unrestricted assets or
      liabilities.




&
            Level
      2 - Inputs other than quoted prices included within Level 1 that are
      observable for the asset or liability, either directly or indirectly,
      including quoted prices for similar assets or liabilities in active
      markets; quoted prices for identical or similar assets or liabilities in
      markets that are not active; inputs other than quoted prices that are
      observable for the asset or liability (e.g., interest rates); and inputs
      that are derived principally from or corroborated by observable market
      data by correlation or other means.




&
            Level
      3 - Inputs that are both significant to the fair value measurement and
      unobservable.





In
February 2007, the FASB issued SFAS No. 159 (SFAS 159), The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement No.
115.  SFAS 159 permits measurement of certain financial assets
and financial liabilities at fair value.  If the fair value option is
elected, the unrealized gains and losses are reported in earnings at each
reporting date.  Generally, the fair value option may be elected on an
instrument-by-instrument basis, as long as it is applied to the instrument in
its entirety.  The fair value option election is irrevocable, unless a
new election date occurs.  SFAS 159 was effective for us on March 1,
2008.  The adoption of SFAS 159 did not have a material impact on our
financial statements as we did not elect the fair value option for any of our
financial assets or liabilities.





Page
- 12




In June
2007, the Emerging Issues Task Force (EITF) of the FASB reached a consensus on
Issue No. 07-3, Accounting for
Nonrefundable Advance Payments for Goods or Services Received for Use in Future
Research and Development Activities(EITF 07-3).  EITF 07-3
requires that non-refundable advance payments for goods or services that will be
used or rendered for future research and development activities must be deferred
and capitalized.  As the related goods are delivered or the services
are performed, or when the goods or services are no longer expected to be
provided, the deferred amounts must be recognized as an expense.  This
issue is effective for financial statements issued for fiscal years beginning
after December 15, 2007 and earlier application is not
permitted.  This consensus is to be applied prospectively for new
contracts entered into on or after the effective date.  We adopted
EITF 07-03 on March 1, 2008.  The adoption of EITF 07-03 did not have
a material effect on our financial statements.





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.  We do not expect the adoption of FSP APB 14-1 to 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.  We are currently reviewing the effect, if any, the
proposed guidance will have on our 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.  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.  We do not expect the adoption
of SFAS 163 to 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.  We are currently evaluating
the requirements of FSP No. EITF 03-6-1 and the impact that its adoption will
have on our results of operations and financial position.





Page
- 13




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.  We are currently evaluating the impact that
adoption of EITF 07-5 will have on our financial statements.





In June
2008, 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, we will evaluate whether the adoption of the proposed Statement
will have any material impact on our financial position and results of
operations.





Overview





Our
mineral claims are in the Atlin mining district of northwest British Columbia,
Canada.  We staked the Bee Peak Claim (the “Claim”) ourselves on
January 30, 2006.  The mineral tenure number is 526773 and the total
area of the Claim is 410.65 hectares.  The Claim is registered in the name
of our Director and pursuant to a trust agreement is held in trust on our
behalf.





We are
required to incur approximately $1,546 (CDN$1,643) on or before January 30, 2009
and approximately $3,091 (CDN$3,285) on or before January 30, 2010 and each year
thereafter on exploration or pay the equivalent sum in cash in lieu of work to
the Province of British Columbia, in order to retain title to the Bee Peak
Claim.  During the six months ended August 31, 2008 we spent
approximately $12,500 on a helicopter-supported magnetic survey on the Bee Peak
Claim.  At August 31, 2008 we had not submitted these exploration
expenditures to the Government of British Columbia for approval.  If
these exploration expenditures are approved by the Government of British
Columbia our unproved mineral properties will be in good standing until January
30, 2013.





Exploration
Plan





On June
18, 2008, we received a helicopter-supported magnetic survey on the Bee Peak
Claim from our consulting geologist.  The report recommends
prospecting and sampling the surveyed area and following up with IP/resistivity
surveying in order to verify the magnetic anomalies and help determine the depth
of the causative source.





The
following is a brief summary of our three phase mineral exploration
program.




