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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 Commission File Number: 0-28351
 KOLORFUSION INTERNATIONAL, INC.
  COLORADO
    
    84-1317836(State or other jurisdiction of
incorporation or organization)
    
    (IRS Employer Identification Number)
  
   
  þ o
 o þ
 24,114,544




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PagePART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Condensed Balance Sheets September 30, 2005 (Unaudited) and June 30, 2005
    
    
    1Statements of Operations Three months ended September 30, 2005 and 2004 (Unaudited)
    
    
    2Condensed Statements of Cash Flows Three months ended September 30, 2005 and 2004 (Unaudited)
    
    
    3Selected Notes to Condensed Financial Statements (Unaudited)
    
    
    45Item 2.
    
    Management's
Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    6Item 3
    
    Controls & Procedures
    
    
    8PART II
    
    OTHER INFORMATION
    
    
    9Certification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906




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FINANCIAL INFORMATION
 
 FINANCIAL STATEMENTS
  
  September 30,
    
    
    June 30,2005
    
    
    2005(Unaudited)
    
    
    (Audited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    81,699
    
    
    $
    152,093Trade accounts receivable, allowance for
doubtful accounts $20,000 as of June 05 and $8,500 as of Sep 05
    
    
    76,567
    
    
    
    193,351Inventories
    
    
    228,128
    
    
    
    209,558Total current assets
    
    
    386,394
    
    
    
    555,002OTHER ASSETS:Patents, less accumulated amortization
September $3,015,578; June $2,954,036
    
    
    676,952
    
    
    
    738,494Other
    
    
    192,100
    
    
    
    193,000869,052
    
    
    
    931,494LEASEHOLD IMPROVEMENTS AND EQUIPMENT, NET
    
    
    123,764
    
    
    
    115,589$
    1,379,210
    
    
    $
    1,602,085LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)CURRENT LIABILITIES:Accounts payable
    
    $
    283,940
    
    
    $
    280,830Deferred revenue
    
    
    214,469
    
    
    
    448,843Current portion of long-term debt
    
    
    708,330
    
    
    
    792,752Accrued expenses
    
    
    115,853
    
    
    
    20,415Accrued expenses due stockholders
    
    
    683,373
    
    
    
    683,373Total current liabilities
    
    
    2,011,965
    
    
    
    2,226,213LONG-TERM DEBT, net of current portion
    
    
    446,115
    
    
    
    364,364DEFERRED REVENUE
    
    
    223,079
    
    
    
    253,939STOCKHOLDERS EQUITY (DEFICIT):Preferred stock, $.001 par value, 10,000,000 shares authorized,
none issued or outstandingCommon stock, $.001 par value, 100,000,000 shares authorized,
September 24,117,544; June 24,117,544 shares issued and outstanding
    
    
    24,118
    
    
    
    24,118Additional paid-in capital
    
    
    10,218,164
    
    
    
    10,218,164Accumulated deficit
    
    
    (11,538,231
    )
    
    
    (11,484,712
    )(1,295,949
    )
    
    
    (1,242,431
    )$
    1,379,210
    
    
    $
    1,602,085
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2005
    
    
    2004Revenues
    
    $
    489,787
    
    
    $
    897,116Expenses:Cost of sales
    
    
    229,024
    
    
    
    587,337Selling, general and administrative expenses
    
    
    300,702
    
    
    
    435,505Operating income (loss)
    
    
    (39,939
    )
    
    
    (125,726
    )Other income (expense)
    
    
    (13,578
    )
    
    
    (12,080
    )Income (loss) before income taxes
    
    
    (53,518
    )
    
    
    (137,806
    )Income taxes
    
    
    
    
    
    
    Net income (loss)
    
    $
    (53,518
    )
    
    $
    (137,806
    )Income (loss) per common share  basic and diluted
    
    $
    (.00
    )
    
    $
    (.00
    )Weighted average outstanding shares  basic and diluted
    
    
    24,117,544
    
    
    
    24,117,544
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2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (53,517
    )
    
    $
    (137,805
    )Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:Depreciation and amortization
    
    
    70,704
    
    
    
    69,778Increase in trade accounts receivable
    
    
    116,784
    
    
    
    68,176Decrease in inventories
    
    
    (18,570
    )
    
    
    129,472Decrease in other assets
    
    
    900
    
    
    
    20,000Increase (decrease) in accounts payable
    
    
    3,109
    
    
    
    (19,938
    )(Decrease) or increase in deferred revenue
    
    
    (175,234
    )
    
    
    (77,540
    )Increase (decrease) in accrued expenses
    
    
    5,438
    
    
    
    6,182Increase in accrued expenses due stockholders
    
    
    0
    
    
    
    16,000Net cash provided by (used in) operating activities
    
    
    (50,386
    )
    
    
    74,325CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of leasehold improvements and equipment
    
    
    17,338
    
    
    
    (5,829
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds From Short Term debt
    
    
    13,378Payments on long-term debt
    
    
    (16,048
    )
    
    
    (173.305
    )Net proceeds from issuance of common shares
    
    
    0.00
    
    
    
    0Net cash (used in) financing activities
    
    
    (2,671
    )
    
    
    (173,305
    )Increase (decrease) in cash and cash equivalents
    
    
    (70,394
    )
    
    
    (104,809
    )Cash and cash equivalents:Beginning
    
    
    152,093
    
    
    
    138,940Ending
    
    $
    81,699
    
    
    $
    34,131SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash payments for interest
    
    $
    13,695
    
    
    $
    14,559
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MANAGEMENTS DISCUSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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PART II OTHER INFORMATION
            (a)
    
    Exhibits:
 31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 (b)
    
    No reports on Form 8-K were filed during the three months ended September 30, 2005.
 
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KOLORFUSION INTERNATIONAL, INC.Date: November 14, 2005
    
    By:
    
    /s/ Stephen NagelDirector, President
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Exhibits:
 31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 No reports on Form 8-K were filed during the three months ended September 30, 2005.