UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                   Form 10-QSB


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

                 For the quarterly period ended March 31, 2006

                                       or

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

                For the transition period from _______ to _______

                       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: 1,269,893 shares of Common Stock, as
of April 15, 2006.


<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

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
March 31, 2006, 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)

                                 March 31, 2006

                                     ASSETS

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

Equipment, net                                                    --

Intangible assets, net                                            --
                                                             -----------
Total Assets                                                 $    --
                                                             ===========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
 Accounts payable                                            $  14,570
                                                             ----------
    Total current liabilities                                   14,570

Convertible Note                                                58,831

Stockholders' Equity:
 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; 1,269,893 shares issued and outstanding              381
 Additional paid-in-capital                                    152,819
 Accumulated deficit                                          (226,601)
                                                              ---------
Total stockholders' equity                                     (73,401)
                                                              ---------
Total Liabilities and Stockholders' Equity                    $   --
                                                              =========

                       See notes to financial statements.

                                      -2-

<PAGE>

                         CASTLE & MORGAN HOLDINGS, INC.
                            STATEMENTS OF OPERATIONS

                                   (Unaudited)

                                         Three months ended
                                      -----------------------
                                              March 31,
                                      -----------------------
                                          2006        2005
                                       ----------  ----------
Net sales                              $      --   $      --
                                       ----------  ----------

Total Income                                  --          --
                                       ----------  ----------
Operating expenses:
 General and administrative               28,516      19,956
 Deferred Compensation                        --       6,667

Total operating expenses                  28,516      26,623

Other Expenses
   Interest Expense                       26,683          --
   Write-off of assets                        --         726

Total Expenses                            55,199      27,349
                                       ----------  ----------

Net Loss                               $ (55,199)   $(27,349)
                                       ==========  ===========

Net loss per share-basic
 and diluted:                          $   (0.04)   $  (0.02)
                                       ==========  ===========

Weighted average common shares
 Outstanding-basic and diluted         1,269,893    1,269,893
                                       ==========  ===========


                        See notes to financial statements

                                      -3-

<PAGE>

                         CASTLE & MORGAN HOLDINGS, INC.
                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                  Three months ended
                                                                                -----------------------
                                                                                       March 31,
                                                                                -----------------------
                                                                                    2006        2005
                                                                                -----------  ----------
Cash flows from operating activities:
<S>                                                                             <C>          <C>
 Net loss                                                                       $  (55,199)  $ (27,349)
                                                                                -----------  ----------
 Adjustments to reconcile net loss to net cash used in operating activities:
  Changes in operating assets and liabilities:
  Decrease in Accounts Receivable                                                       --          65
  Increase (Decrease) in Accounts Payable                                            7,027     (17,048)
  Write-Off Deferred Compensation                                                       --       6,667
  Amortization of Beneficial Conversion Feature                                     26,040          --
                                                                                -----------  ----------

Net cash used by operating activities                                              (22,132)    (37,665)
                                                                                -----------  ----------
Cash Flows from investment activities
 Write-off assets                                                                       --         726
                                                                                -----------  ----------
Net cash provided by investment activities                                              --         726
                                                                                -----------  ----------
Cash flows from financing activities:
 Additional Paid-In Capital                                                             --      25,819
 Additional Shareholder Loans                                                           --       3,400
 Repayments to Shareholders                                                             --      (2,604)
 Proceeds from Convertible Debt                                                     21,489          --
 Accrued Interest on Convertible Note                                                  643          --
                                                                                -----------  ----------
Net cash provided by financing activities                                           22,132      36,615
                                                                                -----------  ----------
Net decrease in cash and cash equivalents                                               --        (324)
Cash at beginning of year                                                               --         324
                                                                                -----------  ----------
Cash and cash equivalents at end of period                                      $       --   $      --
                                                                                ===========  ==========
Supplemental cash flow information:

Cash paid during the year for:
   Interest                                                                     $       -    $      -
                                                                                ===========  ==========
   Income taxes                                                                 $       -    $      -
                                                                                ===========  ==========

</TABLE>

                       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 March 31, 2006 and the results of operations and cash
flows for the three month period ended March 31, 2006 and 2005 have been
included and that the disclosures are adequate to make the information presented
not misleading.

2. LOANS PAYABLE - SHAREHOLDERS

During the quarter ended March 31, 2006, certain shareholders of the Company
advanced loans totaling $21,489 to the Company. Loans payable to shareholders
bear no interest and are payable on demand. Outstanding shareholder loans in the
amount of $21,489 were exchanged on March 31, 2006 for the same principal amount
of Convertible Note (see Note 3, below).

3. CONVERTIBLE NOTE.

On March 31, 2006, the Company's Board of Directors agreed to increase the face
amount of the Convertible Note to $113,999 by converting the Company's
outstanding loans payable to shareholders as of such date ($21,489) to
additional face amount payable on account of the Convertible Note. Based on the
aforesaid terms, the Convertible Note is convertible into as many as 1,519,986
shares of the Company's common stock (calculated taking into account the 1 for 3
reverse stock split which became effective on April 13, 2006). As of this date,
no amount of the Convertible Note has been converted by any holder.

