UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   Form 10-QSB

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

                  For the quarterly period ended June 30, 2005

                       COMMISSION FILE NUMBER: 333-112754

                         Castle & Morgan Holdings, Inc.
              (Exact name of Small Business Issuer in its Charter)

          Delaware                                        32-0104570
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                          180 Varick Street, 13th Floor
                            New York, New York 10014
                    (Address of principal executive offices)

                                  310-396-1691
                           (Issuer's telephone number)

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 3,809,570 shares of Common Stock, as
of July 28, 2005.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]


<PAGE>

                                Table of Contents

                                                                         Pages
PART 1.  FINANCIAL INFORMATION

Item 1   Financial Statements                                              2-6

Item 2   Management's Discussion and Analysis or Plan
         Of Operations                                                       6

Item 3   Controls and Procedures                                             9

PART II. OTHER INFORMATION                                                   9

Item 5   Other Information                                                   9

Item 6   Exhibits                                                           10

Signature                                                                   10

Exhibits

4.1   Convertible Note dated as of April 1, 2005

31    Certification of Chief Executive Officer and Principal Financial Officer
      Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32    Statement furnished pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002, 18 U.S.C. Section 1350


<PAGE>

          SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This section and other parts of this Form 10-QSB contain forward-looking
statements that are, by their nature, subject to risks and uncertainties. These
forward-looking statements include, without limitation, statements relating to
our company's operations, economic performance, financial condition, growth and
acquisition strategies, investments, and operating plans. Any such statements
that are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the generality of the foregoing, words such as
"believe", "expect", "intend", "anticipate", "may", "should", "expects",
"plans", "anticipates", "estimates", "predicts", "potential", "continue",
"projects" or the negative or other variations or comparable terminology or
derivatives thereof denote forward-looking statements. These statements are only
predictions and by their nature involve substantial risks and uncertainties,
many of which are beyond our control. Thus, actual results may differ materially
from those expressed in or implied by such forward-looking statements. Factors
that could cause actual results to differ materially include, but are not
limited to, those discussed in Item. 6 of the Company's Form 10-KSB filed on
February 8, 2005, Management's Discussion and Analysis or Plan of Operation,
under the heading "Risk Factors." Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements. We are under no
obligation to publicly update any of the forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.


                                      -1-
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.           Financial Statements

                         CASTLE & MORGAN HOLDINGS, INC.
                                  BALANCE SHEET

                                   (Unaudited)

                                  June 30, 2005

                                     ASSETS

Current assets:
 Cash and cash equivalents                                         $         --
                                                                   ------------
    Total current assets                                                     --

Total Assets                                                       $         --
                                                                   ============

                     LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
 Accounts payable                                                  $      9,594
 Loans payable - shareholders                                            28,502
                                                                   ------------
    Total current liabilities                                            38,096
                                                                   ------------
Convertible Note                                                         10,716

Stockholders' Deficit:
 Preferred stock, $.0001 par value, 1,000,000
  shares authorized; 0 shares issued and outstanding                         --
 Common stock, $.0001 par value, 100,000,000 shares
  authorized; 3,809,570 shares issued and outstanding                       381
 Additional paid-in-capital                                              91,740
 Accumulated deficit
                                                                       (140,933)
                                                                   ------------
Total stockholders' deficit                                             (48,812)
                                                                   ------------
Total Liabilities and Stockholders' Deficit                        $         --
                                                                   ============

                       See notes to financial statements.


                                      -2-
<PAGE>

                         CASTLE & MORGAN HOLDINGS, INC.
                            STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                       Three months ended                 Six months ended
                                  -----------------------------     -----------------------------
                                            June 30,                          June 30,
                                  -----------------------------     -----------------------------
                                      2005             2004             2005             2004
                                  ------------     ------------     ------------     ------------
<S>                               <C>              <C>              <C>              <C>
Operating expenses:
 General and administrative       $     37,460     $     11,406     $     57,416     $     12,219
 Depreciation and amortization              --              266               --              745
 Deferred Compensation                      --               --            6,667               --
                                  ------------     ------------     ------------     ------------
Total operating expenses                37,460           11,672           64,083           12,964