Page
- 14




1.  The
first phase of our three phase exploration program is expected to cost
approximately $24,000 (CDN$26,000).  Phase One of our exploration
program cannot start until June 2009 because the area is inaccessible due to
snow.  As of date of this filing we had conducted a review of the
available geochemical data for the region, including data from the area close to
the Claim and completed a helicopter-supported magnetic survey on the
Claim.  We received the geophysical report on the helicopter-supported
magnetic survey report on June 18, 2008 and we are currently evaluating the
results of this report to determine if we will proceed with Phase One of our
mineral exploration program.  If we decide to proceed we will send a
team to the claim for a period of 14 days.  During this period the
crew will generally survey the Claim seeking any outcroppings and locating
streams.  An outcropping is a part of a rock formation that appears
above the surface of the surrounding land.  The crew will use global
positioning equipment and take a total of 80 samples, including rock, stream
sediment, and stream sediment panned concentrate samples.  All samples
will be bagged and tagged for location, date and time for later
analysis.





2.  The
samples obtained during Phase One of the mineral exploration program will be
analyzed and considered with reference to the regional database.  We
will engage a consulting geologist to interpret the results of Phase
One.  If we are able to identify favorable rock formations and
structures with elevated metal values we will plan and conduct Phase Two of the
mineral exploration program.





3.  If
Phase Two of the mineral exploration program were to proceed, our consulting
geological technician has indicated that we should budget between $61,000
(CDN$65,000) and $141,000 (CDN$150,000) for this phase.  If we proceed
with Phase Two a prospector and geologist will helicopter onto the Bee Peak
Claim and will stay for a period of 10 days.  During this period the
crew will use global positioning equipment and will obtain 50 samples from
locations that are to be determined during the Phase One review.  All
samples will be bagged and tagged for location, date and time for later
analysis.  Also, the program will include further rock and soil
geochemistry sampling, a limited amount of trenching using hand tools and
dynamite, additional geochemical sampling, and simple geophysical survey
methods.  After this period is over the crew will return to Atlin by
helicopter.





4.  Once
we have completed Phase Two of our mineral exploration program, we will review
the results with a consulting geologist to interpret our Phase Two
results.  If we are able to continue to confirm elevated metal values
at specific hand drilled targets we will consider Phase Two a success and would
plan for Phase Three of the mineral exploration program.





5.  Phase
Three is expected to cost between $188,000 (CDN$200,000) and $235,000
(CDN$250,000) and will be speculative, depending on the location and
configuration of the mineral zones.  It is likely that further
geophysical surveys with different techniques or more densely spaced
observations will be required to assist in designing a program of diamond drill
holes to test the deeper potential of the best parts of the Bee Peak
Claim.  Costs, including, the cost of a limited drilling campaign, are
difficult to estimate but in a somewhat remote area like the Bee Peak Claim are
likely to be fairly high.  At this stage, we would seek to link with a
major resource company in a joint venture relationship in recognition of
financing requirements.





At August
31, 2008, we had a cash balance of $200.  We will have to raise
additional funds to cover our operating costs and commence Phase One of our
mineral exploration program.





During
the next 12 months, we do not anticipate generating any revenue.  We
anticipate funding our operations and Phase One of our mineral exploration
program with the equity financing from the sale of our common stock, private
loans or advances or the sale of part of our interest in the Bee Peak
Claim.  If we are successful in completing an equity financing,
existing shareholders will experience dilution of their interest.  We
do not have any financing arranged and cannot provide investors with any
assurance that we will be able to raise sufficient funding from the sale of our
common stock or obtain private loans or advances to cover our operating costs or
fund our mineral exploration program. In the absence of such financing, our
business will fail.






Page
- 15





We may
consider entering into a joint venture partnership by linking with a major
resource company to provide the required funding to complete Phase Three of the
mineral exploration program.  We have not undertaken any efforts to
locate a joint venture partner for Phase Three.  If we enter into a
joint venture arrangement, we will assign a percentage of our interest in the
Claim to the joint venture partner.








Based on
the nature of our business, management anticipates incurring operating losses in
the foreseeable future.  We base this expectation, in part, on the
fact that very few mineral claims in the exploration stage ultimately develop
into producing, profitable mines.  Our future financial results are
also uncertain due to a number of factors, some of which are outside our
control.  These factors include, but are not limited to:





a)
            our
      ability to raise additional
funding;


b)           the
market price for minerals;


c)           the
results of our proposed exploration programs on the Claim; and


d)           our
ability to find joint venture partners for the development of our interest in
the Claim.





Accounting
and Audit Plan





We intend
to continue to have our outside consultant assist in the preparation of our
quarterly and annual financial statements and have these financial statements
reviewed or audited by our independent auditor.  Our outside
consultant is expected to charge us approximately $1,100 to prepare each of our
quarterly and annual financial statements.  Our independent auditor is
expected to charge approximately $1,500 to review our quarterly financial
statements, approximately $7,500 to audit our annual financial statements, and
approximately $1,000 to prepare our corporate tax returns.  During the
next 12 months, we anticipate spending approximately $17,400 to pay for our
accounting and audit requirements.





