|UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB

(Amendment No. 1)
|-----------------------------------------------------------------------------------------------------



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



|For the quarterly period ended December 31,
 2003

OR
|-----------------------------------------------------



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

|For the transition period from __________ to __________
|-------------------------------------------------------
|                                                       



|Commission File Number: 0-28351
|-------------------------------
|                               



| | KOLORFUSION INTERNATIONAL, INC.                       
| | ------------------------------------------------------
| | (Exact name of registrant as specified in its charter)



|COLORADO                        | 84-1317836                          
|------------------------------- | ------------------------------------
|(State or other jurisdiction of | (IRS Employer Identification Number)
|incorporation or organization)  |                                     



| | 7347 S. Revere Parkway, Centennial, CO 80112         
| | -----------------------------------------------------
| | (Address and zip code of principal executive offices)
| | (303) 690-2910                                       
| | (Registrants telephone number, including area code) 



|Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section
 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter
 period that the registrant was required to file such reports), and (2) has been subject of the filing
 requirements for at least the past 90 days.Yes _X_  No
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                               



|23,388,144Common Shares were outstanding as of February 11,
 2004
|-----------------------------------------------------------------
|                                                                 

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Purpose of Amendment No. 1 The filing is made to restate the
Companys financial statements and related Managements Discussions and Analysis
for the three months ended and six months ended December 31, 2003 and 2002 and the balance
sheets as of December 31, 2003 and June 30, 2003 have been restated, per SEC request in
January 2004, to reflect license revenue being recognized on a straight line basis over
the life of the agreement. The change relates to a license and royalty agreement signed
with a third party in August 2002. The Company had previously recognized the entire
$750,000 fee related to this agreement into revenue in the quarter ended September 30,
2002. The Company restated its financial statements to recognize revenue ratably over the
maximum term (August 2002 through June 2008) of the exclusivity agreement. As reflected in
the statement of operations, revenue and net income increased by $31,690 for each of the
three months ended December 31, 2003 and 2002 and increased (decreased) $63,380 and
($697,185) for the six months ended December 31, 2003 and 2002, as a result of this
adjustment. In addition, earnings per share declined $.03 for the six months ended
December 31, 2002. There was no impact on the earnings per share for the other periods
where there is an income statement presented. As reflected in the balance sheet, deferred
revenues increased $570,422 and $633,802 on the December 31, 2003 and June 30, 2003
balance sheets. The restatement did not impact the Companys cash flow for the period
presented. The amendment does not reflect the
effect of any events subsequent to the original filing of the Form 10-QSB for the three
months ended and six months ended December 31, 2003, except for the aforementioned
restatement as described above.


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KOLORFUSION INTERNATIONAL, INC.

I N D E X

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|PART I   FINANCIAL INFORMATION                                                                                    
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|Item 1.   Financial Statements (Unaudited)                                                                        
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|Item 2.   Managements Discussion and Analysis of Financial                    Condition and Results of Operations |  | 9-11
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|Item 3.   Controls and Procedures                                                                                  |  | 11  
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|PART II  OTHER INFORMATION                                                                                        
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|Item 1.   Legal Proceedings                                                                                        |  | 12  
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|Item 2.   Changes in Securities                                                                                    |  | 12  
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|Item 3.   Defaults Upon Senior Securities                                                                          |  | 12  
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|Item 4.   Submission of Matters to a Vote of Security Holders                                                      |  | 12  
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|Item 5.   Other Information                                                                                        |  | 12  
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|Item 6.   Exhibits and Reports on Form 8-K                                                                        
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PART I  FINANCIAL INFORMATION
Item 1  Financial Statements KOLORFUSION INTERNATIONAL, INC. CONDENSED BALANCE SHEETS ASSETS
     (Restated)December 31,2003
     (Restated)June 30,2003(Unaudited)
     (Audited)CURRENT ASSETS:Cash and cash equivalents
     $1,270
        
     $73,772Trade accounts receivable, no allowance fordoubtful accounts considered necessary
     216,787
        