Other Expenses
 Interest Expense                       10,716               --           10,716               --
 Write-off of assets                        --               --              726               --
                                  ------------     ------------     ------------     ------------
Total Expenses                          48,176           11,672           75,525           12,964
                                  ------------     ------------     ------------     ------------

Net Loss                          $    (48,176)    $    (11,672)    $    (75,525)    $    (12,964)
                                  ============     ============     ============     ============

Net loss per share-basic
 and diluted:                     $      (0.01)    $      (0.00)    $      (0.02)    $      (0.00)
                                  ============     ============     ============     ============

Weighted average common shares
 Outstanding-basic and diluted       3,809,570        3,534,275        3,809,750        3,534,275
                                  ============     ============     ============     ============
</TABLE>

                        See notes to financial statements

                                      -3-

<PAGE>

                         CASTLE & MORGAN HOLDINGS, INC.
                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)

                                                       Six months ended
                                                  -----------------------------
                                                            June 30,
                                                  -----------------------------
                                                      2005             2004
                                                  ------------     ------------
Cash flows from operating activities:
 Net loss                                         $    (75,525)    $    (12,964)
                                                  ------------     ------------
 Adjustments to reconcile net loss to
  net cash used in operating activities:
  Depreciation and amortization                             --              745
 Changes in operating assets and liabilities:
  Increase/(Decrease) in Accounts Receivable                65               --
  Increase/(Decrease) in Accounts Payable               (8,090)            (351)
 Write-Off Deferred Compensation                         6,667               --
 Amortization of beneficial conversion feature          10,584               --
                                                  ------------     ------------
Net cash used by operating activities                  (66,299)         (12,570)
                                                  ------------     ------------
Cash Flows from investment activities
 Write-off assets                                          726               --
                                                  ------------     ------------
Net cash provided by investment activities                 726               --
                                                  ------------     ------------
Cash flows from financing activities:
 Capital Contributions                                  25,819               --
 Additional Shareholder Loans                           41,902           12,020
 Repayments to Shareholders                             (2,604)              --
 Accrued interest on Convertible Note                      132               --
                                                  ------------     ------------
Net cash provided by financing activities               65,249           12,020
                                                  ------------     ------------
Net decrease in cash and
 cash equivalents                                         (324)            (550)
Cash at beginning of year                                  324            1,688
                                                  ------------     ------------
Cash and cash equivalents at end of period        $         --     $      1,118
                                                  ============     ============
Supplemental cash flow information:

Cash paid during the year for:
   Interest                                       $         --     $         --
                                                  ============     ============
   Income taxes                                   $         --     $         --
                                                  ============     ============
   Non-cash financing activities:
     Convert shareholder loans to
     Convertible note                             $     52,920     $         --
                                                  ============     ============

                       See notes to financial statements.


                                      -4-
<PAGE>

                         CASTLE & MORGAN HOLDINGS, INC.

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

1.    BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial statements
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures required for annual
financial statements have been condensed or omitted. The Company's management
believes that all adjustments necessary to present fairly the Company's
financial position as of June 30, 2005 and the results of operations and cash
flows for the three- and six-month periods ended June 30, 2005 and 2004 have
been included and that the disclosures are adequate to make the information
presented not misleading.

2.    ADDITIONAL CAPITAL INVESTMENT

During the quarter ended March 31, 2005, a shareholder and a company wholly
owned by the Company's former President invested additional capital in the
Company in the amount of $25,819. No additional shares were issued on account of
this investment and the Company is under no obligation to issue any additional
shares and does not intend to do so.

3.    LOANS PAYABLE - SHAREHOLDERS

During the quarter ended June 30, 2005, shareholders made additional loans to
the Company aggregating $28,502. During the quarter ended March 31, 2005,
shareholders made additional loans to the Company aggregating $13,400 and the
Company paid off an aggregate of $2,604 of Shareholder Loans. On April 1, 2005,
the Company issued a Convertible Note bearing a face value of $52,920 to certain
shareholders who were the lender under that certain Loan Agreement dated as of
February 26, 2005 ("Loan Agreement") evidencing a loan in the amount of $52,920.
By its terms, the Convertible Note superceded in its entirety the terms of the
Loan Agreement (see Note 4, below).