Functional
Currency





Our
functional currency is the United States dollar.  We have determined
that our functional currency is the United States dollar for the following
reasons:





●  our
current and future financings are and will be in United States
dollars;


●  we
maintain the majority of our cash holdings in United States
dollars;


●  any
      potential sales of ore recovered from the Bee Peak Claim will be
      undertaken in United
  States   dollars;


●  the
majority of our administrative expenses are undertaken in United States
dollars;


●  all
cash flows are generated in United States dollars; and


&  the
      Bee Peak Claim is located in Canada, and even though the exploration
      expenses are estimated in Canadian dollars, these expenses can usually be
      requested to be billed in United States
dollars.





Results
of Operations – Three and Six Months Ended August 31, 2008 and 2007





Revenues





We did
not have any operating revenues from inception (October 3, 2005) to the date of
this filing.  To date our activities have been financed through the
proceeds of share subscriptions and funds advanced by our
Director.  Due to the nature of our business we do not expect to have
operating revenues within the next year.





Operating
Expenses





Our
operating results for the three and six months ended August 31, 2008 and 2007
and the changes between those periods for the expenses are summarized as
follows:







Page
- 16





For
      the Three Months Ended August 31,
            Increase
              (Decrease)
              Between
      the
              Three
      Months Ended August 31, 2008 and 2007
            
            For
      the Six
              Months
      Ended August 31,
            Increase
      (Decrease) Between the Six
              Months
      ended August 31, 2008 and 20072008
            
            2007
            
            2008
            
            2007Administrative
      fees
            $
            1,060
            $
            1,029
            $
            31
            $
            2,120
            $
            4,029
            $
            (1,909)Bank
      charges and interest
            
            (14)
            
            17
            
            (31)
            
            6
            
            35
            
            (29)Exploration
      and development costs
            
            -
            
            -
            
            -
            
            12,452
            
            -
            
            12,452Professional
      fees
            
            5,671
            
            21,608
            
            (15,937)
            
            18,519
            
            22,298
            
            (3,779)Regulatory
            
            538
            
            -
            
            538
            
            1,613
            
            -
            
            1,613Net
      loss
            $
            7,255
            $
            22,654
            $
            (15,399)
            $
            34,710
            $
            26,362
            $
            8,348





During
the three months ended August 31, 2008, we had a net loss of $7,255 compared to
a net loss of $22,654 for the three months ended August 31, 2007.  The
$15,399 decrease in net loss was primarily due to a decrease in professional
fees.  Professional fees were higher during the three months ended
August 31, 2007 due to preparation of our SB-2.





During
the six months ended August 31, 2008, we had a net loss of $34,710 compared to a
net loss of $26,362 for the six months ended August 31, 2007.  The
$8,348 increase in net loss was primarily due to a $12,452 increase in
exploration and development costs in payment of our helicopter-supported
magnetic survey.  This increase was partially offset by decreases in
administrative fees of $1,909 and in professional fees of $3,779 due to
additional costs associated with the preparation of our SB-2 during the six
months ended August 31, 2007.





Over the
next 12 months, we do not anticipate generating any revenue and we expect our
operating losses to be approximately $61,000.  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 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 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 in the Bee Peak Claim.  Although we have not attempted to
locate a joint venture partner, if we enter into a joint venture arrangement, we
would assign a percentage of our interest in the Bee Peak Claim to our joint
venture partner.





Liquidity
and Capital Resources





At August
31, 2008, we had a cash balance of $205 and negative cash flow from operations
of $1,711.  To date we have funded our operations with cash that we
received from the sale of our common stock and advances from our
Director.





Going
Concern





Due to
lack of operating history and present inability to generate revenues, our
auditors have stated in their opinion that 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.




Page
- 17





The notes
to our financial statements as of August 31, 2008 disclose our uncertain ability
to continue as a going concern.  We have not and do not expect to
generate any revenues to cover our expenses while we are in the exploration
stage and as a result we have accumulated a deficit of $109,259 since
inception.  At August 31, 2008, we had $52,964 in current liabilities,
when our current liabilities are offset against our current assets of $205 we
are left with a working capital deficit of $52,759.  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.  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.  Our financial statements do not give effect
to any adjustments that would be necessary should we be unable to continue as a
going concern and therefore be required to realize our assets and discharge our
liabilities in other than the normal course of business and at amounts different
from those reflected in the accompanying financial statements.  While
we have successfully generated sufficient working capital through the sale of
common stock to the date of this filing and we believe that we can continue to
do so for the next year, there are no assurances that we will succeed in
generating sufficient working capital through the sale of our common stock to
meet our ongoing cash needs.