     123,280Inventories
     276,941
        
     262,803Total current assets
     494,998
        
     459,855OTHER ASSETS:Patents, less accumulated amortizationDecember $2,584,784; June $2,461,699
     1,107,746
        
     1,230,831Other
     29,270
        
     101,2701,137,016
        
     1,332,101LEASEHOLD IMPROVEMENTS AND EQUIPMENT, NET
     129,637
        
     149,888$1,761,651
        
     $1,941,844LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)CURRENT LIABILITIES:Accounts payable
     $285,419
        
     $227,241Deferred revenue
     176,761
        
     214,261Current portion of long-term debt
     548,820
        
     589,148Accrued expenses
     22,914
        
     31,267Accrued expenses due stockholders
     403,115
        
     371,000Total current liabilities
     1,437,029
        
     1,432,917LONG-TERM DEBT, net of current portion
     486,690
        
     502,637DEFERRED REVENUES
     443,661
        
     507,041STOCKHOLDERS 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,December 31, 2003  23,388,144; June 30, 2003 -23,226,144 shares issued and outstanding
     23,388
        
     23,226Additional paid-in capital
     9,854,193
        
     9,773,355Accumulated deficit
     (10,483,310
        )
     (10,297,332
        )(605,729
        )
     (500,751
        )$1,761,651
        
     $1,941,844  See Notes to Condensed Financial Statements.


1

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KOLORFUSION INTERNATIONAL, INC. CONDENSED STATEMENTS OF OPERATIONS
(Unaudited) (Restated)Three Months EndedDecember 31
     (Restated)Six Months EndedDecember 312003
     2002
     2003
     2002Revenues
     
     
     $581,248
        
     $371,462
        
     $1,190,106
        
     $751,234Expenses:Cost of sales
     297,056
        
     189,830
        
     604,402
        
     427,503Selling, G&A
     417,114
        
     380,947
        
     823,880
        
     682,696Other income (expense)
     58,097
        
     (3,829
        )
     52,198
        
     (14,896
        )Net income (loss)
     $(74,825
        )
     $(203,144
        )
     $(185,978
        )
     $(373,861
        )Income (loss)/share  basicand diluted
     $
        
     $(.01
        )
     $(.01
        )
     $(.02
        )Wt.ave. outstanding shares  basicand diluted
     23,294,144
        
     21,818,144
        
     23,262,477
        
     21,818,144   See Notes to Condensed Financial Statements.


2

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KOLORFUSION INTERNATIONAL, INC. CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended December 31, 2003 and 2002 (Restated)2003
     (Restated)2002CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
     $(185,978
        )
     (373,861
        )Adjustments to reconcile net income (loss) to netcash provided by (used in) operating activities:Depreciation and amortization
     141,445
        
     147,566Loss on disposal of equipment
     1,891
        
     Increase in trade accounts receivable
     (93,507
        )
     (235,821
        )(Increase) decrease in inventories
     (14,138
        )
     2,002Decrease in other assets
     72,000
        
     Increase (decrease) in deferred revenues
     (100,880
        )
     697,185Increase (decrease) in accounts payable
     58,178
        
     (205,345
        )Increase (decrease) in accrued expenses
     (8,353
        )
     9,221Increase in accrued expenses due stockholders
     32,115
        
     8,500Net cash provided by (used in) operating activities
     (97,227
        )
     49,447CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of leasehold improvements and equipment
     
        
     (16,823
        )CASH FLOWS FROM FINANCING ACTIVITIES:Payments on long-term debt
     (56,275
        )
     (4,000
        )Net proceeds from issuance of common shares
     81,000
        
     Net cash (used in) financing activities
     24,725
        
     (4,000
        )Increase (decrease) in cash and cash equivalents
     (72,502
        )
     28,624Cash and cash equivalents:Beginning
     73,772
        
     9,903Ending
     $1,270
        
     $38,527SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash payments for interest
     $20,924
        
     $14,913   See Notes to Condensed Financial Statements.


3

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KOLORFUSION INTERNATIONAL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited) Note 1.