4.    CONVERTIBLE NOTE

On April 1, 2005, the Company issued a Convertible Note in the initial face
amount of $52,920 ("Convertible Note") to the lender under the Loan Agreement.
By its terms, the indebtedness evidenced by the Convertible Note, together with
interest at a rate of 3% per annum, is due and payable on July 31, 2006
("Maturity Date"). The Convertible Note is convertible by its holders at any
time prior to the Maturity Date into common stock of the Company at conversion
price of $0.025 per share. As a result of the issuance of the Convertible Note,
the value attributable to the beneficial conversion was $52,920 of which $10,584
was amortized as interest expense during the three and six month periods ending
June 30, 2005. The remaining un-amortized balance of $41,706 is shown as a
reduction to the face amount of the Convertible Note. .A copy of the Convertible
Note is appended as exhibit 4.1 hereto and is incorporated by reference.

5.    DISCONTINUANCE OF PRIOR BUSINESS.

During the quarter ended March 31, 2005, the Company discontinued its business
as a reseller of video/dvd/cd titles. As a result of such action, the Company
recorded a write-down of $726 relative to the assets related to this business.


                                       -5-
<PAGE>

6.    DEFERRED COMPENSATION.

On March 10, 2005, the Company fully amortized the remaining deferred
compensation which it had carried on its balance sheet as of such date in the
amount of $6,667.

7.    GOING CONCERN

Since inception, the Company has been considered a development stage company and
has generated minimal operating revenues. There is substantial doubt that the
Company will generate sufficient revenues during 2005 to meet its operating cash
requirements. Accordingly, the Company's ability to continue operations through
2005 depends on its success in obtaining additional capital in an amount
sufficient to meet its cash needs. This raises substantial doubt about its
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from this uncertainty. At this time, the
Company is dependent upon advances from its principal shareholders to satisfy
all of its financial requirements. No shareholder has made any commitment to
provide such financing.

Item 2.  Management's Discussion and Analysis or Plan Of Operation

Background

We were incorporated under the Laws of the State of Delaware in June 2003 and
were inactive until December 18, 2003 at which time Festive World
LLC(hereinafter "Festive"), a New York Limited Liability Company, was merged
into us. Since 1999, Festive has been engaged as a reseller of video/dvd/cd
titles through its website. From December 2003 until March 2005, we were engaged
in the business of acting as a reseller of videos, dvds and cds through our
website. From and after March 10, 2005, the Company discontinued its business as
a reseller of video/dvd/cd titles.

Plan of Operations

We are a "shell" company that has no specific business plan or purpose other
than to engage in a merger or acquisition. We will attempt to locate and
negotiate with an operating business entity for the combination of that target
with us. The combination will most likely take the form of a merger,
stock-for-stock exchange or stock-for-assets exchange. In most instances, the
target will want to structure the business combination to be within the
definition of a tax-free reorganization under Section 351 or 368 of the Internal
Revenue Code of 1986, as amended. The Company's business plan now consists of
exploring potential targets for a business combination with the Company through
a purchase of assets, share purchase or exchange, merger or similar type of
transaction. At this time, the Company does not have any specific plans or
proposals which relate to or would result in: (a) the acquisition by any person
of additional securities of the Company; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Company or any of its subsidiaries; (c) a sale or transfer of a material amount
of assets of the Company or of any of its subsidiaries; (d) any change in the
present board of directors or management of the Company, including any plans or
proposals to change the number or term of directors or to fill any existing
vacancies on the board; (e) any material change in the present capitalization or
dividend policy of the Company; (f) any other material change in the Company's
business or corporate structure; (g) changes in the Company's charter, bylaws or
instruments corresponding thereto or other


                                       -6-
<PAGE>

actions which may impede the acquisition of control of the issuer by any other
person; (h) causing a class of securities of the Company to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities Act;
or (j) any similar action to those enumerated above.

We own no real estate and have no full-time employees. We have not had any
operations since March 10, 2005 and will not have any operations of our own
unless we effect a business combination with an operating business.