For
      the Six Months Ended
              August
      31,2008
            
            
            2007Net
      cash used in operating activities
            $
            (1,711
            )
            
            $
            (15,813
            )Net
      cash provided by investing activities
            
            -
            
            
            
            -Net
      cash provided by financing activities
            
            -
            
            
            
            -Net
      decrease in cash
            $
            (1,711
            )
            
            $
            (15,813
            )





Net
Cash Used in Operating Activities





Net cash
used in operating activities during the six months ended August 31, 2008
compared to the six months ended August 31, 2007 decreased by
$14,102.  This decrease was primarily due to increases in advances
from our Director and in accounts payable.





Net
Cash Used in Investing Activities





We did
not have any investing activities during the six months ended August 31, 2008
and 2007.





Net
Cash Provided By Financing Activities





We did
not have any financing activities during the six months ended August 31, 2008
and 2007.





Off-Balance
Sheet Arrangements





We have
no 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 are material to our
investors.  We do not have any non-consolidated, special-purpose
entities.





Internal
and External Sources of Liquidity





To date,
we have funded our operations from the sale of its common stock and advances
from our director.








Page
- 18





Foreign
Exchange





We are
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.  We do not believe that we have any material
risk due to foreign currency exchange.





Inflation





We do not
believe that inflation will have a material impact on our future
operations.





Item
3.  Quantitative and Qualitative Disclosures About Market
Risk.





Kushi is
a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is
not required to provide the information required under this item.





Item
4.  Controls and Procedures.





Disclosure Controls and
Procedures





Disclosure
controls and procedures are designed to ensure that information required to be
disclosed in the reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported, within the time period 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 the reports filed under the Exchange Act is
accumulated and communicated to management, including Matthew Diehl, Kushi’s
Chief Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure.





Mr. Diehl
has evaluated the effectiveness of the design and operation of Kushi’s
disclosure controls and procedures (as such term is defined in Rules 13a-15 and
15d-15 under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end
of the period covered by this quarterly report (the “Evaluation
Date”).  Based on such evaluation, Mr. Diehl has concluded
that, as of the Evaluation Date, Kushi’s disclosure controls and procedures are
effective to ensure that information required to be disclosed in the reports
Kushi files and submits under the Exchange Act is recorded, processed,
summarized and reported as and when required.





Changes in Internal
Controls





During
the last fiscal quarter covered by this report, there were no changes in Kushi’s
internal controls or, to Kushi’s knowledge, in other factors that have
materially affected, or are reasonably likely to materially affect, these
controls and procedures subsequent to the Evaluation Date.





Management’s Report on
Internal Controls over Financial Reporting





Kushi is
a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is
not required to provide the information required under this item.





PART
II – OTHER INFORMATION





Item
1.  Legal Proceedings.





Kushi is
not a party to any pending legal proceedings and, to the best of Kushi’s
knowledge, none of Kushi’s property or assets are the subject of any pending
legal proceedings.





Item
1A.  Risk Factors.





Kushi is
a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is
not required to provide the information required under this item.




Page
- 19





Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds.





During
the quarter of the fiscal year covered by this report, (i) Kushi did not modify
the instruments defining the rights of its shareholders, (ii) no rights of any
shareholders were limited or qualified by any other class of securities, and
(iii) Kushi did not sell any unregistered equity securities.





Item
3.  Defaults Upon Senior Securities.





During
the quarter of the fiscal year covered by this report, no material default has
occurred with respect to any indebtedness of Kushi.  Also, during this
quarter, no material arrearage in the payment of dividends has
occurred.





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





No matter
was submitted to a vote of security holders through the solicitation of proxies
or otherwise, during the quarter of the fiscal year covered by this
report.





Item
5.  Other Information.





During
the quarter of the fiscal year covered by this report, Kushi reported all
information that was required to be disclosed in a report on Form
8-K.





Item
6.  Exhibits





(a)
            Index
      to and Description of Exhibits





All
Exhibits required to be filed with the Form 10-Q are incorporated by reference
to Kushi’s documents previously filed with the SEC.