4. 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. 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.

                                       -5-

<PAGE>

6.  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 2006 to meet its operating cash
requirements. Accordingly, the Company's ability to continue operations through
2006 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.

7.  SUBSEQUENT EVENTS

On March 31, 2006,  the Company's  board of directors  approved a  one-for-three
share reverse stock split which became  effective on April 13, 2006. As a result
of such split, on the effective date the Company's 3,809,679  outstanding shares
of common stock was reduced to 1,269,893 outstanding shares of common stock. The
reverse  split did not  change  the number of the  Company's  authorized  common
shares or the par value of said shares. The Amendment of the Articles of
Incorporation was filed with the Delaware Secretary of State on April 19, 2006.
The reverse stock split is presented retroactive for all periods covered by this
report.

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

Background

The Company was incorporated under the Laws of the State of Delaware in June
2003 and was inactive until December 18, 2003 at which time Festive World LLC
(hereinafter "Festive"), a New York Limited Liability Company, was merged into
the Company. Since 1999, Festive has been engaged as a reseller of video/dvd/cd
titles through its website. From December 2003 until March 2005, the Company was
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

The Company is a "shell" company that has no specific business plan or purpose
other than to engage in a merger or take part in an acquisition. The Company
will attempt to locate and negotiate with an operating business entity for the
combination of that target with it. 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

                                       -6-

<PAGE>

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 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.

The Company owns no real estate and has no full-time employees. It has not had
any operations since March 10, 2005 and will not have any operations of its own
unless it effects a business combination with an operating business.

Results of Operations for the Three Months ended March 31, 2006 compared to the
Three Months Ended March 31, 2005

The Company had no sales for either the three months ended March 31, 2006 or the
comparable period ended March 31, 2005. Total general and administrative
expenses increased from $19,956 for the three months ended March 31, 2005 to
$28,516 for the three months ended March 31, 2006. The primary reason for the
increase in operating expenses resulted from an increase in legal and accounting
fees. For the three months ended March 31, 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. The Company recorded a loss of $55,199 for the three month
period ended March 31, 2006 compared with a loss of $27,349 in the comparable
period ended March 31, 2005. The increased loss is attributable to interest
expense in connection with the Convertible Note and the amortization of the
beneficial conversion feature associated therewith.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2006, the Company had total current assets of $0 and total current
liabilities of $14,570, not including the $113,999 face value of the Convertible
Note. At March 31, 2006, the Company had negative working capital of $14,570. As
of March 31, 2006, The Company had an accumulated deficit of $226,601.


Net cash used in operating activities was $22,132 during the three months ended
March 31, 2006, consisting of net operating loss of $55,199, an increase in
accounts payable of $7,027 and $26,040 amortization of beneficial conversion
feature associated with the Convertible Note.

                                       -7-

<PAGE>

Net cash provided by financing activities was $22,132 for the three months ended
March 31, 2006, which consisted of $21,489 of additional shareholder loans,
which were exchanged for $21,489 additional face amount of convertible notes
during the period, together with $643 accrued interest 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.
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 continue 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 March 31, 2006 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 the Company will be able to raise
necessary funds from outside sources to satisfy any requirements for cash. 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 may  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.

The Company does not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on its financial condition,
changes in its 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 requires the use of estimates and

                                       -8-

<PAGE>

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 March 31, 2006 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:

Subsequent Event:

On June 27, 2005, the Board of Directors of the Company unanimously adopted a
resolution seeking stockholder approval 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 principal
stockholders of the Company holding 3,376,473 shares of Common Stock,
representing approximately 88.6% of the total issued and outstanding Common
Stock, 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. Thereafter On June 30, 2005, the

                                       -9-

<PAGE>

Company filed a Preliminary  Schedule 14C  Information  Statement  with the U.S.
Securities  and  Exchange  Commission  and on July 25, 2005 the Company  filed a
Definitive  Schedule 14C  Information  Statement  with the U.S.  Securities  and
Exchange  Commission,  which  was  mailed to all  shareholders  of record of the
Company on June 3, 2005, on July 25, 2005. The resolutions  became  effective on
August 15,  2005,  twenty  days  after  such  mailing.  On March 31,  2006,  the
Company's board of directors approved a one-for-three  share reverse stock split
which  became  effective on April 13,  2006.  As a result of such split,  on the
effective date the Company's  3,809,679  outstanding  shares of common stock was
reduced to 1,269,893  outstanding  shares of common stock. The reverse split did
not change the number of the Company's authorized common shares or the par value
of said shares. The Amendment of the Articles of Incorporation was filed with
the Delaware Secretary of State on April 19, 2006. The reverse stock split is
presented retroactive for all periods covered by this report.

ITEM 6.  EXHIBITS

         31* Certification 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:   April 26, 2006
         Encino, California


CASTLE & MORGAN HOLDINGS, INC.
        (Registrant)

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