Condensed Financial Statements:  The condensed
balance sheet as of December 31, 2003, the statements of operations for the
periods ended December 31, 2003 and 2002, and the condensed statements of cash
flows for the six-month periods then ended have been prepared by the Company,
without audit. Operating results for the periods ended December 31, 2003 are not
necessarily indicative of the results that may be expected for the fiscal year
ending June 30, 2004. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and changes in cash flows at December
31, 2003 and for all periods presented have been made.  Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted. It is suggested that
these condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Companys June 30, 2003
audited financial statements. The results of operations for the period ended
December 31, 2003 are not necessarily indicative of the operating results for
the full year.  Note 2.

Restatement  The accompanying
financial statements for the three months ended and six months ended December
31, 2003 and 2002 and the balance sheets as of December 31, 2003 and June 30,
2003 have been restated, per the SECs request in January 2004, to reflect
license revenue being recognized on a straight line basis over the life of the
agreement. The change relates to a license and royalty agreement signed with a
third party in August 2002. The Company had previously recognized the entire
$750,000 fee related to this agreement into revenue in the quarter ended
September 30, 2002. The Company restated its financial statements to recognize
revenue ratably over the maximum term (August 2002 through June 2008) of the
exclusivity agreement. As reflected in the statement of operations, revenue and
net income increased by $31,690 for each of the three months ended December 31,
2003 and 2002 and increased (decreased) $63,380 and ($697,185) for the six
months ended December 31, 2003 and 2002, as a result of this adjustment. In
addition, earnings per share declined $.03 for the six months ended December 31,
2002. There was no impact on the earnings per share for the other periods where
there is an income statement presented. As reflected in the balance sheet,
deferred revenues increased $570,422 and $633,802 on the December 31, 2003 and
June 30, 2003 balance sheets. The restatement did not impact the Companys
cash flow for the period presented. The Company also amended its Form 10-KSB for
the year ended June 30, 2003 to reflect this restatement.


4

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The following
tables represent the impact of the restatement on balances as reported, adjusted
and restated for all periods presented.  Balance Sheets As of December 31, 2003As Reported
     Adjustments
     RestatedTotal assets
     
     
     $1,761,651
        
     $
        
     $1,761,651Deferred revenue  current
     $50,000
        
     $126,761
        
     $176,761Total current liabilities
     1,310,268
        
     126,761
        
     1,437,029Deferred revenue  LT
     
        
     443,661
        
     443,661Total liabilities
     1,796,958
        
     570,422
        
     2,367,380Accumulated deficit
     (9,912,888
        )
     (570,422
        )
     (10,483,310
        )Total stockholders equity
     (35,307
        )
     (570,422
        )
     (605,729
        )Total liabilities and stockholders equity
     $1,761,651
        
     $
        
     $1,761,651As of June 30, 2003As Reported
     Adjustments
     RestatedTotal assets
     $1,941,844
        
     $
        
     $1,941,844Deferred revenue  current
     $87,500
        
     $126,761
        
     $214,261Total current liabilities
     1,306,156
        
     126,761
        
     1,432,917Deferred revenue  LT
     
        
     507,041
        
     507,041Total liabilities
     1,808,793
        
     633,802
        
     2,442,595Accumulated deficit
     (9,663,530
        )
     (633,802
        )
     (10,297,332
        )Total stockholders equity
     133,051
        
     (633,802
        )
     (500,751
        )Total liabilities and stockholders equity
     $1,941,844
        
     $
        
     $1,941,844 Statements of Operations Three months ended December 31, 2003As Reported
     Adjustments
     RestatedRevenues
     
     
     $549,558
        
     $31,690
        
     $581,248Cost of sales
     (297,056
        )
     
        
     (297,056
        )S, G, & A
     (417,114
        )
     
        
     (417,114
        )Other income
     58,097
        
     
        
     58,097Net loss
     $(106,515
        )
     $31,690
        
     $(74,825
        )Net loss per common share:Basic and diluted
     $
        
     $
        
     $


5

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Six months ended December 31, 2003As Reported
     Adjustments
     RestatedRevenues
     