Exhibit
            Description
            Status3.1
            Articles
      of Incorporation of Kushi Resources Inc., filed as an Exhibit to Kushi’s
      Form SB-2 (Registration Statement) filed on October 12, 2007 and
      incorporated herein by reference.
            Filed3.2
            By-Laws
      of Kushi Resources Inc., filed as an Exhibit to Kushi’s Form SB-2
      (Registration Statement) filed on October 12, 2007 and incorporated herein
      by reference.
            Filed10.1
            Declaration
      of Trust, filed as an Exhibit to Kushi’s Form SB-2 (Registration
      Statement) filed on October 12, 2007 and incorporated herein by
      reference.
            Filed14
            Code
      of Ethics, filed as an Exhibit to Kushi’s Form SB-2 (Registration
      Statement) filed on October 12, 2007 and incorporated herein by
      reference.
            Filed31
            Certifications pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.
            Included32
            Certification pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.
            Included





Page
- 20





SIGNATURES





In
accordance with the requirements of the Securities Exchange Act of 1934, Kushi
Resources Inc. has caused this report to be signed on its behalf by the
undersigned duly authorized person.











KUSHI
RESOURCES INC.










Dated:                      October 15,
2008                                                By:/s/ Matthew
Diehl


Name:    Matthew Diehl


Title:      CEO and CFO


(Principal Executive
Officer,


Principal Financial
Officer,


and Chief Accounting
Officer)








Page
- 21








Exhibit
31














Page
- 22




KUSHI
RESOURCES INC.


CERTIFICATIONS
PURSUANT TO


SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002






CERTIFICATION






I,
Matthew Diehl, certify that:




1.  I
have reviewed this quarterly report on Form 10-Q for the quarter ending August
31, 2008 of Kushi Resources Inc.;




2.  Based
on my knowledge, this quarterly report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this
report;




3.  Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;




4.
 The registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:




(a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;




(b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;




(c)
Evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and




(d)
Disclosed in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and




5.  The
registrant’s other certifying officers and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):




(a) All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and




(b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial
reporting.






Date:  October
15, 2008






/s/
Matthew Diehl


Matthew
Diehl


Chief
Executive Officer




Page
- 23




KUSHI
RESOURCES INC.


CERTIFICATIONS
PURSUANT TO


SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002






CERTIFICATION






I,
Matthew Diehl, certify that:




1.  I
have reviewed this quarterly report on Form 10-Q for the quarter ending August
31, 2008 of Kushi Resources Inc.;




2.  Based
on my knowledge, this quarterly report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this
report;




3.  Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;




4.
 The registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:




(a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;




(b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;




(c)
Evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and




(d)
Disclosed in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and




5.  The
registrant’s other certifying officers and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):




(a) All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and




(b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial
reporting.






Date:  October
15, 2008






/s/
Matthew Diehl


Matthew
Diehl


Chief
Financial Officer




Page
- 24








Exhibit
32








Page
- 25




CERTIFICATION
PURSUANT TO


18
U.S.C. SECTION 1350,


AS
ADOPTED PURSUANT TO


SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002










In
connection with the Quarterly Report of Kushi Resources Inc. (the “Company”) on
Form 10-Q for the period ending August 31, 2008 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), I, Matthew Diehl,
President, Chief Executive Officer of the Company and a member of the Board of
Directors, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:






(1)  The
      Report fully complies with the requirements of section 13(a) or 15(d) of
      the Securities Exchange Act of 1934;
and






(2)  The
      information contained in the Report fairly presents, in all material
      respects, the financial condition and results of operations of the
      Company.








/s/
Matthew Diehl


Matthew
Diehl




Chief
Executive Officer






October
15, 2008




Page
- 26




CERTIFICATION
PURSUANT TO


18
U.S.C. SECTION 1350,


AS
ADOPTED PURSUANT TO


SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002









In
connection with the Quarterly Report of Kushi Resources Inc. (the “Company”) on
Form 10-Q for the period ending August 31, 2008 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), I, Matthew Diehl, Chief
Financial Officer of the Company and a member of the Board of Directors,
certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:






(1)  The
      Report fully complies with the requirements of section 13(a) or 15(d) of
      the Securities Exchange Act of 1934;
and






(2)  The
      information contained in the Report fairly presents, in all material
      respects, the financial condition and results of operations of the
      Company.






/s/
Matthew Diehl


Matthew
Diehl




Chief
Financial Officer






October
15, 2008






Page
- 27