Results of Operations for the Three Months ended June 30, 2005 compared to the
Three Months Ended June 30, 2004

The Company had no sales for either the three months ended June 30, 2005 or the
comparable period ended June 30, 2004. Total general and administrative expenses
increased from $11,406 for the three months ended June 30, 2004 to $37,460 for
the three months ended June 30, 2005. The primary reason for the increase in
operating expenses resulted from an increase in legal and accounting
professional fees. In the three month period ended June 30, 2005, the Company
recorded no depreciation or amortization expense compared to an accrual of $266
for the comparable period the prior year. For the three month period ended June
30, 2005, the Company recorded interest expense of $10,716, comprising $132
accrued interest on its Convertible Notes and $10,584 amortization of beneficial
conversion feature. No interest expense was recorded for the comparable period
the prior year. As a result of the above, the Company recorded a loss of $48,176
for the three month period ended June 30, 2005 compared with a loss of $11,672
in the comparable period ended June 30, 2004.

Results of Operations for the Six Months ended June 30, 2005 compared to the Six
Months Ended June 30, 2004

The Company had no sales for either the six months ended June 30, 2005 or the
comparable period ended June 30, 2004. Total general and administrative expenses
increased from $12,219 for the six months ended June 30, 2004 to $57,416 for the
three months ended June 30, 2005. The primary reason for the increase in
operating expenses resulted from an increase in legal and accounting
professional fees. In the six month period ended June 30, 2005, the Company
recorded no depreciation or amortization expense compared to an accrual of $745
for the comparable period the prior year. For the six month period ended June
30, 2005, the Company recorded interest expense of $10,716, comprising $132
accrued interest on its Convertible Notes and $10,584 amortization of beneficial
conversion feature. No interest expense was recorded for the comparable period
the prior year. In the six months ended June 30, 2005, the Company fully
amortized remaining deferred compensation in the amount of $6,667 and wrote off
assets having a carrying value of $726 in connection with the discontinuation of
its primary business. As a result of the above, the Company recorded a loss of
$75,525 for the six month period ended June 30, 2005 compared with a loss of
$12,964 in the comparable period ended June 30, 2004.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2005, the Company had total current assets of $0 and total current
liabilities of $38,096. At June 30, 2005, the Company had working capital of
($38,096). As of June 30, 2005, we had an accumulated deficit of $140,933.


                                       -7-
<PAGE>

Net cash used in operating activities was $66,299 during the six months ended
June 30, 2005, consisting of net operating loss of $75,525, an increase in
accounts receivable of $65, a decrease in accounts payable of $8,090, the
amortization of remaining deferred compensation in the amount of $6,667 and
amortization of beneficial conversion in the amount of $10,584.

Net cash provided by investment activities comprised the write-off of assets
utilized in the Company's discontinued line of business with a carrying value of
$726.

Net cash provided by financing activities was $65,249 for the six months ended
June 30, 2005, which consisted of capital contributions in the amount of
$25,819, additional shareholder loans of $41,902, repayments to shareholders of
$2,604 and accrued interest of $132 on the Convertible Note.

It is imperative that the Company raise sufficient capital to satisfy its cash
requirements until it can complete a business combination with a target company
which may result in the Company becoming a going concern. There is no guarantee
that the Company will be able to complete such a transaction within the next 12
months, if at all or that such a transaction will result in the Company becoming
a going concern. In the meantime, the Company is dependent upon advances from
its principal shareholders to satisfy all of its financial requirements. No
shareholder has made any commitment to provide such financing. There can be no
assurance that the Company will be able to raise any additional financing, or
that financing opportunities, if any, which it may encounter will be on terms
favorable to the Company. During the period ended June 30, 2005 and for future
periods, the Company will, at a minimum, incur expenses related to compliance
with applicable regulatory and financial reporting requirements, which will
include but not be limited to professional fees and financial printing fees. The
Company will also incur costs in connection with the review, analysis and
completion of any potential transactions. The Company does not expect
significant revenue or cash flows from operations until a potential transaction
is completed, if at all.