     
     $1,126,726
        
     $63,380
        
     $1,190,106Cost of sales
     (604,402
        )
     
        
     (604,402
        )S, G, & A
     (823,880
        )
     
        
     (823,880
        )Other income
     52,198
        
     
        
     52,198Net loss
     $(249,358
        )
     $63,380
        
     $(185,978
        )Net loss per common share:Basic and diluted
     $(0.01
        )
     $
        
     $(0.01
        )Three months ended December 31, 2002As Reported
     Adjustments
     RestatedRevenues
     $339,772
        
     $31,690
        
     $371,462Cost of sales
     (189,830
        )
     
        
     (189,830
        )S, G, & A
     (380,947
        )
     
        
     (380,947
        )Other expense
     (3,829
        )
     
        
     (3,829
        )Net loss
     $(234,834
        )
     $31,690
        
     $(203,144
        )Net loss per common share:Basic and diluted
     $(0.01
        )
     $
        
     $(0.01
        )Six months ended December 31, 2002As Reported
     Adjustments
     RestatedRevenues
     $1,448,419
        
     $(697,185
        )
     $751,234Cost of sales
     (427,503
        )
     
        
     (427,503
        )S, G, & A
     (682,696
        )
     
        
     (682,696
        )Other expense
     (14,896
        )
     
        
     (14,896
        )Net income (loss)
     $323,324
        
     $(697,185
        )
     $(373,861
        )Net income (loss) per common share:Basic and diluted
     $0.01
        
     $(0.03
        )
     $(0.02
        )


6

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Note 3.

Stock Based Compensation:  The Company uses
the intrinsic value method prescribed by Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees, and related
interpretations in accounting for employee stock options. Under the intrinsic
value method, compensation expense is recorded only to the extent that the
market price of the common stock exceeds the exercise price of the stock option
on the date of grant.  The
Company has adopted the disclosure-only provisions of SFAS No. 123. During the quarters
ended December 31, 2003 and 2002 there were no stock options that vested. Therefore had
compensation cost for stock options been determined based on the fair value methodology
prescribed by SFAS 123, the Company would have recognized no additional compensation
expense.  Note 4.

Patents:  The
Company purchased the patent rights for Canada and the United States. The cost of those
rights are amortized using the straight-line method over nine years. Patent amortization
expense amounted to $61,543 for each of the quarters ended December 31, 2003 and 2002 and
$123,085 for each of the six month periods ended December 31, 2003 and 2002. Patent
amortization expense will be $246,170 for each of the next five years.  Note 5.

Other income (expense):  Included in
other income (expense) for the three and six months ended December 31, 2003 is
other income of $75,013 related to shares of Company common stock the Company
received from a former officer of the Company. The former officer surrendered
the stock as payment for an employment legal settlement.  Note 6.

Stockholders Deficit:  During the six
months ended December 31, 2003, stockholders deficit changed for a net
loss of $185,978 and for issuance of 162,000 shares of common stock for $81,000.


7

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Note 7.

Companys Continued Existence:  The accompanying
financial statements have been prepared in conformity with accounting principles
generally accepted in the United States of America, which contemplate
continuation of the Company as a going concern. The Company has sustained
substantial losses. The Company may arrange for the sale of additional shares of
stock to obtain additional operating capital throughout the year and intends to
increase cash flows from operations. There can be no assurance the Company will
be able to obtain capital on acceptable terms.  Note 8.

Income Taxes:  Deferred taxes
are provided on a liability method whereby deferred tax assets are recognized
for deductible temporary differences and net operating loss and tax credit carry
forwards and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the financial
statement reported amounts of assets and liabilities and their tax basis.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of the
enactment.  The Company has
available net operating loss carryforwards of approximately $6,400,000, of which
no benefit has been recorded, at December 31, 2003 which will expire at various
times from 2013 to 2023.  Note 9.

Subsequent Event:  In January 2004,
the Company executed a line of credit agreement with an individual. This line of
credit bears interest at 15% and matures in January 2005. The agreement is
secured by specific accounts receivable of the Company, common stock held by a
shareholder, and guaranteed by a shareholder.


8

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KOLORFUSION INTERNATIONAL, INC. Item 2.   MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Revenues increased
in the quarter ended December 31, 2003 to $581,248 from $371,462 in 2002, an increase of
56%. The increase is due to the expansion of business with the Companys prior
existing accounts and the implementation of new business with new accounts. Cost
of sales increased in the quarter ended December 31, 2003 to $297,056 from $189,830 in
2002, a 56% increase, which is due to the increased sales. The Company expects the sales
and profit margin to increase as it acquires new customers and it lowers the cost of
processing and materials. Selling, general and administrative expenses increased in 2003
to $417,114 from $380,947 in 2002, an increase of 9%. The
result was a net loss in the quarter ended December 31, 2003 of $74,825 compared to a net
loss of $203,184 in the same quarter in 2002. The net loss per share was approximately $0
in 2003, compared to a net loss per share of approximately $.01 in 2002. LIQUIDITY AND CAPITAL
RESOURCES Kolorfusion
International, Inc. has historically had more expenses than income in each year of its
operations. The accumulated deficit from inception to December 31, 2003 was $10,483,310
and current liabilities are in excess of current assets. The Company has been able to
maintain a positive cash position solely through financing activities. The Company
continues to expand its business with new accounts in many categories, including outdoor
product manufacturers, household and building products. Additionally, existing accounts
continue to expand the use of the Companys process resulting in higher revenues.
The Company also plans to continue to include additional outside financings or lines of
credit. The Company established a first line of credit of $100,000 in January 2004.
Further the Company is considering soliciting additional outside investment capital of up
to $3,000,000 to provide growth capital; and management believes there is a good
likelihood of obtaining a significant portion of this funding due to the improvement of
the financial condition of the Company and its continued growth. There
are no known trends, events or uncertainties that are likely to have a material impact on
the short or long term liquidity, except perhaps declining sales. As mentioned, the
primary source of liquidity in the future will be increased sales and some additional
outside investment. In the event that sales should decline the Company may have to seek
additional funds through equity


9

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sales or debt. Additional equity
sales would have a dilutive effect. The debt financing, if any, would most likely be
convertible to common stock, which would also have a dilutive effect. There can be no
assurance that additional capital will be available on terms acceptable to the Company or
on any terms whatsoever. There are no material commitments for capital expenditures. There
are no known trends, events or uncertainties reasonably expected to have a material impact
on the net sales or revenues or income from continuing operations. There are no
significant elements of income or loss that do not arise from continuing operations. There
are no seasonal aspects to the business of Kolorfusion International, Inc. SIGNIFICANT ACCOUNTING
POLICIES Financial
Reporting Release No. 60, which was recently released by the Securities and Exchange
commission, requires all companies to include a discussion of critical accounting policies
or methods used in the preparation of financial statements. Note 1 (of Form 10KSB for the
year ended June 30, 2003) of the Notes to the Financial Statements includes a summary of
the significant accounting policies and methods used in the preparation of our Financial
Statements. The following is a brief discussion of the more significant accounting
policies and methods used by the company. In addition, Financial Reporting Release No. 61
was recently released by the SEC to require all companies to include a discussion to
address, among other things, liquidity, off-balance sheet arrangements, contractual
obligations and commercial commitments. General The
preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the dates of the financial statements and reported
amounts of revenues and expenses during the reporting periods. The most significant
estimates and assumptions relate to the valuation of inventory. Actual amounts could
differ from these estimates. Inventory
Valuation As
noted in Note 1 (of Form 10KSB for the year ended June 30, 2003) of the Notes to the
Financial Statements, inventories consist of raw materials, and are valued at the lower of
cost or market (first-in, first-out method).