There is no assurance whatsoever that we will be able at need to raise necessary
funds from outside sources. Such a lack of funds could result in severe
consequences to us, including among others:

      1.    failure to make timely filings with the SEC as required by the
            Exchange Act, which also probably would result in suspension of
            trading or quotation in our stock and could result in fines and
            penalties to us under the Exchange Act

      2.    curtailing or eliminating our ability to locate and perform suitable
            investigations of potential acquisitions; or

      3.    inability to complete a desirable acquisition due to lack of funds
            to pay legal and accounting fees and acquisition-related expenses.

Off-Balance Sheet Arrangements.

We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
our financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.

Critical Accounting Policies

The Company prepared the consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements


                                       -8-
<PAGE>

requires the use of estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Management periodically
evaluates the estimates and judgments made. Management bases its estimates and
judgments on historical experience and on various factors that are believed to
be reasonable under the circumstances. Actual results may differ from these
estimates as a result of different assumptions or conditions.

Item 3. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management (consisting solely of our President) conducted an evaluation of
our "disclosure controls and procedures" (as defined in the General Rules and
Regulations under the Securities Exchange Act of 1934 at Rules 13a-15 and
15d-15) within the 90-day period prior to the filing of this Form 10-QSB.
Disclosure controls and procedures that are designed with the objective of
ensuring that information required to be disclosed in our reports filed under
the Securities Exchange Act of 1934, such as this Form 10-QSB, is recorded,
processed, summarized and reported within the time period specified by the
Securities and Exchange Commission's guidelines. Based on management's
evaluation, it was concluded that as of June 30, 2005 and as of the date that
the evaluation of our disclosure controls and procedures was completed, our
disclosure controls and procedures are effective to ensure that all material
information required to be filed in this Quarterly Report on Form 10-QSB has
been made known to him in a timely fashion.

There have been no changes (including corrective actions with regard to
significant deficiencies or material weaknesses) in our internal control over
financial reporting identified in connection with the evaluation performed that
occurred during the fiscal quarter covered by this report that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

PART II.   OTHER INFORMATION

Item 5.  Other Information:

On June 27, 2005, the Board of Directors of the Company unanimously adopted a
resolution seeking stockholder approval to amend the Company's Certificate of
Incorporation to effect a reverse stock split of the Company's common stock.
Thereafter, on June 27, 2005, pursuant to the By-Laws of the
Company and Delaware General Corporation Law ss.228, certain stockholders of the
Company holding in the aggregate 3,376,473 shares of Common Stock, representing
approximately 88.6% of the total issued and outstanding Common Stock of the
Company, adopted a resolution to authorize the Board of Directors, in its sole
discretion, to effect a reverse split of the Company's common stock based upon a
ratio of not less than one-for-one and one-half nor more than one-for-three
shares at any time prior to June 27, 2006. In addition, notwithstanding approval
of this proposal by the stockholders, the Board of Directors may, in its sole
discretion, determine not to effect, and abandon, the reverse stock split
without further action by our stockholders. On June 30, 2005, the Company filed
with the U.S. Securities & Exchange Commission a Preliminary Information
Statement pursuant to Section 14(C) of the Securities Exchange Act of 1934.
Thereafter, on July 25, 2005, the Company filed with the U.S. Securities &


                                       -9-
<PAGE>

Exchange Commission a Definitive Information Statement pursuant to Section 14(C)
of the Securities Exchange Act of 1934. A copy of the Information Statement was
mailed to all shareholders of the Company on July 25, 2005. The actions detailed
in the Information Statement will therefore become effective twenty days
following such mailing on August 14, 2005.

ITEM 6.  EXHIBITS

         Exhibits

         4.1* Convertible Note dated as of April 1, 2005

         31*  Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the
              Securities Exchange Act of 1934, as amended.

         32*  Certification pursuant to 18 U.S.C. Section 1350, as adopted
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

         * Filed herein

                                    SIGNATURE

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

Dated:   August 12, 2005
         Santa Monica, California

CASTLE & MORGAN HOLDINGS, INC.
        (Registrant)

/s/ Geoffrey Alison
--------------------------------------------------------------
Geoffrey Alison, Chief Executive Officer, Principal Executive
Financial and Accounting Officer


                                      -10-