10

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Revenue
Recognition As
noted in Note 1 (of Form 10KSB for the year ended June 30, 2003) to the Financial
Statements, license and royalty revenue is recognized upon completion of the earnings
process. The Company recognizes sales when products are shipped, collectibility is
probable and the fee is fixed or determined. Patent
Rights At
noted in Note 1 (of Form 10KSB for the year ended June 30, 2003) to the Financial
Statements, the cost of the patent rights are being amortized using the straight-line
method over nine years. In accordance with SFAS No. 144, the Company evaluates whether
changes have occurred that would require revision of the remaining estimated lives of
recorded long-lived assets, or render those assets not recoverable. If such circumstances
arise, recoverability is determined by comparing the undiscounted cash flows of long-lived
assets to their respective carrying values. The amount of impairment, if any, is measured
on the projected cash flows using an appropriate discount rate. FORWARD-LOOKING
STATEMENTS Certain
statements in this report constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and the Securities Exchange Act of 1934. These
statements may appear in a number of places in this report and can be identified by the
use of terminology such as anticipate, believe,
estimate, intend, may, could,
possible, plan, will, forecast, and
similar words or expressions. The Companys forward-looking statements generally
relate to, among other things: (i) the Companys financing plans; (ii) trends
affecting the Companys financial condition or results of operations; (iii) the
Companys growth strategy and operating strategy; and (iv) the declaration of any
payment of dividends. Investors must carefully consider forward-looking statements and
understand that such statements involve a variety of risks and uncertainties, known and
unknown, and may be affected by inaccurate assumptions. Consequently, no forward-looking
statement can be guaranteed and actual results may vary materially. The Company undertakes
no obligation to update any forward-looking statement. Item 3.   CONTROLS AND PROCEDURES Management
of the Company has evaluated, with the participation of the Chief Executive Officer and
Chief Financial Officer of the Company, the effectiveness of the Companys disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the
fiscal quarter covered by this Quarterly Report on Form 10-QSB. Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer of the Company have concluded that
the Companys disclosure controls and procedures as of the end of the fiscal quarter
covered by this Quarterly Report on Form 10-QSB are effective to provide reasonable
assurance that information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and Exchange
Commission. Management of the Company has also evaluated, with the participation of the
Chief Executive Officer and Chief Financial Officer of the Company, any change in the
Companys internal control over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter covered by
this Quarterly Report on Form 10-QSB. There was no change in the Companys internal
control over financial reporting identified in that evaluation that occurred during the
fiscal quarter covered by this Quarterly Report on Form 10-QSB that has materially
affected, or is reasonably likely to materially affect, the Companys internal
control over financial reporting. However, due to the limited number of Company employees
engaged in the authorization, recording, processing and reporting of transactions, there
is inherently a lack of segregation of duties. The Company periodically assesses the cost
versus benefit of adding the resources that would remedy or mitigate this situation and
currently, does not consider the benefits to outweigh the costs of adding additional staff
in light of the limited number of transactions related to the Companys operations.


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PART II. OTHER INFORMATION _________________ ITEM 1.

LEGAL PROCEEDINGS.  The Company is
aware of no legal proceeding, which is pending or threatened to which the
Company believes to be immaterial.  ITEM 2.

CHANGES IN SECURITIES.  The Company
issued 162,000 common shares for 81,000 in the quarter ending December 31, 2003.  ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.  (a)    Not Applicable. (b)    Not Applicable. ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.  Not Applicable.  ITEM 5.

OTHER INFORMATION.  Additional
information has been provided to the SEC, after December 31, 2003 in response to
a letter received by the Company dated January 8, 2004 from the SEC related to
comments on the Companys Form 10-KSB for the year ended June 30, 2003.  ITEM 6.

EXHIBITS AND REPORTS ON FORM 8-K.  (a)    Exhibits. 31.    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002+ 32.    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+ (b)    Reports on Form 8-K We
did not file any reports on Form 8-K during the quarter ended December 31, 2003. + Filed herewith.


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SIGNATURE In accordance
with the requirements of the Exchange Act, the registrant caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized. KOLORFUSION INTERNATIONAL, INC.Date   April 23, 2004
     By:
     
     /s/   Stephen NagelStephen NagelDirector, President


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